Portfolio Management

Let's talk about how to build and manage a Stock portfolio.

No of stocks

• • Volatility Vs Stock count

  • 25-30 Stocks

Market cap distribution

• • Recommendation - Stick to "large caps" - at least within top 100 by free float market cap NSE 100 or BSE 100

  • Get to MC\SC with maturity and learning from LC

Sector distribution

• • Differentiate between sectors - MorningStar has nice sector distribution

  • If you buy 15 stocks from different 15 sectors, it will take care of diversification

  • Cyclical - Move up and down along with economy, Beta > 1 - Basic Material, Consumer Cyclical, Financial Services, Real Estate

  • Defensive - Not dependent on GDP\economy, Beta < 1 - Consumer Defensive, Healthcare, Utilities

  • Sensitive - In between Cyclic & Defensive, Beta = 1 (Volatile as Market) - Communication Services, Energy, Industrials, Technology

  • Write down investment mandate

  • MNC could be a sector, low debt one could be choice

Stock selection

• • Multiple methods

  • - Earnings Power Box - Whether stock is creating value for me, profit is used productively or not

  • - Focus on Debt free or low debt companies, e.g. Shreya Stocks

  • Factor investing

  • - Low volatility

  • - Quality

  • Value investing is tricky and challenging - Better to hold in beginning

Stock sell strategy

• • Super Important

  • I will sell a stock if ...

Rebalancing

• • Market cap rebalancing

  • Sector rebalancing

  • Full portfolio rebalancing (equity: debt)