My Stock Portfolio Feb 2021

Last Updated on December 29, 2021 at 5:57 pm

This is the monthly update of my stock portfolio. Readers may recall a detailed analysis was published in Dec 2020: Stock portfolio analysis: total return 22.58% and in Jan 2021 it was first compared with the NIfty. An update is presented below.

Important please do not ignore: The direct equity portfolio is only about 17% of my retirement equity MF portfolio. My goal is to buy stocks with practically zero research. I started investing in stocks only after stepping on the threshold of financial freedom and ensuring my son’s future portfolio is in a secure position.

I continue to invest normally in mutual funds. For detail’s see: How my retirement portfolio has performed in 2020: personal finance audit. I have purchased mutual funds all these years each month regardless of market levels and I shall strive to copy this uninteresting strategy for direct equity as well.

Time is not just money; Time is unquantifiable money. Time wasted in stock analysis or mutual fund analysis; the right time to invest etc is an unquantifiable loss. So my goal is to buy a fund or stock within a minute.

There is zero-skill involved in any aspect of my portfolio. I compensate for the lack of knowledge with discipline. Randomness (aka luck) plays a huge role in the return numbers you see below. I have already discussed a monkey portfolio and how mine is one.

I got the confidence to invest in stocks after evaluating the performance of low volatility indices. I told myself I am not going to do any stock analysis or research. A quick check of company health, a brief review of volatility and buy.  If I cannot accept a stock within a few minutes, I am wasting time and money.

The way I see it, the stock portfolio is part of my retirement portfolio basket as a dividend source. It is also part of my emergency fund. Maybe I will find another use for It in future.

Caution: No part of this article should be treated as investment advice. I started investing in stock after my goal-based investing was in place.

Stock picking strategy

1. Choose stocks with little or no evaluation or analysis.
2. Choose low volatile stocks with sound financial health (low debt min requirement)
3. Choose stocks that tend to trade close to their all-time highs (approx momentum indicator). See for example A list of stocks that have traded close to their “all-time high:
4. Do not be afraid to pick expensive stocks – both in absolute price and valuation. Note: Value investing may sound intelligent and enticing, but it is essentially riskier. I neither have the age to take on such a risk, nor the qualitative insights to pick stocks that the market has shunned but will be discovered sooner than later. To appreciate the risk associated with value investing and why it is more qualitative than quantitative, see this analysis: Is it time to exit ICICI Value Discovery & Quantum Long Term Equity?
5. When in doubt, ask your wife when she is just about to fall asleep in the afternoon.
6. Do not fear dividends (or dividend taxation): I had (extremely) small exposures to (only) dividend payers like IOC and CoalIndia; Have no problem with such stocks; I removed them only to trim down the portfolio and exploit their capital losses – offset them with rebalancing gains from my son’s portfolio.
   • What matters primarily is company health. Whether it is a dividend payer or not is incidental. That is, it makes no sense to say no to a company only because it pays huge dividends! Just as it makes no sense to sell a stock because it has increased dividend payout.
   • All stock investors over a period of 10 plus years will receive dividends whether they like it not. There is no choice, unlike mutual funds.
   • Dividends are not something “extra” in terms of returns/performance but do represent real profit. It can serve as a source of income for an older investor: How to build the ideal retirement portfolio.
7. Peaceful sleep is the best form of realised gains: hence the importance to business health, low volatility, reasonable momentum (not all stocks in my portfolio will check all these boxes).

Related videos: How to buy your first stock without breaking your head 

The Portfolio Feb 2021

Please note: Although investments started in 2014, about 60% of the total invested amount is within the last year. So do not take the return nos seriously.

Dividend Return = Total Dividends divided by Total Investment

Capital Gain (CG) Returns = Total CG divided by Total Investment

Total Return = Dividend Return + CG Return.

All these are absolute returns before tax.

Dividend Return of the portfolio: 0.99%

CG Return of the portfolio: 21.2%

Total Return of the portfolio: 22.2%. This corresponds to an approximate annualized return of 32.7%

Amusingly, if the same investments had been done in UTI Nifty fund direct plan, the total return would be pretty much the same: 22% absolute and 32.5% annualized. Thus the considerable extra return of direct equity portfolio seen in Jan 2021 has all but vanished in Feb 2021. Maybe it will come back in March, maybe not.

However, the volatility of the portfolio is significantly lower than that of the market making the risk-adjusted return higher.

Note: The dividends in the stock portfolio are not assumed to be reinvested. Such a calculation is significantly harder (will try soon). If done the stock portfolio is likely to edge higher. The above numbers are only approximate. Besides, with the bulk of the portfolio still young, there is no point concluding one way or another. I had fun building this money portfolio with no effort and I am going to continue. Please do your own research and invest.

Verdict: Monkey hanging on.