2023 Calendar year has ended. It has been more than 5 year that I started this thread. I made lot of mistakes in these 5 years. I thought of documenting mistakes done in last 3 years mainly and my learning over the years.
Mistakes
- Not selling losers and averaging down losers –
2023 – Laurus Lab from 70-80% gain to 30% loss(hope story), PPL pharma(bet on promoter), Sunteck(good company still lost money), EKC(bought on tips) etc. Lost 20-60%
2022 – Neuland lab(hope story), Sequent(animal pharma story not matching with numbers), EKC (bought on tips) etc where I lost 40-80%
2021- Yes Bank(average down), Granules, Transpek – Lost 20-60%
2020 – Yes Bank(average down), Bharti Airtel, Shakti pump etc – Lost 20-60%
Learning – Losers should not reach to more than 10-15%)except all market is down. Also never average down losers except you are super confident and company is showing growth in numbers.
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Price anchoring – I used to have price bias. If I see a company at a price and price increases, it was hard for me to buy. @hitesh2710 Sir helped people like me in overcoming this bias.
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Portfolio sizing – I have done this mistake over years and still doing it. I dont think diversified portfolio is bad and I may never have portfolio of 15-20-25 stocks. I am not that type of investor. But I think everyone has their own style and should be doing what they are comfortable with. There are investors, fund managers which has 50-60 stocks and still make 20-30% CAGR. So by portfolio sizing, I meant giving good allocation to winners or average up. This may be drawback of having so many stocks that you lose track of who is winning. I need to improve it so that I am averaging up winners and have losers remain in the lab and one day they will be kicked out from the lab.
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Reduce number of stocks – this is somewhat related with above. My goal is to reduce number of stocks in the portfolio. I am planning to have separate portfolio for satellite stocks which might increase/decrease over time and core stocks. Currently I started liking every idea if technicals are good. Some stocks perform and some doesn’t. I remove one which doesn’t perform. But number of stocks keep increasing.
Few more learnings –
Although some of learnings are mentioned in the mistakes itself, some other learning are –
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Top down approach works as comparative to bottom up investing. You can pick best company from tail wind sector and may not get any return. But if you pick average to good company in tailwind sector, you will make decent money.
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Technical plays a good role in getting return in term of entry/exit. I need to improve on it.
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Learn fundamentals of the company to make core portfolio and have conviction in the companies.
Overall, I think I am lucky that I survived with all these mistakes and made returns more than nifty.
Any feedback/suggestion/questions are welcome
