VijayKiran (VK) Long Term Portfolio Mistakes & Learnings

@Amritasen22 Here is the PF performance snapshot dated - 31/May/2021

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Please check my portfolio and give feedback

Do you hold alembic pharma

Yes, I hold alembic pharma.

Thanks. I found two pf thread under your name. Which one to review, please guide.

Please review my last post

Your last post

Have gone through it but before I give my comments please do understand I am not SEBI registered advisor.

Your stock selection broadly looks fine and I do have some of them in my pf. I have not studied in detail about JK paper and Chamanlal because it is not in my investing list universe. I personally avoid cyclical for long term pf. I don’t know your investing experience but I hope you know the pros and cons of concentration. I prefer diversification and practicing it for many years. IMO if your experience is less than a decade then go for diversification and consistent business performance. All the best.

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What an Year 2021 was! Absolutely fantastic in terms of Stock market upside and scaling new heights during pandemic. The closing quarter Oct-Dec’21 was not so good compared to first 9 months but the Sensex closes handsomely around 58000 which was also a forecast last year during Nov’2020 post.

Wishing all readers a fantastic, Happy and Prosperous New Year 2022 ahead.

Happy investing!
VK

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The closing of year 2021 has brought lots of mixed experiences in personal as well as financial life. It has been more than three years that I had taken charge of my financial investing life from the clutches of outsourced and established professional fund managers. The journey was really bumpy, full of doubts and confusion but slowly started yielding good performance and results. With more time of reading, passion and commitment; it has given its edge in terms of performance relative to what it was when done passively. Fantastic forum, great learning experience and became improved investor in due course of time. More to learn and get better…

Below is the snap shot of equity performance for my own reference purpose:

Year VK Equity PF Returns Sensex Returns
07/Nov/2018 100.00 100.00
31/Dec/2021 246.49 165.32

Last 3-Year XIRR: 33.15% (excluding dividends)

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Core PF remains the same.

Happy investing.
VK

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Congratulations, that’s fantastic IRR along with fact that almost no churn since an year or more! I think I used to consider myself a low churn investor but looking at the way you have managed in last couple years, its amazing to have an inspiration in this aspect. You did not sell single share in the crash and added on to just couple names…no clutter of multiple tracking positions or need to add new names every now and then…that’s true simple investing!

Did you add new capital to existing position in last couple of years or the invested capital remains same as before?

Also, would be nice if you can share the percentage on CMV of your holdings so that we can see how the individual holdings have competed among themselves along the months/years you simply held them in ups and downs! Thanks

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@Investor_No_1
Thank you for your kind words. I didn’t added any fresh capital to my PF, however, there were some changes made w.r.t. capital re-allocation to rising sectors. Below is the snapshot of Top holdings with % allocation (CMV) as on today:

Company % Weight
HDFC Bank 2.61
Reliance Industries 2.59
PI Industries 5.61
HDFC 1.32
HDFC AMC 1.13
Asian Paints 5.38
TCS 2.08
ITC 2.01
Natco Pharma 1.11
Laurus Labs 1.06
Pidilite Industries 5.61
Yes Bank 1.50
Bajaj Finance 5.40
Avenue Supermarts 1.95
Relaxo Footwears 5.80
Alembic Pharma 1.00
Petronet LNG 1.00
Divi’s Laboratories 5.34
Nestle India 1.80
Infosys 2.30
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Portfolio Update - 30/Jun/2022

I thought this is the right time to reflect back on the performance of portfolio having completed first half of the calendar year 2022.

The last 8-9 months has been very testing time for investors to see the evaporation of profits fading away in oblivion with the passage of every months. The index and broader market has taken the path of downward spiral with snowballing effect on the portfolio gains made post corona fall of 2020. The entire gains made in 2021 has been sucked away by market in last 6 months leaving very less room of confidence for the new investors.

Shattered, baffled and confused many might be wondering what is the next best strategy to ride the market! In my humble opinion there is hardly a retail investor can do anything in short term to take the bull or bear by horns. A retail investor has only one edge in his arsenal and that is very long term view aka TIME which should not be less than a decade, at least 10 years to reward himself handsomely compared to existing debt instruments return availability at his disposal.

