My investing journey began over seven years ago with some stocks picked by my father for me and what a journey it has been. From zero to here over seven years, it’s been a phenomenal run. Ive had my fair share of ups and downs but over time I have become what in investing parleys is known as a concentrated investor.
I own only seven stocks- eight if you believe Jio Finance and RIL are two separate companies and the top stock is well over 70% of my portfolio. Well, if you ask any investing expert, he will say my portfolio is extremely risky and Ive absolutely no idea what I am doing and I should sell part of it and rebalance it and make it more diversified to reduce risk. I have a different opinion to that.
When you see it from the point of view of a professional fund manager, a typical fund scheme has 50-60 and even more stocks with weightage mirroring or at least hugging the benchmark index. If lets say a fund has Nifty 50 as benchmark, it will generally have more or less all the stocks of nifty 50, give or take a few here and there. How it tries to beat the market, ie, to do better than the benchmark is by going overweight in a few stocks and underweight in others. So it Reliance has 9% weight in index, if it owns 5% Reliance, its called being underweight and vice versa in case it owns 12% Reliance. And then it comes on TV and justify oh we are overweight financials and underweight IT because the rate cycle is moving south or because Donald Trump has won the election and so on and so forth. They measure their performance by beating the benchmark. So if Nifty 50 is up 15% in a year and they are up 16%, they will celebrate and be feted as the man who has beaten the market and so on.
On the other hand, I as an individual investor is not in the game of beating an index or market for that matter. I am here to make money and to sustainably generate wealth for myself.And serious wealth is not made by owning everything the market has to offer today morning. It’s made by staying invested for long periods of time in businesses which compound their earnings and hence their share prices 10-5-100-1000 times.
So when I was beginning to get serious, I had 15-20 stocks with some stocks doing good and some doing worse. It was only in 2020, post covid when TaMo and BSE really took off. So in the process of natural selection, I was smart enough to not sell my winners and what eventually happened, as you can read my blogs beginning May 2021, I began a process of elimination. I sold my PSU stocks after making 2-3x my money and bought more and more BSE and TaMo and the like. I understood the power of quality, low debt, good yield and then I understood the concept of decadal themes and 100 bagger stocks. This is when I narrowed my theme to two simple iterations- growing consumption in India and financialisation of savings. And financialisation of savings would be led by non-lending stocks was my biggest learning.
That I was extremely bullish on BSE is an understatement. I also grew as an investor and began to average up and have bought BSE and others at all prices. My most recent purchase would be at 4500 BSE and 4700 AMC. So in the end, the results have been pretty staggering.
My portfolio is up 90% this year. Almost up 400% since bottom of March 2023 and is up 50% since Budget 2023. I also have seen drawdowns of over 5% a day, regularly since the largest stock is so heavily influencing that the entire portfolio is skewed.
So what am I trying to say here. I am making you see that I am having almost a VC like mentality when the biggest winners are funded in every round at higher valuations with almost unlimited runway and distant exits. There’s a reason why sequoia has been what it has been. It had such brilliant 10000 baggers that its returns are better than any other person.
So when you are running such a concentrated portfolio that your entire networth is directly proportional to one or two companies, then your behaviour and psychology goes through a paradigm shift. You start to think in terms of where the business will be in three-five years and not how the stock price has moved up or down because of what SEBI has done or what election results tell you. It is so much easier said than done. Your heart pumps and you begin to sweat looking at 10% drawdowns in two days because just 5 such occasions and you’ll be left with less than half of where you were just a few days ago. You begin to doubt yourself when out of nowhere the price tanks and you are being told by some technical analyst that it was overbought and fell from a resistance.
So the journey to make multi bagger returns only look good from the outside. Since you are so lonely in your belief that when the things go south, the world tells you that you were just lucky earlier and the time to pay for your sins are here. The wealth destruction is at times so brutal and so furious that you simply can’t react.
The returns are exceptional on the upside though. I have been blessed to have beaten every possible index over the past one, three or five year period. The vision for some of my stocks remain the same and I am sure that what I am trying to achieve in my life is a moonshot- zero-to-billion and it can’t be done by playing small.
My life as an individual investor is going to be very, very different than any of you because I am trying to be big enough to buy percentages in companies I own. Just like RJ bought 5% of Crisil or 5% of Titan and made his Billions. Every successful investor has made 95% of his wealth by owning huge quantities of less than 3 companies; everything else has been sidekicks
Disclaimer- The views expressed in this blog are personal opinions and are shared for educational and informational purposes only. They should not be considered as financial, investment, or legal advice. I write primarily to document my own learning and thinking process. I am not a SEBI-registered investment adviser, research analyst, or financial influencer, and no part of this blog should be seen as a recommendation to buy, sell, or hold any security. Please do your own research or consult a qualified professional before making any financial decisions.
Life is all about Compounding! 