Hi Devesh,
First of all, kudos to you for being active in the markets in your early 20’s. Compounding is a powerful weapon, and the earlier you get going, the better things will be.
Also, I am glad that you’re being open and honest about your experience with pharma. On my end, if I invest in a company with limited research and it goes up, I do not consider it a win. If I do the research and it climbs, but not because of the reasons that I thought it would, it’s still not a win to me. I personally only consider it a win when the points in my thesis were the reason why a stock moved up in value.
I like your two step strategy (satellite portfolio + main account with just 6-10 stocks). It’s a smart way to track, analyze and filter out companies. Over time, you will get better at screening companies, and you will get a better idea of the kinds of companies you would want to invest in. The high level qualifiers that I use are below:
• They have to have the ability to move up in weight class (micro to small, small to mid, etc.)
• They have to be in a sunrise sector (ER&D and renewable energy versus steel products and packaging)
• They have to have a defensible moat that’s ideally primarily grounded in unique technology. Other than that, the moat can be strengthened with good execution calibre, superior distribution, and platform/ecosystem potential
I do not maintain a satellite portfolio, but I track a handful of companies, and similar to your main account strategy, I just invest in 6-10 companies.
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