First of all, you need to avoid following price gyrations.
We need to learn a lot about Portfolio Creation from mutual funds.
Each economy has some sectors which contribute to its GDP in a meaningful manner.
Banking, IT, FMCG, Chemicals, Retail, NBFC, FMEG etc. Your portfolio cannot be called a balanced ,and level headed portfolio until you invest in atleast 6-7 prominent sectors of economy. And in each sector , you need to choose atleast 2-3 sector leaders to diversify among sectors to avoid company specific risks. Most mutual funds have 25 to 30 minimum number of stocks. Sensex has 30 stocks, Nifty has 50 stocks. There is a reason for that. Its not an arbitrary number.
Coming to your following up of so many companies…You need to segregate your portfolo companies into two distinct categories.
- Need constant follow up
- need infrequent and quarterly or half yearly follow up.
Just to give your example, What wil you achieve by following Hindustan Unilever daily?
Its not going to change its course suddenly?
Nor its going to achieve greater heights in 6 months, nor its going to the dogs in 6 months.
Once you read its 2-3 annual reports and understood its business and then you may just have to listen to their quarterly concalls or management interviews. Beyond that, what will you do? And what will you achieve by giving it dedicated time?
And if your 75% portfolio stocks are of this nature, your work is considerably reduced.
Even in case of constant follow up type.companies, in the first place you wont select such companies where you need so much involvement. If that is the case, i would start my own business. Secondly even if you pick such company, once you understant the business of that comapny by reading 2-3 annual reports, what else to.know about it? There is not going to be quarterly exams that you are preparing for.
You may read concalls transcript. Corporate announcements, Rating reports. Beyond that what a retail investor can do?
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