Last Updated on December 29, 2021 at 5:57 pm
Over the last few months, I have posted monthly updates of my stock portfolio compared with an equivalent investment in a Nifty index fund. This is the March 2021 update. This is the archive of previous updates.
Personal finance is primarily personal. So kindly do not ignore the following context in which I am managing the stock portfolio. The direct equity portfolio is only about 19% 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.
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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 buy a stock within a few minutes, I am wasting time and money (in that order).
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
- Choose stocks with little or no evaluation or analysis.
- Choose low volatile stocks with sound 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 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.
- 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 March 2021
Please note: Although investments started in 2014, about 65% of the total invested amount is within the last year. So do not take the return nos seriously.
| Instrument | Weight |
| ASIANPAINT | 15.78% |
| HINDUNILVR | 14.42% |
| TCS | 13.90% |
| INFY | 12.54% |
| HDFCBANK | 12.29% |
| PIDILITIND | 10.72% |
| DABUR | 7.83% |
| COLPAL | 5.64% |
| ITC | 2.99% |
| WIPRO | 1.98% |
| MARICO | 1.92% |
- Dividend Return = Total Dividends divided by Total Investment
- Capital Gain (CG) Returns = Total CG divided by Total Investment
- Total Return = Dividend Return + CG Return.
- CAGR = ( 1 + Total Return ) ^ ( 1 / Avg. Years) – 1 => Avg. year = 0.7 in this case.
- All returns before tax.
- The stock split in HDFC Bank and Colgate has complicated this calculation. I need to check independently if the numbers are correct.
| Stock | Dividend Return | CG Return | Total Return |
| HDFCBANK | 0.44% | 51.46% | 51.90% |
| INFY | 0.89% | 23.24% | 24.12% |
| COLPAL | 2.37% | 20.78% | 23.16% |
| ASIANPAINT | 0.29% | 18.68% | 18.98% |
| TCS | 0.63% | 15.44% | 16.07% |
| PIDILITIND | 0.16% | 14.11% | 14.27% |
| HINDUNILVR | 1.84% | 10.21% | 12.05% |
| WIPRO | 0.17% | 8.90% | 9.08% |
| ITC | 1.63% | 2.47% | 4.10% |
| MARICO | 0.51% | 2.89% | 3.40% |
| DABUR | 0.36% | 1.54% | 1.90% |
| Total | 0.92% | 16.97% | 17.89% |
| CAGR | 1.41% | 25.12% | 26.53% |
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 return would be a bit higher. The above numbers are only approximate.
Comparison with Nifty: if the same investments had been done in UTI Nifty fund direct plan, the total return would be 21.2% (compared to 17.89% for the stock portfolio). The XIRR of the Nifty investment would be 31.5%. The XIRR of the stock investment was not computed (due to complications from dividends and splits) but should be lower given the 3.3% lower absolute return. As of now, the only thing going for the stock portfolio is its beta of 0.45 – about 55% less volatile than the “market”
I have fun building this “monkey portfolio” with no effort and am going to continue. Please do your own research and invest.
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