As I said earlier, in a few stocks where I have taken a very small allocation, I am just betting on turnaround stories. These companies have taken various steps in sync with government initiatives, which perhaps places them in a very good position in terms of risk and reward. I will be out of theses stock anytime soon.
Barring these 4 stocks having a short-term view, the number of stocks boils down to 23, which is comfortable for me to track. Going forward, I will not go beyond 25 stocks in my portfolio.
I change my portfolio only if my thesis points prove wrong, such as a loss of competitive advantage, permanent damage to operating margins, corporate governance issues, market saturation (no growth in the sector as a whole), and so on. As long as my thesis points are intact, I will stay invested even if the market corrects. I also take this opportunity to add more if any corrections are made for any temporary reason. I do track the quarterly results and Concall for ways forward.
I maintain an emergency fund (equivalent to six months’ worth of expenses) inclusive of cash allocation, which is less than 2% of my portfolio.
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