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Few steps that can improve your returns:
(for the stubborn, amateur, active investor, who should rather be indexing)
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(for the stubborn, amateur, active investor, who should rather be indexing)
Don’t buy anything that you are not comfortable buying at least 5% of your portfolio.
This is not a return maximisation hack, it’s a risk mitigation one.
You will have higher thresholds for inclusions if you force yourself to buy at least 5%. You will be more selective.
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This is not a return maximisation hack, it’s a risk mitigation one.
You will have higher thresholds for inclusions if you force yourself to buy at least 5%. You will be more selective.
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Have at least 10 & not more than 20 stocks in the portfolio (if your portfolio is >>> annual income).
There just aren’t enough clean companies available in India at good valuations that you understand. I struggle to get to even 10 & I have being doing this for a while now.
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There just aren’t enough clean companies available in India at good valuations that you understand. I struggle to get to even 10 & I have being doing this for a while now.
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If your portfolio size is similar to your annual income then you can concentrate more — may be just three ideas.
But for those you have to patient & hope market gives you an opportunity to buy your favourite idea at a good price.
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But for those you have to patient & hope market gives you an opportunity to buy your favourite idea at a good price.
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Stay with Large Cap, Debt free companies.
Don’t fall for the siren song of multibaggers.
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Don’t fall for the siren song of multibaggers.
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Target 12% to 15% return. This is key.
You won’t take unnecessary risks. This is a fantastic CAGR. Look at performance of Equity Funds of your favourite FM over the last couple of decades to convince yourself.
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You won’t take unnecessary risks. This is a fantastic CAGR. Look at performance of Equity Funds of your favourite FM over the last couple of decades to convince yourself.
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Average up when the thesis pans out. Don’t average down.
If you really understand the idea & the business you can average down. But on average it’s better to assume that you just don’t. Leave room for doubt.
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If you really understand the idea & the business you can average down. But on average it’s better to assume that you just don’t. Leave room for doubt.
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Don’t sell the stock just because it’s not performing (at least for a couple of years) unless there is negative development/new set of data that negates the original thesis.
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Don’t play turnarounds. Just don’t. This is a minefield.
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Don’t look for hidden gems. Obvious ideas are your best bet.
Some of the best performer large caps in India have been obvious trades for decades.
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Some of the best performer large caps in India have been obvious trades for decades.
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I mark down my equity portfolio by 30% when making my quarterly family balance sheet. This mental hack helps in avoiding panic sells during sell offs.
At the same time since I am not marking down individual ideas I keep evaluating the thesis for each of those closely.
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At the same time since I am not marking down individual ideas I keep evaluating the thesis for each of those closely.
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Save every month. Create an excel where you track this number.
This will improve you portfolio performance. This cushions will help you avoid both greed & fear.
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This will improve you portfolio performance. This cushions will help you avoid both greed & fear.
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The first goal is to have a portfolio 10 times your annual income. Then it’s like having 2 salaries (an awesome feeling). Assume that this will be driven by savings not your portfolio returns.
Don’t buy the new iPhone or a Car, stay on rent. Save like fanatic.
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Don’t buy the new iPhone or a Car, stay on rent. Save like fanatic.
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If you can’t find ideas stay in cash or Index. There are worse things than sitting on a pile of sweet cash earning risk free returns.
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DONT
TRADE
IN
F&O
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TRADE
IN
F&O
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Don’t coattail.
Even if Mr. Buffett asks you to buy a particular stock the first question you should ask him is — why? If you don’t understand it, let it go.
Treat all large, popular Indian “investors” as morons. Some aren’t but this assumption works on average.
15/15
Even if Mr. Buffett asks you to buy a particular stock the first question you should ask him is — why? If you don’t understand it, let it go.
Treat all large, popular Indian “investors” as morons. Some aren’t but this assumption works on average.
15/15
