SC's portfolio...!

This thread is going to be dedicated to portfolio building. There is no hurry to deploy full capital. Portfolio building is a painfully slow way to invest for the long term. So expectation is set to gain 25-30% p.a.

Capital : 10 L
Limit per stock : 50 K

Entry with 20 K, 1 add on of 20 K, 1 add on of 10 K to the winners.
Cut the looser as soon as sl is hit.

There wont be time / motivation to monitor the progress of the stocks on intraday basis, so stop loss will be placed as soon as market opens. For entry, will place trigger buy at S3 lvl of camarilla. In case it doesnt trigger, then stock will be purchased at 3.20. Exit will be on the last 10 min.

p.s. please don't trade based on my analysis. I could be wrong just like any other analyst.

Dear SC,

Will you please explain the reason(s) for deployment of 20k in 1 stock in 1 go when you are saying - Portfolio building is a painfully slow way to invest for the long term !!!

Dear SC,

Will you please explain the reason(s) for deployment of 20k in 1 stock in 1 go when you are saying - Portfolio building is a painfully slow way to invest for the long term !!!

20K is just 2% of the Capital sought to be invested!! How much slower do you want!!!

Best time to build portfolio is when nifty is at 5100 to 5350...! This is when we can catch them young and watch them grow...

the process of basket building starts with plenty of random stocks and then chucking the bad apples away and nurturing the good ones. this is slow and painful....!

as rk said... risk per stock is initially set to 2% of capital per stock.

As far as I understood the situation, portfolio will contain 20 good apples in the final phase... and it will not be constantly monitored day by day but will grow with the health of the overall market... So the way we look at risk of 2% per trade may not hold good here, Mr. Karnani... When fully deployed, the risk will be far more than what you comprehended...

Now coming to portfolio building... The process of portfolio building starts with valuation of financial instruments first... then comes selection... allocation of fund... execution is the next stage... revaluation... finally re-shuffling... In my opinion, this random sampling may not give good results in the long run as it will give equal importance to TCS and say, Mastek while choosing socks from the IT sector depending only on price quotes and not on the other factors which affect running of a business... The downside risk of the portfolio will be higher with the selection of high beta stocks and random sampling will surely lead to that phase in some point of portfolio building process...

As far as I understood the situation, portfolio will contain 20 good apples in the final phase... and it will not be constantly monitored day by day but will grow with the health of the overall market... So the way we look at risk of 2% per trade may not hold good here, Mr. Karnani... When fully deployed, the risk will be far more than what you comprehended...

Now coming to portfolio building... The process of portfolio building starts with valuation of financial instruments first... then comes selection... allocation of fund... execution is the next stage... revaluation... finally re-shuffling... In my opinion, this random sampling may not give good results in the long run as it will give equal importance to TCS and say, Mastek while choosing stocks from the IT sector depending only on price quotes and not on the other factors which affect running of a business... The downside risk of the portfolio will be higher with the selection of high beta stocks and random sampling will surely lead to that phase in some point of portfolio building process...

PGDIMES,
My view is slightly different.
market is a future discounting mechanism. Means all the news that affect the stock in the next 2 years is priced in. So value of the stock at any given point of time is a reflection of the sentiments on that particular sector and that particular stock. A very lucrative stock like TCS will command a huge premium over mastek. While tcs can and maybe will, out perform mastek in the long run, when we are in the business of value unlocking, mastek will give better opportunity of capital appreciation while tcs will give stability. when it comes to falling... tcs will be on many watch list, so wont fall as badly as mastek. So current scenario is... masket has better value than tcs, as market has fallen 5-6%!

I have to accept the fact that my fundamental analysis is a big zero and Technical Analysis is above average. So all my trading decision has to be as per my strength.

BTW, portfolio need not contain 20 good apples. It'll be a basket of stocks that didnt hit tsl... if the momentum is good and hits add lvl..the fund allocation for each will go up accordingly...!

I'll never be 100% invested anyway...!

Somanjana,

Would love to see your way of building portfolio... :thumb: Hope all your trades will be posted live (means on the day of buying/selling)... Linkon started some threads on this sometimes back... :lol:

I can only talk about my experience of building portfolio which started 3 years back... I had similar opinion like you... To buy those which starts first out of the block or to buy the stocks which have the potential of huge value unlocking... Initially the plan was OK... But the problems will surface when all the stocks begin to hit TSL at the same time... and unlike FNO you won't be able to reverse your trade... Moreover it will be difficult to monitor a basket of stocks constantly... and the way you & Linkon trade nifty fno, I hope you wouldn't get frustrated/bamboozled by the movement of the stocks in your portfolio...