#AskBq How to hold on to your stocks for long time - when every other new idea sounds just as promising as the stocks one hold (Ramdeo sir)
First thing you need to set a portfolio goal. For example, setting portfolio goal of 25 percent in three years. If your portfolio remains promising quarter after quarter and a terrific idea comes in between, you must find some money within portfolio to buy that particular thing.
#ASKBQ sir how to get out of this F&O trading addiction
Trying to invest in quality stock but can’t due to F&O addiction @Raamdeo sir
F&O trade is completely price focused, whereas buying stocks is completely value focused. For F&O traders price is everything. I don’t know how to make that transition. But if you are making good money, don’t change your style of trading.
@BloombergQuint #AskBQ Raamdeo MO AMC is underweight on economy facing stocks vs. other MF schemes HDFC, ICICI. What if the cycle turns?
We are not focused on what others are doing. We are extremely focused on what we do.
I don’t believe that the economy takes off and our portfolio will be completely bypassed. I try to avoid businesses, which for instance, is good for three years and bad for eight years. One must see over a period of time if they have beaten the indices big time and one has received a decent return.
I want to ask your advise on - general portfolio allocation strategy (for a small retail investor) one should follow.
(a) How many stocks one should have in his portfolio (Maximum & Minimum numbers) ?
(b) What kind of general allocation should be assigned towards each bet in one's portfolio ?
(c) What should be one's maximum allocation (percentage wise) towards a stock in his portfolio ?
(d) Do you believe/follow/recommend in any systematic portfolio bet allocation methods like Kelly's formula ?
Apart from passion and information, what you need is a framework. One needs to build a skill in making a good portfolio. Unless you can buy enough to make it at least 10 percent of your portfolio, don't buy that stock.
#ASKBQ what are the 5 must screening criteria for selecting investment stocks (Ramdeo) @BloombergQuint
First, you must see the key financial ratios. This tells if the company has any advantage. Further, do refer to analyst research. Start building knowledge about the company such as what is the company doing right. Find out what is going to happen to the company's business in the next 15-20 years. Check how its competitors are performing and project how its competitors will do. Dig out the company's performance and project it for a set period of time.
#ASKBQ Raamdeo Sir about the future of Asset Management Companies & criteria for selecting such AMC?
Thank you @_nirajshah
I think one must look into the investment philosophy of the fund. There are AMCs with multiple investment philosophies and not just one. That is the filter through which you say yes or no to the stock.
What is the next value migration according to you and how could one benefit from that?
Value migration is a very powerful theme.
First, you must equip yourself with the theory. People who are masters since early times create a lot of value. The very purpose that the migration is happening is to get better margins.
Based on 'Margin of Safety' how do you decide when to exit a stock, partially or completely?
There are 2-3 hardcore principles of selling. One of them is if you are fundamentally wrong. For instance, after doing all the research, you bought the stock. Later, you figure out that it is completely wrong. You have to correct your portfolio. You have to sell.
The second is if the company is wrong. For instance, if they get into a diversified business, which one would have never thought they would do, and they put about 200 percent of networth into the new venture. Then one will have to run away.
Third, for instance, if I make my portfolio goal of 25 percent, later I notice that the stock has run to such a level that it is almost impossible to make 25 percent, then I will have second thoughts about continuing with that stock or not.