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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » How do we rightly manage our portfolios

How do we rightly manage our portfolios

+11
Aamiable
Antonym
san1985
StocksWatch
stumpy
ShareShares
Hiru
FXX
TuskerLK
hunter
chamarahs
15 posters

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1How do we rightly manage our portfolios Empty How do we rightly manage our portfolios Fri May 13, 2011 1:21 pm

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

dear guys.....,

I lost lot fo my money(50%) due to bad portfolio Managment... can you guys help me to learn about Portfolio managment....
what should i do to recover my lost money....
what type of shares ,
what are the softwares that can use....

if you guys can help... it s will be helpful to me and new comers to learn about Portfolio managment......

hunter

hunter
Moderator
Moderator

Pls share some more details about how you managed s far.
For example;
How many different stocks were you handling at any given time?
What is the basis you bought shares and sold them?

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

you mean what stocks that i buy and wat i sold.....

TuskerLK

TuskerLK
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

yes chamara, hunter is asking for what shares you bought and sold and at what prices..

Timing is very vital in share trading, guess you ended up at losses by following the crowd

FXX

FXX
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

good thread, i see lots of experts in this forum and we can learn lot from them about about Portfolio management, etc

Hiru


Manager - Equity Analytics
Manager - Equity Analytics

This is how I have been doing.

First I invested what I have in 68 stocks in small quantities. Remember this in last July and now my theory may be not practical. Remember I did not do this blindly as the gambler, but analysis was easy as most of the shares were undervalued.

Because of this huge portfolio and the upward trend in the market I could earn 60% gain on my investment by September 2010.

But the climate changed due to new regulations, I had problems as prices of stocks started stagnating or downward movements.

Then I realized all my money at a small loss and narrowed my portfolio down to 20 shares or so. At the same time I purchased small quantities by keeping more than 50% in cash to face any price decreases in already own shares. But I was spending more than 4 hours a day both in fundamental and technical analysis.

Because of this extensive home-work I could get the maximum advantage of balance 50% when the REEF and LGL started its run. Whether you believe or not, I this 50% becomes 400% in January. I have not earn any sum from illiquid shares and no broker advices were taken.

I hope , depending on the current market condition, you better trade in small quantities and have 10-15 share portfolio. Important point is you restrict your investment to 30%-40% of your money.

But if you have no patience you become greedy so that you will purchase shares without analyzing- this is the biggest danger you may have been facing.

I am not an expert and I do not know all the correct analytical methods, but what I did during the period starting from July 2010 was so far fruitful.

ShareShares


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

I always prefer diversified portfolio mostly liquid stocks, safer option. There is no major impact even if there is a sharp fall in share prices in one or two stocks, others can compensate. This is only a personal preference.

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

Re: How do we rightly manage Our portfolio.......
by hunter Yesterday at 1:30 pm


-Pls share some more details about how you managed s far.
For example;
How many different stocks were you handling at any given time?
What is the basis you bought shares and sold them?


in my last portfolio( bwtween four months)

buying selling

wapo 200 Rs.330 Rs.241
guar 200 Rs.450 Rs.380
gran 200 Rs.215 Rs.170
tafL 400 Rs.177 Rs.145
dial 1000 Rs. 11.10 Rs.10.50
ldev 500 Rs.58 Rs.78

stumpy

stumpy
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Hiru wrote:This is how I have been doing.

First I invested what I have in 68 stocks in small quantities. Remember this in last July and now my theory may be not practical. Remember I did not do this blindly as the gambler, but analysis was easy as most of the shares were undervalued.

Because of this huge portfolio and the upward trend in the market I could earn 60% gain on my investment by September 2010.

But the climate changed due to new regulations, I had problems as prices of stocks started stagnating or downward movements.

Then I realized all my money at a small loss and narrowed my portfolio down to 20 shares or so. At the same time I purchased small quantities by keeping more than 50% in cash to face any price decreases in already own shares. But I was spending more than 4 hours a day both in fundamental and technical analysis.

