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Few steps that can improve your returns:
(for the stubborn, amateur, active investor, who should rather be indexing)
(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
