I usually do not invest in compounders. Basically it does not suit my temperament. I prefer instead to go for the companies where there are triggers lined up for price appreciation, usually in the form of growth stories. I often have 3-5 such names in my portfolio which usually occupy nearly 40-60% of my portfolio. Rest is usually into companies with sectoral tailwinds, or some other triggers, or sometimes just good chart set ups. ( many a times in companies with good chart set ups, the near term triggers are not visible and they come into picture later on. ) Maximum allocation I make to my top holding is usually limited to 20-25%. Last big allocation was in Laurus where I allocated nearly 50% but there the investment case was pretty clear and things kept playing out according to what I expected. And market was in a strong consistent uptrend.
Aim is to land a big winner which goes up 2-3 times every couple of years from among the top 3-5 picks and try to grab steady returns from rest of the portfolio with higher churn. Sometimes things play out as expected above, other times its a battle, like its now… In markets like what we have currently, it takes a lot of patience and discipline to run the course. And there has to be a lot of focus on capital protection.
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