Valorem's Portfolio

Hello fellow ValuePickrs,

I’m a 14 year old student from Mumbai. Valorem is not my real name, but it means Value in latin. I joined the forum very recently, but I have been learning about investing for around a year and a half now. Below, I will share about my investing journey and portfolio.

My Journey
Before I start, I must say that I am extremely grateful to my family who have supported me in my investing journey despite my young age.

I don’t remember when I first heard about investing and stocks, but I only got interested in them in late 2020. At the time, my father had taken a course on technical analysis. Having a lot of spare time due to the lock down, I decided to accompany my father in one of his courses webinars and was immediately fascinated. I started sincerely watching videos on technical analysis and would discuss my learnings and observations with my father.
Around the same time, I began learning Python (a programming language). This skill has played a key role in my journey as an investor.

By mid 2021, I was pretty good at technical analysis and was an aspiring day trader. I was using technical indicators like RSI, ADX and Stochastic to find good trades and my strategy was quite profitable (backtesting). My parents decided to support me by providing me with a small trading account to handle (I would tell them what to buy and sell, and they would do so). Unfortunately, I burned my fingers badly. At first I made a return of around 7%, but soon I landed up losing more than 20% of the original capital. I felt extremely bad and defeated.
This experience taught me the first and second rule of Warren Buffet, without me knowing who he was -

  1. Don’t lose money
  2. Don’t forget rule number 1

Following the experience, I took a break from trading as my Exams were around the corner. Once they were over, I considered giving up the market - but my mother persuaded me not to give up my passion because of one bad experience.
I decided to listen to her, but I began reconsidering my approach to equities.

Until then, I had only traded stocks. I realized that the technical chart told us little about the company and there many other important factors. I also realized that there would be a higher chance of making consistent returns in the market if I invested in stocks using technofunda analysis instead of trading them using only technical analysis. So, I decided to transition to technofunda investing.

A few books I read on investing are One Up On Wall Street, The Intelligent Investor, Beating The Street How Buffet Does It and Coffee Can Investing. I also took up many free courses on the internet and watched many YouTube videos on investing.

My Current Investment Process
My goal is to make a mainly automated investment framework.

I have developed a python script that scrapes data from screener.in and financial news websites (like economic times), projects future earnings, finds the intrinsic value of a stock using many methods (DCF, Graham Intrinsic Value & EPS Multiple), carries out sentiment analysis on conference call scripts and articles related to sector/stock. This is not the only way I analyze a stock, but one of the ways. I also do manual analysis following/instead of this.
To short list stocks, I use screener.in. I have tweaked and combined a few screens to make one I like. Recently, I have also begun to short list stocks based on their ValuePickr threads (If I find an interesting thread, I take a closer look into the stock). I am working on way to add sentiment analysis of the ValuePickr thread of a stock in the python script I mentioned above.

After selecting a stock, I take a look at its technical chart which helps me decide when to enter.

Position Sizing
I realized that if we provide the same allocation to each stock, there is a lower chance of making exceptional returns. Even though the returns will be good if the right stocks are selected, we can make higher returns if the portfolio is concentrated.

The size of my position depends on many factors:

  1. The strength of my conviction
  2. My understanding of the business and company
  3. The valuation (How cheap a stock is)

My Entry & Exit Process
I enter a stock in 3 legs, and exit in 3 legs as well - unless I believe that the stock price can crash in a very short period of time.
The first and last legs are equal, whilst the second leg is larger. The ratio of the 3 legs is 3:4:3.

My Portfolio

  • The Status column represents my Accumulation Status.
  • Currently, I have not mentioned the average price as I am still accumulating the stocks. I will add the Average Prices once I am done accumulating.
  • I wont write about each stock here. If anyone wants, I will summarize my thesis but (like @sahil_vi said) I believe that it will be better for each stock to be discussed in its own ValuePickr thread.

My Portfolio Goals
I aim for a CAGR of around 35-40%. I know it sounds very ambitious, but I believe that it is possible.

