Portfolio Building Strategies

Introduction

• Recent gains: 90% in small cap assets, total returns approx. 114% in the last year.
• Portfolio corrections vary (30% vs. 5-4%) based on asset holdings.
• Importance of portfolio-building videos highlighted through previous successful mutual fund commentary.

5 Types of Stocks to Hold

1. 5x Type of Stocks

• Definition: Stocks that can grow from 100 to 500 rupees in 3-5 years (multi-bagger potential).
• Practical returns expected: 2x to 5x.
• Example: Small cap 250 index purchased 1.5 years ago, experienced a 90% gain.
• Stock performance analysis:
  • Importance of analyzing historical performance.
  • Acknowledgment of consolidation phases before potential breakouts.

2. 2x Type of Stocks

• Definition: Stocks with potential to double in value.
• Finding these stocks involves understanding sector rotation.
• Examples:
  • Punjab National Bank, Canara Bank: benefited recently from growth in private banking sector.
  • Consumer durables (Voltas, Whirlpool) showing strong returns.
  • Emphasis on timing market corrections and potential resilience of certain sectors during downturns.

3. Swing Stocks

• Definition: Stocks with potential for short-term gains based on market movements.
• Example: Tata Elxsi displayed significant short-term increase after unexpected market behavior from a prominent fund manager.
• Importance of business fundamentals and market trends in swing trading.

4. SME IPO Stocks and Unlisted Stocks

• High-risk investments with potential for high rewards.
• Suggested allocation: 10-15% of portfolio in around 30 companies.
• Expectation: Some stocks may die while a few may yield very high returns (10x potential).

5. Hedges

• Definition: Instruments to protect against market volatility.
• Types of hedges:
  • Call/Put options.
  • International exposure (US equities, international bonds, real estate).
• Example: Middle East FD rates (5% without tax) and Dirham appreciation offer solid returns for high-ticket investors.
• Recommendations to consider hedges only if the portfolio exceeds 30-35 lakh.

Conclusion

• Portfolio structured with macroeconomics in mind.
• Education opportunities through workshops for deeper understanding of stock investing.
• Encouragement for high-ticket investors to consider diverse investment strategies.