Stock picking dilemma

On Internet we can find a lot of research reports on various stocks and model portfolios by various financial institutions and experts. They all have some rationale to invest in it. At first glance all recommended stocks look like a great investment story. If I choose all of them I will end-up having 100s of stocks within short time. As we know there's no thumb rule or check list to pick any stock. In such situation, having less knowledge about finance, how should I pick the stock?

Share your thoughts and opinion please. @Meenakshi Razdan @Vidhi Khanna @RAMA MURTHY SASTRY CHALLA @kharb @Srouta Mukherjee @w4wealth

 

In my view you can have two type of stocks in your portfolio.First and major part can be Secular growth stories of Indian stock market like consumption ,Pvt banking including NBFC housing finiance ,Pharma , technology,auto .infra etc You can pick large cap blue chips stocks in these these which are boring but will continue to give returns .Few of them can be HDFC bank,kotak bank,indusind bank,axis bank ,ICICI bank,dcb bank,lic housing,deewan housing,gic housing ,asian paints,hul,itc,l&t,ultratech Cement,lupin,maruti,tata motors,tcs,infosys and few more.You can have 70% portfolio in such stocks.For rest 30% you can chose few small and mid cap funds like Franklin smaller compnies fund,dsp microcap,mirae emerging blue chip fund etc .Above is my investment stretagy.Or you can also pick some flavour of the season stocks upto10% (out of 30% )of your portfolio but with strict stop loss for thrill and to judge your capability and for comparison with small cap mutual funds.You can also study portfolio of small cap funds for stock selection..If you can beat small cap funds for many years,then you are ready for more investment on your own.

 

Dear Farhan,

No need to go for all of them. Just 10 fundamental good stocks are enough to keep in your portfolio by allocating 10% on each. If you are entering a stock at the right price where downside is minimal, then getting 20 to 25% even in the short term is a possibility. Returns are definitely much more for the long term holders but there is no harm in exiting after a jump of 20 to 25% in the short term and picking the next good one.

Thanks
Feroz

 

100% Agreed Big Dilemma is there. So many stocks are there and all are looking attractive. How to decide which stock is big dilemma. We have to do full research and especially into negative factors to remove low conviction stocks. If we discuss the stock thoroughly and highlight positive and negative we get high conviction and then we can buy the stock. I did this in case of stocks like Bajaj Finance, CAPF, TCI, GATI, JB Chem, DHFL and now I am holding with conviction in mind that these are safe stocks. Also approach should be to secure reasonable return from stocks and keep capital safe.

 

searching for a Multi baggier stock selection is a very Difficult process from aprox 6500 indian companies , but we have to do some home work on that , no relaxation in that issue , but selection of portfolio in aprox 6500 listed companies is not that much difficult , we have to search for " Very Good Management companies " in " Large cap stocks " almost 50% of the portfolio and remaining 20 % search for " Good Management Companies " in growth sectors in " Mid and small cap stocks " for growth purpose , for remaining 10 % stocks selection " Good Management companies " in new Dynamic growth sectors not recognized by public and pick up in early stage for Future Multi Baggier stocks and always maintain minimum 20 % cash reserves in your total capital is always good ... not take as it is these numbers or percentage but it may change according to your risk apatite ...in my experience construction of portfolio is not that much difficult but main Difficult issue is maintain portfolio more than market growth with a consistency for medium to log term is very difficult part ....
Most Difficult part i feel
1.Finding our own Risk Apatite
2.Financial Management
3.Multi baggier stocks identification
4.changing Bad performance stocks in our portfolio with new good performance stocks
5.Recognize future growth sectors
6.Future stock growth expectation and stick on that stock in difficult situations (company bad results and bad news times)

 

everybody have their own investing style. some likes largecaps , some like midcaps and small caps and some like micro caps. it is according to you which investing style suites your financial goals and conditions. balanced approach have less risk but it is not the most attractive one.
stock picking is all about knowing companies and their businesses.Better you know about a company and its business it is better for investmentr returns.study businesses as deep as possible reading annual reports, news and articles, company filings etc.

owning shares in 4-5 businesses you like the most is stock picking for me.

 

V.good advice

 

Good point about knowing co well.

 

Great insights were shared. I am thankful to all the responders, now I can definitely pick best among betters

 

Traders should try to keep their portfolio diversified and choose stocks from different sectors always. Also sector which is performing best stocks of that should be considered first.

 

Can anyone suggest me some stocks from smallcap that have great potential for sustainable growth....

 

You do not need to choose all the stocks. All you need to do is choose different stocks from different stocks. Diversity will help you in managing risk easily.

 

Thanks for your advice..

 

100% Agreed

 

Make basket of stock like CAPF, JB Chem, TCI, Apcotex, from various sectors. All are good companies with good management, good track record of dividends and profits, growth plans etc. These are safe stocks for long term portfolio IMHO.

 

Thanks