Credits
The Format of this post has been inspired by @sahil_vi, a great investor who I have learned a lot from.
A few other prominent investors from whom I have learned a lot and am thankful to include @Tar, @Donald, @ayushmit, @pratyushmittal, @Worldlywiseinvestors, kalpesh4430 and @Kumar_manas. Without these

Updates
I will add updates about my portfolio here. If there are any changes in allocation, I will mention it here and change my portfolio table above.

  • 13/03/2022 : Post released
  • 14/03/2022 : Added Ishmohit Sir to credits as I previously did not know that he had a ValuePickr account.
17 Likes

Hey @valorem … Kudos for starting so early. I would recommend you to read Pat Dorsey’s “Five Rules of successful stock investing” and watch Ramdeo Agrawal’s ‘How to Invest’ interview series with BloombergQuint’s Niraj Shah. They will enhance your understanding of businesses as well as stock keeping and help you with Qualitative side of Investing.

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Great Recommendations. I would like to add to it - Do checkout Marcellus Blogs, Books by Saurabh Mukherjea and also their YT channel

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Welcome to the forum! Great to have younger folks around.

Someone has recommended useful content already.I would add MoSL’s wealth creation studies to the list.The PDFs are available for free and video series from many years is also available on YT.In my view,this content is more relevant for Indian markets & gives you a sense of what stocks have done great in what kind of markets.Since you have entered the markets your learning curve will be much faster now.Nothing teaches better than experience.

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Hi @valorem

It may be a out of context response. Personally I think you should focus on your education. Stock market will be there forever and will present lots of opportunity when you return after your education.

Stock market would be a distraction to your academics either bull or bear market.

May be you have an exceptional skills however normal/above average people, at the starting stage, tend to make much higher CAGR in their professional career than from the stock market. In that way first a person can build his/her base capital, if they don’t have it already and then do the switch.

It is just my thinking and everyone has different view and thinking. Choice is yours.

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Welcome to the forum. I am really really overjoyed to see 14 year old people get interested in this space. This is the absolute joy of watching education do it’s work at its epitomy.

+20 crore. Stock market rewards those that have unique insights. Only way to have unique insights is to spend a lot of time educating oneself & a lot of time contemplating about the nature of reality & the world around us. We cannot do either decisively by getting diverted by cagr & money. Money is a side-effect of good investing not its root cause or its prime objective
Thousands have tried to create automated trading strategies, but it’s an insanely hard problem. Back testing is only creating false precision because stock markets follow a fat tailed distribution : the rare event are not all that rare & can Kill any strategy. How do you back test against a tail risk which hasn’t happened yet?

Only 1 institution has managed to do well with algorithmic trading : rentech. And it took many many world level PhDs to build rentech. Even if ones eventual goal is to build an automated investing system, ones time is actually best spent in initial part of life focussing on education: on math, statistics, probability theory, calculus, getting a PhD in a related area & then double down on the efforts to model the stock market mathematically (one of the best minds in this space is nassim taleb) his work is so hard that i cannot understand it without dedicating significant time to it.

Just adding my 2 cents. Hope it does not offend anyone. :pray::pray:

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Hi @paran_raja sir, thanks for sharing your views. I do concentrate a lot on academics. Investing is a hobby and I analyze the market for less than an hour in a day. I leave enough time for studying and playing sports, which is essential in every student’s life.

Hello @sahil_vi sir, thanks for sharing your views. The python script plays a small part in my analysis process. It only projects future earnings, finds the intrinsic value of a stock using many methods (DCF, Graham Intrinsic Value & EPS Multiple), carries out sentiment analysis on conference call scripts and articles related to sector/stock. I believe that these functions can help a lot, but they are not enough to make a decision. I also do a manual deep dive into the company and industry before making a decision.
My goal is not to make a completely automated investment framework, but a mainly automated one.

