The first thing is to see how many stock you are willing to hold. Normally it should be around 10 stocks (I actually hold 4-5 at most) now if you start looking at it from a stock to stock perspective everything might look very good for instance if you see at say ONGC there would be no reason to sell. The question that we could ask ourselves are:

Edited by basant - 06/Nov/2006 at 7:01am

I have said before that I am bullish on the whole team not the Indian cricket but our local Equitydesk team. Out of that the significantly weighted ones in my portfolio are (not in this order):

3-5 significantly weighted stocks and the others scattered a bit. The weightages change as one of the stocks doubled in some real quick time! ----------------------------------

Edited by vipul - 04/Dec/2006 at 5:43am

I was just thinking about the kind of stocks which make up the portfolio and then have come with 3 categories.
1. Stocks for Quick Buck - HTMT, Infomedia before open offer etc
2. Stocks with Multibagger potential - Pantaloon, Educomp, TV18 etc
3. Stocks as good compounder - HDFC, ICICI bank, Bharti, L&T, TCS, Zee etc.
In Category 1 there can be any stocks which seems like short term money makers and can be held for short term and after making the money, disposed off
In Category 2,mostly the stocks have to be from Midcap space with good concept and great execution skills
In category 3, the stocks are for the long term giving consistent returns year on year. they should be comprising of large caps till we cannot find any largecap with compounding possibilities.
What i am trying to point out is that if we want compounders then we should be looking at large caps first. For ex Blue star and Shanti gear are compounders in mid cap space. But they should be invested in after we have exhausted large cap compounders. Mid caps should not be invested for compounders. Similarly even for multibaggers, we should first look at largecaps, exhaust the possibilities and then go to midcaps.

I think this is the whole principle of priortization..
This exercise will reduce the overall portfolio risk and we would be knowing what we are investing for.
As vipul's catchline says, "Always Make Only Those Transactions, Which Have Potential To Change Your Life"