Here is the brief snapshot of my Equity PF performance:

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Year VK Equity PF Returns Sensex Value Sensex Returns
07-Nov-18 100 35237 100
30-Jun-22 219.57 53018 150.46
XIRR 24.07% 11.85%

Here is the YTD (Jan’2022 - Jun’2022) performance

YTD Equity Return YTD Sensex Return
-10.92% -8.99%

The fall from All time High (ATH) also makes sense to anlayze and ponder upon:

Equity PF Fall from ATH Sensex Fall from ATH
-16.28% -14.16

In short, its too early to start getting nervous or euphoric about any metrics because what is more important is not numbers but chances of meeting one’s long time goal of his portfolio. My portfolio has been prepared keeping my early retirement and child education in mind. I see that I may be reaching the goal of being financially free earlier than anticipated just because of tight fiscal discipline and systematic long term investing. It took nearly 16 years of slow and staggered investments across asset class to reach a stage where I would be comfortable saying good bye to the drudgery of toxic work environment.

During the GFC crisis of 2008 I wrote in my diary that “Freedom from all forms of toxicity is the ultimate and only thing worth pursuing in ones life time”. I am gald I am nearing it :slight_smile:

Core PF remains the same. I didn’t added any fresh capital to my PF, however, there were some changes made w.r.t. capital re-allocation to rising sectors.

Happy investing.
VK

Disclaimer: I am not a SEBI registered advisor. My thoughts are only for academic and learning purposes.

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Portfolio Update - 31/Dec/2022

The time has come to reflect on the year gone by. What an year 2022 was from investing perspective! It was really difficult making money for retail investor portfolio. The larger duration of the year index remained flat and negative. Some rally do happened but was short lived. The index moved in way that look as if it is tightly controlled and manipulated by strong hands. Out of 247 days of trading in 2022, 125 days remained red and 122 days show positive returns for Sensex. The ADR for Sensex for 2022 is 0.98 with YTD return of meager 4.44% only.

My equity portfolio too didn’t performed well compared to Sensex. It has been almost four years since Nov-2018 that I am managing and measuring my portfolio actively. I am managing my Retirement corpus. It is a great learning experience while managing my money independently. Many of the good quality stocks in my PF didn’t moved or performed as per expectations causing lots of doubt in my mind. Last couple of years it had been very bad for HDFC group of companies like HDFC Bank, HDFC Ltd, HDFC AMC and HDFC Life. I had good exposure towards this group but gradually trimmed down in the second half of 2022. This year has given me an opportunity to add to my existing holdings whereby increased my positions in TCS, Asian Paints, Titan, Deepak Nitrite and Pidilite. Some stocks which pleasantly surprised me this year in my satellite PF are VBL, Butterfly, Uno Minda and Nikhil Adhesive. Planning to increase my holdings in these in coming year.

Brief snapshot of PF performance at the end of year 2022 are as follows:

  1. Asset allocation- Equity:Debt = 82% : 18%
  2. Equity PF return XIRR (Nov/2018-Dec2022) = 24.96%
  3. Sensex fall from ATH = -3.86%
  4. Equity PF fall from ATH = -6.43%
Calendar Year
(Jan-Dec)
2019 2020 2021 2022
Sensex Returns 17.08% 15.75% 21.99% 4.44%
VK Equity PF Returns 42.92% 29.82% 32.85% 2.37%
Rs 100 becomes 142.92 185.54 246.49 252.32
Date VK Equity PF Returns Sensex Returns
07-Nov-18 100 100
30-Dec-22 252.32 172.66

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Wishing everyone lots of success and happiness in their investing journey. A very happy and prosperous New Year 2023 to all.

VK

Disclaimer: I am not a SEBI registered advisor. My thoughts are only for academic and learning purposes. I am invested in all the names mentioned above and may exit anytime. Please do your own due diligence, research and homework before investing.

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Some inner reflections on market and Portfolio performance

Just wanted to document certain on going thought process for future reference for self and also to share some learning hoping that it can help those who are on the similar situations, positioning and circumstances.

Since Oct’2021, the market behavior is very erratic and unpredictable and has taken away sizable gains from many portfolios slowly and in staggered manner leaving investors clueless about when to take actions to circumvent losses on PF level. Very difficult scenario in last 15 months but it looks things will improve from here now onward in 2023. Time and price correction has played its major role as of now.