I know that there are low chances for common people without a deep understanding of anomaly detection and mathematic patterns to become consistently successful in algorithmic trading. Algorithmic trading is not my approach, but I’m only using python to quicken my analysis process.

Thank you to everyone who has provided feedback, recommendations and useful criticism - the best teacher.

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Good to see a 14 kid started investing,
I will suggest you to invest small amount for initial 5 years.

Always invest on own conviction, you can borrow ideas.

Lot to learn!

I recommend below books -

  1. rich dad poor dad (Personal finance)
  2. richest man in Babylon (Personal finance & must follow)
  3. learn to earn ( Basic)
  4. One up on wall street ( Basic to advance)
  5. Beating the street ( Advance)
  6. Common stocks uncommon profits (Advance)
  7. The warren buffet way ( Advance and must follow)
  8. Good to great ( Advance and must follow)
  9. Warren Buffett’s letter’s to shareholders

these books will shape your mind and you also need to read psychology related books in investments to better control over emotions.

Hope this will help!
Best of luck to your investment journey.

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Hello fellow ValuePickrs,
I have made some changes to my portfolio:

  • I finished accumulating Satia Industries and Dynemic Products.
  • I have begun accumulating Agarwal Industries with a 4% weightage.
  • I have reduced the allocation given to Redington & Deepak Fertilizers (I have not started accumulating any of them yet).

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Hello fellow ValuePickrs
I have once again made some changes to my portfolio:

  • I have started accumulating Meghmani Organics.
  • I have finished accumulating Mirza International.
  • I have decided to increase my allocating of TV18 Broadcast and Indiabulls Real Estate to 6% from 5.5% each.
  • I have also decided to decrease my allocation of GNFC from 5.5% to 3% (Which is how much I had already accumulated), thus I am done accumulating that too.

I am also sharing my Watch List below:

  • IIFL Finance
  • Adani Wilmar
  • Redington India
  • HT Media
  • Jagran Prakashan

Do give feedback and share any recommendations!

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First of all, congratulations for getting this focus so early in life and thanks to your parents direction and motivation as well.
As you are doing this with knowledge of your parents and they themselves motivated you, I would assume that they also aware of stock investing and may also be active in this field to guide you and strike a balance between academics and investing.

While most others have given you very nice feedback, only one significant thing comes to my mind and that is your above goal. I would not call this as ambitious but on the contrary, it can prove to be the biggest hurdle for future ambitions. I would call it rather unrealistic and dangerous. However, young people ought to have such goals and adventurous targets, for that is what makes them truly young and presents them the opportunity to learn from such goals.

If I were to give any suggestion, although I am not eligible for any, would be that - time is on your side. You have decades and decades ahead of you, so use this time to understand yourself as an investor rather than in these CAGR targets. Understand what you truly want to achieve via investing and involve in healthy discussions with your parents, relatives, seniors who may have experience in this field and their experience over decades. This would present you on what a realistic expectation can be.

One of the biggest wealth creater of Indian history has been Titan…a 1000 plus bagger for RJ who had time with him when he invested in it early with excellent allocation. Titan was then a very ordinary company struggling with new areas and declining existing core business. It would have certainly not passed numerous statistical metrics and CAGR expectations…

You have time on your side, evolve as an investor, understand yourself, remind yourself that you are here for the long haul no matter what the CAGR…and lastly Time is friend of good businesses, multiple entry and exit to achieve much better result in not so good businesses maybe rewarding once, twice but expectation of doing it majority of times may be dangerously ambitious…

Disc. Not at all eligible for any suggestion or recommendation. Only personal opinion out of discussions with multiple people and self experience. I can be completely wrong in all my assessments

4 Likes

Hello,

I have no words as my mind struck at ur age. I personally started investing at the age of 31 and now am 34 due to lack of awareness and no guidance from anyone before. I have always thought that investing should be taught or learn at an early age like 20 atleast and regret for not starting investing early atleast 5 years before. Nevertheless i can’t recall the time and with my very limited knowledge i find your stock selection is great but cyclical and momentum. Choose whom you follow wisely in twitter or your source of ideas

Also can you explain your rationale of your watchlist stocks like HT media and Jagran prakashan. Personally invested in IIFL finance, Redington, Dynamic products and Deepak fertilizers among your stocks and it’s not a reco

Also a small suggestion would be don’t allocate more time per day for stock market at this age as and when you taste profit we only tends to taste more and loose focus. Also in future if your career goals are towards finance like MBA or CA you can increase the time spent and focus more but don’t stop investing.