Because of this extensive home-work I could get the maximum advantage of balance 50% when the REEF and LGL started its run. Whether you believe or not, I this 50% becomes 400% in January. I have not earn any sum from illiquid shares and no broker advices were taken.

I hope , depending on the current market condition, you better trade in small quantities and have 10-15 share portfolio. Important point is you restrict your investment to 30%-40% of your money.

But if you have no patience you become greedy so that you will purchase shares without analyzing- this is the biggest danger you may have been facing.

I am not an expert and I do not know all the correct analytical methods, but what I did during the period starting from July 2010 was so far fruitful.

Managing such a big portfolio is not advisable at all!
Even though I monitor the whole market.... I try to keep my portfolio up to maximum of 10 stocks. But I prefer if you can keep it as 6. I'm keeping 6 stocks to a 3 month horizon & other 4 mostly less than 1 month. Since I'm a short term trader.

I really appreciate the "extensive homework" done by you. Even I follow that theory, it's da best key to success!

But during past 2 months most of the people made loses. Even I was not much involved in trading. So, there's a exact time for everything. Every market day is not designed for you. Do your own analysis! Get helicopter view of the market! Respect other's ideas! But don't follow them!
"Don't follow the crowd" as Marketwatch said Wink
Get advices from brokers! But invest on you own! You have to take the decision.

Happy Trading!


10How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Sat May 14, 2011 12:05 pm

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

ya... you are telling the truth.... stumpy.. (+) rep from me...
but not good at analyzing side... i am proffesion by video camera man....
still learning..... thats why iask from you guys to help me to learn about it....

11How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Sat May 14, 2011 12:09 pm

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

chamarahs wrote:dear guys.....,

I lost lot fo my money(50%) due to bad portfolio Managment... can you guys help me to learn about Portfolio managment....
what should i do to recover my lost money....
what type of shares ,
what are the softwares that can use....

if you guys can help... it s will be helpful to me and new comers to learn about Portfolio managment......

HI chamarahs, successful portfolio management has been a topic frequestly discussed at the forum. You may wish to refer to following threads for comments by various members.

http://forum.srilankaequity.com/t2901-how-do-we-need-to-diversify-a-portfolio-at-colombo-stock-exchange-cse?highlight=portfolio

http://forum.srilankaequity.com/t2923-a-case-study-of-extreme-diversification-seek-your-comments-suggestion?highlight=portfolio

http://forum.srilankaequity.com/t677-combination-of-a-value-portfolio?highlight=portfolio

Hope this will be useful.

Hiru


Manager - Equity Analytics
Manager - Equity Analytics

stumpy wrote:
Hiru wrote:This is how I have been doing.

First I invested what I have in 68 stocks in small quantities. Remember this in last July and now my theory may be not practical. Remember I did not do this blindly as the gambler, but analysis was easy as most of the shares were undervalued.

Because of this huge portfolio and the upward trend in the market I could earn 60% gain on my investment by September 2010.

But the climate changed due to new regulations, I had problems as prices of stocks started stagnating or downward movements.

Then I realized all my money at a small loss and narrowed my portfolio down to 20 shares or so. At the same time I purchased small quantities by keeping more than 50% in cash to face any price decreases in already own shares. But I was spending more than 4 hours a day both in fundamental and technical analysis.

Because of this extensive home-work I could get the maximum advantage of balance 50% when the REEF and LGL started its run. Whether you believe or not, I this 50% becomes 400% in January. I have not earn any sum from illiquid shares and no broker advices were taken.

I hope , depending on the current market condition, you better trade in small quantities and have 10-15 share portfolio. Important point is you restrict your investment to 30%-40% of your money.

But if you have no patience you become greedy so that you will purchase shares without analyzing- this is the biggest danger you may have been facing.

I am not an expert and I do not know all the correct analytical methods, but what I did during the period starting from July 2010 was so far fruitful.