I am not qualified to recommend any aspect on the stock per se but I think I can add some pointers towards portfolio construction based on my experience.

  1. Lets say that we are critically analyzing the equity portfolio performance then according to me it is not the exercise to be done in isolation.
  2. To me portfolio assessment should be done taking into accounts Equity plus Debt together.
  3. Also what % of Net-worth is invested in Equity and Debt is important before analyzing.
  4. What stage of journey one is positioned in investing i.e. accumulation phase or near withdrawing phase.
  5. Compute the overall portfolio performance vis-a-vis Index and then take a call for adjustments, re-balancing within equity, asset allocation across asset class.

I think some illustrations from my own experience will add some value to the current thought process for better decision making:

A) For me I am almost done with my accumulation phase i.e. I wont be adding any meaningful capital in Equity to my existing portfolio. My asset allocation is in the ratio of Equity: Debt = 80%:20%

B) Debt part consists of Gold, FD, EPF, PPF, NPS

C) Equity allocation distributed across all market cap and spread across meaningful sector like Finance, Consumer, Chemical, Pharma and IT.

Most of the core holdings has been beaten down 30-50% from High like Divis, Asian Paints, Dmart, Relaxo. TCS didn’t moved an inch and is 10% down in YTD, entire HDFC group stocks became step brother for the market. The impact on portfolio in positive terms is not great but not at all disastrous. Because over a period of last 7-8 years I designed my PF in such a way that it should trail and exceed Index most of the time. So last year PF performance vis-a-vis Index is lag of only 2% on relative basis. And PF fall from All time High is also not so significant compared to Index.

Re-balancing within equity is very important. Sector allocation and churning is equally important which require deep study and research. If we get sector rotation right and slightly ahead of the curve then the overall PF performance would be better than average. Investment in Gold is giving good returns currently and can be used to move capital from Gold to Equity now which I am doing presently.

D) Some KPI which I designed for my PF is under periodic tracking are as follows:

i) X = No. of times AUM w.r.t. Annual expense
ii) Index Fall from ATH
iii) PF fall from ATH
iv) Annualized return of PF vis-a vis Index
v) PF Beta, PF covariance w.r.t. Index
vi) Average PF gain/loss per unit of Index
vii) Excess gain/loss w.r.t. Risk free return of 6%
viii) Average Gain/loss in AUM per year
ix) Opportunity cost w.r.t. Index Investing
x) Individual stock weighted between 5-7% on cost basis

Here is last year PF performance link for reference.

In summary, Individual stock bad performance has hardly any negative impact on overall PF provided it is well diversified and not highly concentrated. On average market beating return on a longer period of time is good approach towards achieving financial goal with peaceful sleep.

Happy investing!
VK

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Portfolio Update - 31/Mar/2023

X-Ray report snapshot from ICICI Demat for self future reference:

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Dear reader,

Thank you for your kind words.
Please take extreme caution on anybody’s suggestion including mine. With this disclaimer let me share my thoughts based on my experiences.

  1. I realized later that out of MF baskets, Index funds are best for long term for retail investor. Infact I am already doing SIP in index fund. FYI.
  2. In my opinion AMC/ Fund houses are more concerned of gathering AUM % fees with only effort to align the MF schemes return near to Index. All the best fund of early 2000 like Reliance Vision, Growth, HDFC etc. are seen no where and people invested in these schemes are paying fees for sub-optimal return for longer period of time still today.
  3. Your realization is correct. There is no substitute to direct stock investing when we want more returns. Only requirement for direct stock investing is that it require full time commitment. It is no part time affair! You need to be constantly on toes for news, research, evaluating opportunities in the market. Keep things on radar and constantly monitor the PF performance on periodic interval. Your decision and judgement if right can make you wealthy in shorter time compared to MF but again direct stock investing is stressful. Coming to MF, I am also invested in PPFAS for last 5 years. My Equity:Debt ratio is 80%:20%. Check your Asset allocation first because it makes more sense than allocation within equity.
    My only advice would be keep monitoring and tracking your investments regularly. For most of retailer there is nothing called buy and sleep kind of scenario.

