Last Updated on December 29, 2021 at 5:57 pm
This is an analysis of my stocks portfolio which has so far fetched a total absolute return of 22.58% (including dividends). Before we begin, several caveats and considerations are necessary.
(1) The stock portfolio is about 16.5% of my equity mutual fund retirement portfolio; (2) The portfolio is relatively young and both the absolute returns of 22.58% and the CAGR of 33.35% should not be taken too seriously; (3) Technically the portfolio was started on Oct 2014; however, 58% of the total transactions made and 71% of the total capital is less than a year old; (4) No transactions were made in the dip – that is during the March 2020 fall. (5) These stock investments are in addition to my regular goal-based mutual fund investments.
The returns that you see is simply the residue of luck. It has nothing to do with my stock picking abilities. If anything, it shows a lazy approach to stock selection has so far done reasonably well. Both the reader must and writer must keep in mind that the portfolio is being evaluated during a time when the market has zoomed up. The real test would be with age and during an extended side-ways market.
Stock picking strategy
- Choose stocks with little or no evaluation or analysis
- Choose low volatile stocks with good financial health (low debt min requirement)
- 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:
- 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?
- When in doubt, ask your wife when she is just about to fall asleep in the afternoon.
- Do not fear dividends (or rather 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, whether they like it not, will receive dividends. There is no choice, unlike mutual funds.
- Dividends are not something “extra” in terms of returns/performance but do represent real profit. For an older investor, it can serve as a source of income: How to build the ideal retirement portfolio
- 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
I update the portfolio monthly on Youtube:
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Tools used
simplywall.st I use their paid investor plan to use their screener and unlimited reports but the free plan may suffice for many. The site has a simple, easy to understand snowflake depiction of stock health, dividends, valuation, past profits and future projections. This is their GitHub stock analysis page
An overview of the snowflake chart of my portfolio is shown below. All of them have good health; some with a good past; some with a good dividend record etc.
Portfolio Returns
The current weight, average holding age in years and the total return (absolute return including dividends) is tabulated below.
| Total | Avg Years | Total Return | Weight |
| HINDUNILVR | 1.575 | 33% | 18.96% |
| ASIANPAINT | 0.59 | 36.25% | 17.25% |
| TCS | 0.31 | 13.23% | 13.50% |
| HDFCBANK | 1.58 | 108% | 11.13% |
| INFY | 0.4 | 22.85% | 9.96% |
| PIDILITIND | 0.57 | 19.60% | 9.80% |
| DABUR | 1.21 | 9% | 8.68% |
| COLPAL | 1.985 | 41% | 5.25% |
| ITC | 0.64 | 6.45% | 3.98% |
| MARICO | 0.65 | 11.61% | 1.18% |
| WIPRO | 1.19 | 36.87% | 0.31% |
| COALINDIA | 1.24 | -25.55% | Sold |
| GODREJCP | 0.94 | -4.50% | Sold |
| HINDPETRO | 1.46 | -14.66% | Sold |
| IOC | 1.11 | -26.50% | Sold |
| VEDL | 1.5 | -19.16% | Sold |
Overall performance
The average portfolio age is only 0.71 years. This means the CAGR mentioned below is merely eye candy. The dividend returns are before tax.
| Total Return | CAGR | |
| From CG | 21.40% | 31.55% |
| Dividends | 1.17% | 1.80% |
| Total | 22.58% | 33.35% |
| Avg Years | 0.71 years |
These numbers are expected to sharply come down as the portfolio ages. I view this stock portfolio as a form of low volatility index investing.
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