Long Term Investment Strategy

I am investing in stocks through smallcase.com.
I am investing for very long term (more than 20 years).
Out of 60 stocks now I am holding, around ten stocks are in loss around 1%. All other stocks are in profit more than15%.
Can i average now those stocks are in loss or should I invest in new different good stocks?
@Karthik @haribabu @harshendrasingh @portfolioplus911@bhuvanesh @saiography

Frankly, if your investment horizon is 20 years, then a blip of 1% should not matter at all!! In fact, even the 15% profit should not. You are here for the long term, for a much larger gain. Its better if you forget about the short term movements!

Btw, 60 is a crowded portfolio - maybe you should not add any more to it.


@umabathy Portfolio of about twenty is optimum.

Since it is long term you need to study financial reports, sector performance on regular basis. You can add on dips when the stock are doing fine.

Close watch on litigations if any also needed. For example ADANI power. Any adverse news will erode net worth in no time.

In today’s technology disruptions long term is no meaning. Companies are vanishing.

If you take Maruti who is enjoying 50% market share may not hold it for long due to technology.

So regular portfolio churning is required. Usually stop loss for long term is set at 10-15%.

Even in tax front govt.may impose tax on LTCG also in Future. Regular booking of profits is also needed.

They imposed tax on dividend last year.

More number of stocks in portfolio means you have to spend more time analyzing financials reports.


Portfolio of 60 stocks is large and you should try to bring it down to less than 20 stocks in that way it will be easier for you to tracks your investments and sector performance and since your view is of long term you should worry only about fundamental changes not about changes in price, if the fundamentals seems to go against the company invested you can think of exiting the stock.


Well, first of all, thanks for adding me to the elite list, all though I don’t find myself of that caliber (In fact I have learned most of the things from @Karthik’s Zerodha Varsity modules and of course many other books!)

And since you asked I will add my 2 cents of insights - although I will mostly repeat what I read.

I do not use smallcase, so don’t know how it functions, but I found the idea really good.

Peter Lynch, the greatest fund manager of all times used to hold around 1500 stocks for the fund he used to manage (Other Peoples Money). But then that’s Peter Lynch.
It’s a great deal to learn from him in his book “One UP on wall street”!

So if you wish to hold that list of 60 stocks then you better know what the underlying business is. When you start digging deeper in to the underlying businesses and dropping the stocks which do not meet your criteria of a potentially good business, gives you the edge of shortening the list of holdings. Don’t worry if some good known names get dropped away during this exercise, which is bound to happen, the less finalist you have the better! This way you would develop more conviction to retain the ones which are worth having in your long-term portfolio.

All others have mentioned 20 is an ideal number of stocks to hold, the reason behind which is because you don’t get the advantage of diversification. Check this module on Zerodha Varsity where you will find the below graphic.

Since your time horizon is more than 20 years, you don’t have to worry about these minor hiccups (1% down or 15% up) and focus on the fundamental evaluation. Have a long-term investing strategy, and do not alter it based on the noise you come across in the path. Don’t beat yourself up trying to beat the market.

Profit booking (highly debatable topic) is of no use, you can never time your entry-exit in the market, and if you think that you can sell at a high point and buy at a low point - please tell me which is high and which is a low point for a multi-bagger with sound underlying business. Let the correction happen once in a while - and let the price realign with earnings, this is nature.

Understand the power of compounding, because you are investing not trading!

So you may ask when to sell? The answer to it is - you know when to sell when you know why you bought the share at the first place. Think of this and please write it down.

Good Luck!


How do you know this?
If you are referring to the havoc created by media about the misinterpreted statement of PM, do remember that FM has clarified that immediately as well.
My understanding is there is no tax on individual investors for LTCG (>1-year holding) and Dividends in the holding period, as the Company in which he has invested is already paying out the tax to govt. in the form of Tax on Profit for the financial year and dividend distribution tax. So taxing investors on LTCG or dividend earnings is simply double taxation.

When did this happen?
If you are referring to dividend income above 10 Lakhs being taxable, then this is not a new thing introduced last year. It has been before that.

Peter Lynch is the best and the book suggested by @saiography is best for you @umabathy

1 Like