I hope it may help. With best wishes.
Happy investing.
VK

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Hello Sir, Could you explain it further with some real life example and Do you have any insights on recently listed REITs? It could be a better option for debt portion of a retirement pf…

Best,

Hi Vishal,

There are plenty of examples from real life but what comes to my mind immediately is from the game of cricket. To illustrate this let us understand two great batsman Dravid and Sehwag. Whom will you prefer first always? To me Dravid is the first choice always because of his consistency across the game format. Sehwag strike rate is brilliant but lacks consistency. He will make anything from 0 to 300 in any match but Dravid can be relied upon to score at least between 30-50 runs in a match. Players like Dravid build the team foundation for long run but then for match winning, pitch hitting performances we need players like Sehwag also. So right mix and appropriate proportion of such players are always preferred in a team. Therefore according to me while constructing the Portfolio of Stocks we should have large percentage of consistent compounding companies and smaller proportion of small, mid, micro cap companies.

Although there are exceptions but statistically if the price/return distribution of stocks is right skewed then most right-skewed distributions have the mean to the right of the median. A right-skewed distribution has a long right tail. And this is what we want and need such stocks in portfolio. Stocks with large variation (e.g. Cyclical stocks) in both sides of its mean values are less reliable and does not give consistent return.

Hope it helps.
VK

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Portfolio Update - 31/Dec/2023

It is an year end today and the time has come for yearly portfolio performance review vis-à-vis my chosen index i.e. Sensex. My core objective of the investment is to beat Sensex in longer period of time. I used to keep records of investment but in a random fashion till 2019. This year I incorporated the investment records of missing year 2017-18 in the overall analysis. It is now 6.5 years of documented investment journey records and I learned many things during portfolio management process.

Since I am managing my retirement corpus by self, my approach towards investment is highly diversified one more tilted towards Peter Lynch style of investing. Due to my own analysis over a period of two decades of various market data I firmly believe in Diversification of asset class across everything. I am invested in more than 100 stocks at various levels/sectors/cap/industry! Having engineering qualification and long tenure managerial experience at all levels has helped me in appreciating the various gamuts of investing and company management view and temperament. My mathematical and statistical know-how is helping me deeply in uncovering various aspects of return/risk at stocks as well as at portfolio level.

The year 2023 has been lot better than year 2022.

i) Advance/Decline Ratio: The Sensex traded for 246 days in 2023. Out of which Sensex ended green in 142 days and red in 104 days which resulted in ADR of 1.37.
My Equity portfolio ADR is 1.54 showing slightly better than Sensex in comparison with PF ending 149 days in green and 97 days in red.

ii) Monthly return analysis: The Sensex started showing strength from the month of April’2023 and given positive return till July’2023. The index dipped in the month of August’2023 by -2.55% and in the month of October’2023 by -2.97%. The best monthly return of Sensex was in the current month of December’2023 with 7.84% followed by Novermber’2023 with 4.87% which actually tilted the yearly Sensex return positively and year 2023 closed with handsome return of 18.74%.

And this behaviour of market indicates that how important it is to be in the market all the time irrespective of rise and fall because you never know when the best phase of market will come. So the best learning is to always remain invested in the market with high quality and timing is futile in long term.

The best monthly return of My Equity portfolio was in the month of November’2023 delivering 6.93% and closed the year with a return of 24.86%.

Brief snapshot of PF performance at the end of year 2023 are as follows:
1. My Asset allocation - Equity : Debt = 86% : 14%
2. Portfolio Beta = 0.99
3. Portfolio Sharpe Ratio = 2.85
4. Monthly return analysis:
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5. All Years return

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6. Trail returns as on 31/Dec/2023

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XIRR returns:

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7. Top 20 companies of PF

Wishing everyone lots of success and happiness in their investing journey. A very happy and prosperous New Year 2024 to all.

VK

Disclaimer: I am not a SEBI registered advisor. My thoughts are only for academic and self-learning and improvement purposes. I am invested in all the names mentioned above and may exit anytime. Please do your own due diligence, research and homework before investing.

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Vijay
Happy New Year!!
Can you please share this excel for portfolio tracking? [removing your stocks]
Thanks!!