I am not a trader any more. I never was a successful trader anyway till March 2020 shook the hell out of me. Ever since I’ve been investing for ad infinitum (investing for perpetuity).
I have carefully curated a high growth portfolio of 50+ scripts with individual weightage between <1% to>3%. No higher.
The returns of my portfolio plotted since 2011 ranges 20%~23% CAGR.
QUESTION - How many of you have experienced these returns yourselves to confirm its indeed possible & not wishful thinking?
I assume these are not your returns and you are only talking of historic returns of the combination of stocks you have filtered.
Tracking 50+ scrips is hard. I would say its better to stick to MF, maybe index mutual funds and couple of balanced funds. And aim for ~12-15% over long period. Investing for perpetuity is best done like that.
Higher returns will require smart churning and smaller pf of stocks (max 20, ideally lower)
Query - Any stock which has a weightage of less than 1% is only good for optics (Similar to Nifty 50 as against BSE 30 - the balance 20 stocks in Nifty have low weightage). It would be nice to know
- Is the portfolio a combination of large, mid and small cap
- How many stocks are in the 3% weightage.
- Since you started since 2011, how many stocks have you exited since 2011 or have you maintained the same stocks since 2011.
I am invested in several behemoth PSUs for the last 15-20 years. My capital (including all bonus issues and dividends) has multiplied by 80-100 times.
The pf has 40% nifty stocks, 35-40-25% cap-wise, covers 9 broad sectors with the usual bias; 25% are at 3% & 30% at 2.25% & the rest at 1~1.5%.
No. The CAGR is historical & I’ve started the journey in FY 2020-21 taking advantage of Zerodha’s nil brokerage (literally).
The rationale behind keeping the 1% stocks is to allow scaling up allocation depending upon performance with time.
My QUESTION remains unanswered - whether anyone HERE has personally experienced it to vouch for the findings.
Thanks for your interest & reply.
Even if one were to vouch, it happened to that person, may or may not happen to others.
I would not say impossible, but I would say it is very difficult, equally time consuming to follow so many stocks, although companies with trustworthy, experienced and able managements need not to be checked frequently, or companies belonging to same industry/sector can be looked at with less time.
Our stocks may undergo time correction or price correction. And when the price does not move, and consolidates for years, for various reasons, it could be frustrating.
Also, there is sector rotation happening for various reasons, so just because we are invested in strong companies does not mean that we will be rewarded. So one may have to think of moving out of the invested stock and ride the tide in other sectors/stocks, and this happens only when one is following the trends, looking at sunrise sectors, even taking a bit of risk by making an early move.
So just like trading, investing is not easy too, there are many moving parts, and it takes time and effort both for understanding our own self to figure out which style suits us, and for understanding the changes in the market, and also, the learning never stops.
Finally, what are we looking at, are we looking at leaving a legacy to the next of kin, or looking at a personal x-digit figure, or wanting to have a peaceful and fulfilling return. All these are subjective and personal.
Because of its historical returns, the stocks find themselves in your model portfolio. You get to see the true picture only if your portfolio gives you such returns.
Whether it’s possible to generate 20 to 25 percent return over such long period? I wouldn’t say it’s impossible but certainly very difficult. Since average market return over such long period is around 15 percent(just a guess), at least 50 percent of your stocks have to outperform. Even if they outperform there is still a very good chance that you may miss your target because the remaining stocks have to at least give at least 10percent CAGR.
Yes. Classic Survivorship bias. Investor’s version of Curve Fitting.
Sir, you made me feel envy of your portfolio. I started off in investing in PSU thinking these are safe stocks and for the dividends. Over the years, I realised that investing in PSU turned out to be a wealth destructor when I compare a stock owned in PSU as against the stock in private sector (same industry), Hence I exited all of my PSU stocks.
you say 80 to 100 times over 20 years. That is stupendous - 1 lack becomes 1 Crore… wow.
I do not think there are many PSU stocks which have given 100 times return in 20 years.
Actually I wanna say there isn’t even one. But am not sure.
Can you please list out the stocks?
Understood something new. Googled it.
Survivorship bias is a common logical error that distorts our understanding of the world. It happens when we assume that success tells the whole story and when we don’t adequately consider past failures.
Did not quite get this. Does this mean, this is how an investor would like to see his portfolio grow than not see the downside
In the recent rally I exited so many PSU stocks because I was tired of them. May be I did just when they started performing.
I exited the following.
- Coal india at 252
- IRFC at 34
- RVNL at 69
- SBI (50%) at 607
Almost all had a holding period of 2 to 3 years.
Now only time will tell if it was a good decision.
PSUs are mostly in cyclical sectors, excluding PSBs, so it is not easy even for seasoned investors to find the cycle’s upturn, it is a special skill.
One could take the chance of investing in them, when they have fallen much or at years’ low, for the dividend.
Yeahh. Kinda like that from what even I understand. Like if a person does well in a particular field, everybody wants to do that.
Few years back everybody wanted to do MBA because the ones who had done it were doing really well. Now we say only the top college ones are doing well.
Then came engineering. Not very much sure but from what I know only IT engineers are doing well.
Recently I gotta know from the college I went that there are 8 batches for PCMC. It’s the one with computer science. When I was a student around 15 years back, there was only 1.
Every commerce student now wants to do CA/ACCA/CS. Yet to see what’s gonna happen here.
I think am talking totally out of the topic. But it’s okay I typed so much. So I will post.
There is some merit in this argument.
Just like momentum trading, students want to do the courses which are in demand, and it could be correct too, because the demand may sustain well over a couple of decades, may be the requirement in the industry has just started.
Of course just like there are investors or traders who have their own styles and systems, there exist students who join what they want to study and become successful too.
No doubt. But you can’t expect the same type of returns from these courses right. Ones who did it when not many were doing it have reaped the benefits. These students will also do good. No doubt but the demand for such qualifications won’t remain same. Now there is supply. Supply reduces pricing power.
I am not talking about return in the financial sense. I am talking about making a living out of following the herd, because there is visible demand for the foreseeable future, because demand in industries don’t fizzle out like fads and fashions, they are sustainable for decades.
Boss. Am saying replicating same returns now won’t be that easy with same stocks which performed in past 20 years. Like 25percent CAGR. They will still give him a decent living. May be around 15 percent CAGR.
That’s all that I am trying to say.
I was talking about education, not stocks (your favorite)
Yes, what you are saying is true because new industries and new businesses come into existence, so old behemoths may not move as fast, and new entrants could become multibaggers. Although, even the deserted ones which are left as failures can come back to limelight if their cycles turn. And as they say, big gets bigger too.
Even I’m sceptical.
Which is why I am seeking opinions and answers.
However what got me excited was that the numbers are all telling that this has indeed happened (hypothetically speaking had the investment been made for each of those years …)
And the numbers are indeed between 20 ~ 24% CAGR …
Which logically brings up the question "A basket of performing stocks (keeping in mind 50+ stocks) can all of a sudden start to underperform … well how badly? 18%, 15%, lower??
Of course, time will tell.