Yes, Having our own classification could help.
I am also trying following approach:
Classification based on Market Cap.
Mega Large : > 1,00,000 Crores
Large : 50,000 to 1,00,000 Crores
Mid : 20,000 to 50,000 Crores
Small : 10,000 to 20,000 Crores
Based on these Market Caps, I decide allocation to the stock. This ensures that, my allocation to unproven businesses is less as compared to proven businesses. I do not consider years in the business but I can add this as well, in addition to future growth prospects. I generally allocate same amount to all stocks based on above category i.e. Equal Weight Allocation. This has worked to some extent.
The reason for Equal Weight Allocation among the stock category is to avoid my personal bias and wrong convictions!! Recent example, I had low conviction on HAL, but it has surprised me as compared to Bharat Electronics where I had high conviction. So conviction does not help much in my case.
I am still looking to focus only on Larger companies in near future as I still remember 2018-19 days when small caps corrected much as compared to large caps.
I have seen that, some times Large caps can also give multi bagger returns with less risk.
| Subscribe To Our Free Newsletter |
