Getting into the right stocks at the right time and getting out of it at the right time, even if the percentage allocation is small - that's what I'm looking at.
- Overall strategy is to get 4 - 5% of the invested amount back, as dividends. Something like buying an apartment and getting rent - but the bigger picture is to benefit from the appreciation of the apartment value. The real plan is - dividends plus fixed securities income should take care of my monthly expenses.
- Objective is to get returns via capital apprecitaion. Almost all the companies in the list have grown at 20 to 60% per annum in the recent past. Low P/E stocks does not necessarily imply low capital appreciation. Check the price graph of my PSU banks for example on moneycontrol.
- The general opinion is that 100 stock portfolio, at best, will match the returns of the index. I intend to get around that by timing the market and better cash management. Since dividend yield has been used as a filter for buying stocks, the same filter will be used to exit the stocks. Basically I'm doing lots of grunt work (on MS Excel) based on past data.
- I need mega-diversification because it is easier for me psychologically to sell stocks. I won't care much if I have to sell "Sri Sakti Paper Mills" with 0.42% weightage. Higher the number of stocks - lower will be my attachment towards it.
- After the index reaches 21000 (or my portfolio value reaches a particular amount "X", whichever is earlier), I intend to sell stocks one by one - so that the portfolio amount remains at "X" at the end of each month - and move that amount into bonds.
Something like a Post Office Monthly Income Scheme - the principal remains constant but "interest" is paid out monthly. If I "feel" that stock markets might crash, I intend to sell of everthing except companies that own brand names.
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