June 6, 2015

Invest and forget

Markets have corrected from 9000 levels and are currently trading at 8000 levels. Some more correction of 500-1000 points may happen. Or it may not.

Long term charts are bullish with nifty expected to hit 25000-30000 in next few years.

So it makes sense to start accumulating good quality stocks with a long term perspective.

The preferred strategy is to invest and forget for next 8-10 years. Since this approach has no stoploss or target, you should ideally limit investment per stock to 2% of your capital. This will mean a portfolio of 40-50 stocks.

This is risk management at the best with zero tension.

Stock selection should be done from CNX 100 stocks. Invest in a business you understand very well. Ideally the company should be around for at least 8-10 years, be leaders in the product segment, has limited debt and whose products enjoy good demand. If you do not understand a business, then do not invest.

Some good sectors - Paints, 2/4 wheelers, Enginerring, Steel, Commercial vehicles, ancillaries like tyres, batteries etc, Pharma stocks, housing finance/ banks etc and so on.

Follow this strategy and you will earn excellent returns over 8-10 years.

Don't ask me for stock names... I have already given enough clues.

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