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shetty
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Joined: 21/Jul/2007
Location: India
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Posts: 112
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   Posted: 04/Jan/2008 at 5:13pm |
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The Pareto principle is good for the long run. You buy a large numebr of stocks. Some will grow to such an extent that they will dwarf the mediocre ones.
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vijayM
Senior Member
Joined: 21/Dec/2007
Location: India
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Posts: 649
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Posted: 29/Jan/2008 at 11:56pm |
Originally posted by basant
Originally posted by kulman
Most of us would rather buy stocks that have already risen in price than put buy limits in for stocks that have been big losers. It takes rare courage to be willing to "buy when the blood is running in the streets,"--- Nathan Rothschild
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I have an additional point on this. On aportfolio of Rs 100 I can buy Rs 1 worth of a stock that is tanking because maximum amount that I lose is 1% but the conviction comes when you bet more then 15% of the portfolio in that stock. Everything else is diversification.
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Basantji,
I agree with your point of conviction but many of us are not good in analysing a company to the extent that you can do. This is mainly a matter of lack of qualification in finance, competance etc. Hence I prefer the strategy of 10 stocks with 10 % each.
Regards
vijayM
Edited by vijayM - 05/Feb/2008 at 9:52pm
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basant
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Location: India
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Posts: 18403
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Posted: 29/Jan/2008 at 6:56am |
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Basantji,
I agree with your point of conviction but many of us are not good in analysing a company to the extent that you can do. This is mainly a matter of lack of qualification in finance, competance etc. Hence I prefer the strategy of 10 stocks with 10 % each.
Regards
Mani |
No problems at all. It is better to be sure about a startegy before we implement it. I was talking froma personal point of view.
10 stocks with apprx 10% each is also good enough.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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s_praharaj
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Joined: 10/Sep/2006
Location: India
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Posts: 357
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Posted: 05/Feb/2008 at 8:01pm |
Pareto principle also applies to Banking.
Here 80% of a Bank's business comes from 20% of its customers.
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Shashi Praharaj
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MANI
Newbie
Joined: 10/Jan/2008
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Posts: 26
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Posted: 06/Feb/2008 at 8:18pm |
CAN SOMEONE TELL ME WHERE WE CAN GET RELIABLE TTM EPS DATA QUICKLY ON INTERNET.
THANKS
MANI
Edited by MANI - 06/Feb/2008 at 8:19pm
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MANI
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pramodjain
Senior Member
Joined: 29/Mar/2007
Location: India
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Posts: 300
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Posted: 06/Feb/2008 at 9:37pm |
Can JM Core 11 Outperform TEDXI
JM Core 11 Investment Trategy
1. The fund will have no market capitalization or sector restrictions.
2. The fund will have a portfolio of exactly 11 stocks.
3. All the 11 stocks will be 9.09% of the portfolio at the time of purchase.
4. The fund will also have strict monitoring criteria, where it will seek to replace certain stocks out of the portfolio every six months so as to prevent stagnancy coming into the fund portfolio.
5. The stocks selection process in the fund may be based on the collowing criteria. - 3year earning growth 25% CAGR. 3 year forward proce to earning ratio 5-7X - P/E expansion 10% per annum . Return otential of 100% over the 3year period.
Portfolio churn discipline
1. If a stock has acheieved a return of 100% before the completion of a 12 months period then its placeinthe portfolio may be reviewed. The stock may be held on if the fund manager s of the view that the stock will deliver a 33% CAGR return to the remaining tenure of the fund.
2. Any stock that achieves a return of the 50% with in a period of less than three months may be reviewed and may be held only if the fund manager believes that the 33% CAGR return potential still remains agter the cooling off period.
3. Any stock that achieves a return of 100% within a period ofless than 6 months may similarly be sold out and left for a cooling period of 10 trading days.
4. Any stock that does not meet at least 50% of targeted return s within 6 months of purchase may be sold out and left for a cooling off period of 5 trading days.
5. Hower, discretionof
Edited by pramodjain - 07/Feb/2008 at 10:05pm
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"We simply attempt to be fearful when others are greedy, and greedy only when others are fearful."
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kulman
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 07/Feb/2008 at 11:05pm |
Whitney Tilson: Strong stomach? Concentrate that portfolio
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As in most subjects relating to money management, there’s a wide diversity of opinion on portfolio concentration versus diversification.
Warren Buffett, who often held fewer than 10 stocks in his partnership before he took over Berkshire Hathaway, has always been an articulate proponent of concentration, arguing that because truly superior ideas are few and far between, the impact of owning them should not be diluted by ideas that are anything less than superior.
David Einhorn of Greenlight Capital puts it well: “We believe in constructing the portfolio so that we put our biggest amount of money in our highest-conviction idea, and then we view the other ideas relative to that. We find things that we think are exceptional only occasionally, so if we find something we think is mispriced, where we have a good understanding of why it’s mispriced, where we think the mispricing is very large and the overall risk is very small, we take an outsized position to make sure we give ourselves the chance to be well compensated for getting it right.”
Managers in favour of somewhat greater diversification – owning, say, 30-50 stocks at a time – often point to the probabilistic nature of investing as justification for not putting too many eggs in one basket.
Zeke Ashton of Centaur Capital describes this position: “It’s not unusual for us to make a good decision that has a bad outcome. If you’re really concentrated and have two bad outcomes out of 10 perfectly good decisions, 10 per cent of your portfolio can blow up.
Our long portfolio currently consists of 24 positions, but nearly half is in our top two positions and the next four positions are all in the 8-12 per cent range. This extremely high level of concentration results in quite a bit of short-term volatility, but my partner and I are comfortable with this and believe it’s the best route to superior long-term returns.
This isn’t for everyone, however: unless you have a strong stomach, a great deal of experience and make your living as an investor, I highly recommend much greater diversification.
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Life can only be understood backwards—but it must be lived forwards
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basant
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Posted: 18/Feb/2008 at 2:05pm |
Originally posted by sunny agarwal
i feel u need to concentrate ur portfolio. u have many stocks in ur portfolio. i am in these markets for the past 4 years and i am limited to only 3/4 stocks. currently i have my 100% holding in one stock only.
ur concern should be percent gains rather than just filling up stocks in ur portfolio. if one stock can give u 100% y do u need to buy 10 stocks. less stocks help u to focus on them and thus results in better research and understanding of the company.
instead of buying 20 companies that can give u returns just identify 1 among 20 and go for it.
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Pearls of wisdom. The biggest gains and losses come from concentarted portfolios only but more often then not an investor will buy the better managed company at a reasonable valuation then otherwise when he has to bet hard.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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