Last Updated on December 24, 2020
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:
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.
My new book for kids: “Chinchu gets a superpower!” is now available!
How to profit from content writing: is our new ebook for those interested in getting side income via content writing. It is at available at a 50% discount for Rs. 500 only!
Use our Robo-advisory Excel Template for a start-to-finish financial plan!
Join our courses in exclusive Facebook Groups!
- 520+ members are now part of our new course: How to get people to pay for your skills! (watch 1st lecture for free). Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show how to achieve by showcasing your skills and building a community that trusts you and pays you!
- Goal-based portfolio management! Join 2125+ members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment of Rs. 3000 only. No recurring fees! Life-long access to videos (10+ hours content) in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author
M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] comAbout freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)Free android apps
- All calculators from our book, “You can be Rich Too” are now available on Google Play!
- Install the Financial Freedom App! (Google Play Store)
- Install Freefincal Retirement Planner App! (Google Play Store)
- Find out if you have enough to say "goodbye" to your employer (Google Play Store)