This year, I’ve exposed myself 60% allocation towards US stocks and observed three basic rules for better returns (Stock selection, timing and most importantly risk control.) All trades made didn’t exceed 9% weight at any single point in time and most of the positions allocated were 3–5% of the portfolio. Diversification was done, so was the advocacy of “less is more” in that there was less focus on timing or trading in and out, but mostly about choosing the right names and keeping them.
These 47 names were actual trades or investments I’ve made in the last 9 months (January 2019 till September 2019 — Portfolio actual return : 31% YTD.) The portfolio would usually have 20 names although this was gradual in that although 47 actual trades were made, the portfolio would have only 20–25 names at a given point in time. Some positions were opened the moment other positions were closed.
Legend of Colors:
1.) Grey — Totally Closed Out
2.) Violet — Took profits partial and riding winners
3.) Green — All positions intact, nothing sold yet
4.) Blue — Neither here nor there. Sometimes winner Sometimes loser
5.) Red — Ugly loser picks which we’ll be trading in and out of a position and minimizing on rallies.
(I’m showing this so that you can have a glimpse of what I’ve recommended and currently have in my portfolio — it also is a tally board of my own recommendation system)
What I’ve learned is that I’m better off diversified in many names. I also learned that the best names are usually eaten at market price (lesson from Roku and Twilio and AMD and MELI) which were identified as winners since Jan/Feb but wasn’t executed.
Analysis shows my selection mechanism is correct with an 85% hit ratio. This proves choosing which stocks to have is important.
