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Thursday, 31 January, 2008

Investments history and lessons

Been long time since I updated the blog. Here is a post out of compulsion rather than necessity. SA is out of the country for some time and hence its me who will have to post things here now.

Investments history.

When I started investing in 2006, I started with Rs. 10000. My investing philosophy was what it is right now. Pick 5-8 stocks and divide the capital equally amongst these 8. Obviously it is difficult to get 8 value picks at the same time. I thus decided to put 2500 in every opportunity.

Over a period of time, I got a job and started saving. Now suddenly I had more money to invest. 10000 looked like a paltry sum. I reached a point where I had invested 50000 in market. I did not hike my stake in earlier investments and merely added new securities. My portfolio now had investments of less than 5000 in 5 or 6 companies and about 10000 in 3 companies.

Moment my savings reached a lakh, I did a review again and realized that I still haven’t sold a single company and the portfolio had less than 5000 in 6 companies, about 10000 in 3 companies and 25000 in 2 companies.

And by the way the portfolio was doing really well. The ones I had put money in 2006 were at-least two-baggers (one stock was up 5 times too). The ones I put Rs, 10000 in had almost doubled and the ones where I put 25000 were up some 30 odd percent. Overall the portfolio was about 40 percent up. And I owned about 12 companies.

Today I did yet another analysis. I realized that I have put in 2 lakhs in all. Since I haven’t sold any stock since I started investing, I own about 16 companies now. 5 are multi-baggers, 5 are two-baggers, 1 is making a loss of about 10% and rest are up by 30 odd percent. Portfolio on the whole is up by 30%. Even thought I have 7 multi-baggers, my portfolio as a whole is up only 30%. One side, I am happy that I have not lost money in the market. On the other hand, I am disappointed that I did not beat the index.

Lessons and feedback

1. I need to start thinking about investments again. I was under the assumption that I don’t have time and if I let the portfolio hang on forever, it would only increase. I have now realized the hard way that selling is as important as identifying and buying is.

2. I need to know when to sell. Few of my stocks are down 50 percent from their highs. I have never sold a stock. Ok, I sold one stock when I needed money but I recently bought it again when market fell 10% on a single day.

3. Since I never thought I would sell, I would need to formulate a selling strategy also. I can sell my stocks when they have reached their fair value (what I think/calculate as the fair value). Or I can sell them moment they are up by 50% or some other such number. Or I can sell them when I see a better opportunity. I will have to sit down and think.

And if you dint notice, I just made it public. I have a 2.5 lakh portfolio. And this is all the saving I have. Lets see how many ransom calls do I get now and how many new friends spring up cos of that.

P.S.: If anyone has any feedback, please revert.


archstone said...

Hi Pseudo,
Recently came across your blog and liked the way you started out your portfolio. ALso liked the discussion on few firms.
I am based out of Los Angeles and in process of establishing a Deep Value fund. Seems like we share the same heroes..Damodaran, Prof Bakshi and ofcourse Buffet..though I am more of a Seth Klarman fan.

Do let me know your email and lets get exchanging views and ideas.

You can reach me at


One of the lessons from history is when it comes to investing buy when theirs blood in the streets.