Happy investing👍

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Hello @Iamsantosh sir,
Thanks for your feedback.

I forgot to mention that both are medium term plays.
To start, they both belong to a neglected sector. They are available at cheap valuations and are witnessing an earnings revival. They also have good fundamentals.
Both companies can be expected to do good with the economic revival.

Hello Everyone,

Below is my Core Portfolio along with my allocations, average prices and current returns:

I will post the other stocks that I hold later this week (Those stocks have not performed as well as my Core Portfolio)

Thank you and do share your views/give feedback!

1 Like

Hello fellow ValuePickrs,

Not many changes have taken place in my PF since my last post.

Below is my Core PF Performance till date:


image
The graph is not very accurate in the beginning

  • The PF has performed well till date and I hope it continues to do so

Non-Core Portfolio:

  • The reason I did not add my Non-Core PF after the last post was that I had not finished buying the stocks in that PF. In fact, I have decided to change the list of stocks I was going to add in that PF. Once I finish buying, I update this thread with that PF as well.

  • Below are the list of stocks that I have already added/am planning to add in my Non-Core PF:
    TV18 Broadcast Ltd
    Mirza International Ltd
    Shreyas Shipping Ltd
    Redington India Ltd
    Indiabulls Real Estate Ltd
    Southern Petrochemical Industries Corporation Ltd
    Rashtriya Chemicals & Fertilizers Ltd
    Jagran Prakashan Ltd
    SJS Enterprises
    Krsnaa Diagnostics

My Views On The Market:


credits

I hope you’ll found this post informative and looking forward to constructive feedback!

2 Likes

Hi it would be really helpful if you share your study on SJS enterprises which You may be already added or looking to add.

What’s the thesis behind Mirza international ? Couldn’t find a presentation and seems like quite a few things are happening there :thinking:

How has your portfolio being performing in this last few days ?

As you mentioned you are 14 years old such a crash can deter away a lot of trained long time investors let alone a young investor who wants to learn and grow.

My only concern is your core portfolio is too concentrated. A highly concentrated portfolio increases the risks in a bear market and increases the returns in a bull market.

Also in that core portfolio as well your holdings 30 % holdings are with the Meghmani Group which has low corporate governance practises ( How Shady Corporate Governance Has Given India Inc. a Bad Name » Capitalmind - Better Investing ) .

In India , corporate governance is a joke and finding high quality businesses is rare that’s why the top companies have such huge premiums over their competitors.

Bear Markets are a really good opportunities for young people to learn the market. Analyze , introspect and mould your investment strategies which will only lead you to future learnings and success

3 Likes

Hello Sir,
Thank you for adding to my Portfolio Thread.

Majority of my gains have been wiped off in this drawdown. I am now making around only 10% - however I am aware that this a part of the journey and have not been deterred.

Below Is My Core Portfolio’s Current Performance

Getting to your concern on my over-concentration, I would like to quote the Oracle Of Omaha: “Diversification preserves wealth, but concentration builds it.”

I have selected the stocks in my portfolio after a detailed study. I have made sure that each of them is undervalued and has little to no risk. Thus, though at first sight it may seem like my Portfolio has high risk, it does not!

I would also like to add, that I have decided to move some capital which I had reserved for my Non-Core Portfolio to my Core-Portfolio and buy some GPIL in this drawdown.

Thank you,
Valorem

6 Likes