Managing such a big portfolio is not advisable at all!
Even though I monitor the whole market.... I try to keep my portfolio up to maximum of 10 stocks. But I prefer if you can keep it as 6. I'm keeping 6 stocks to a 3 month horizon & other 4 mostly less than 1 month. Since I'm a short term trader.

I really appreciate the "extensive homework" done by you. Even I follow that theory, it's da best key to success!

But during past 2 months most of the people made loses. Even I was not much involved in trading. So, there's a exact time for everything. Every market day is not designed for you. Do your own analysis! Get helicopter view of the market! Respect other's ideas! But don't follow them!
"Don't follow the crowd" as Marketwatch said Wink
Get advices from brokers! But invest on you own! You have to take the decision.

Happy Trading!



Clearly now a days it would not be advisable to maintain 68 shares in your portfolio, because most of the shares are either fairly valued or overvalued and the developments in the political background.

Even though most people have been succesful by keeping 5-10 shares in their portfolios for people just started it would be useful to have at least 10-15 shares in their portfolio as they are still learning.

Main disadvantage in maintaining a wider portfolio is that you can not get big profit that would be possible with few shares, but remember your risk is also less than that would be with few share portfolio. Ultimately you have to consider the time available for you to deal with your portfolio considering your portfolio as one of your main business- business success requires continuous attention.

san1985

san1985
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Hiru wrote:
Clearly now a days it would not be advisable to maintain 68 shares in your portfolio, because most of the shares are either fairly valued or overvalued and the developments in the political background.

[/color] Even though most people have been succesful by keeping 5-10 shares in their portfolios for people just started it would be useful to have at least 10-15 shares in their portfolio as they are still learning.

Main disadvantage in maintaining a wider portfolio is that you can not get big profit that would be possible with few shares, but remember your risk is also less than that would be with few share portfolio. Ultimately you have to consider the time available for you to deal with your portfolio considering your portfolio as one of your main business- business success requires continuous attention.

According to CAPM(capital asset pricing model) to diversify specific risk an investor should invest in at least 30 stocks, of course in different sectors...

This is what theory says....I dont know to what extent its true...

Warran Buffet is not a big fan of diversification...

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics

It's a question of whether you are seeking to diversify your risk - thus reducing the probability of loss or to maximize your profits. The decision would depend on each individual's risk appetite and investment objectives.

Personally, I invest 50% in bank FDs - for capital protection; the remaining 50% is allocated between just 3 stocks that I believe in. This formula works for me, but the allocation basis would depend on each individual, really.

hunter

hunter
Moderator
Moderator

chamarahs wrote:
Re: How do we rightly manage Our portfolio.......
by hunter Yesterday at 1:30 pm


-Pls share some more details about how you managed s far.
For example;
How many different stocks were you handling at any given time?
What is the basis you bought shares and sold them?


in my last portfolio( bwtween four months)

buying selling

wapo 200 Rs.330 Rs.241
guar 200 Rs.450 Rs.380
gran 200 Rs.215 Rs.170
tafL 400 Rs.177 Rs.145
dial 1000 Rs. 11.10 Rs.10.50
ldev 500 Rs.58 Rs.78

chamarahs,

It looks like You have followed the crowd and bought most of the stocks at the peak.
Sometimes (not most of the time) this method works when there is a long bull run in the market. For example, it would have worked if we entered the market 2 years ago. As I observe, the situation is different now.
However, the mistakes give us opportunity to learn. (We may loose money but don't loose those costly lessons)

I suggest you experiencing the market for few months and learn as much as possible and come up with a strategy suitable for you.
At the same time, I like to put down few suggestions that might help you;

1. Invest only in profit making companies
2. Keep only 5~10 different stocks (shares) at any given time.
3. Don't invest all your money at once (but in 3~4 steps, in different days/weeks in one share)
4. Try to buy on the rise of price but avoid buying at the peak (Easier said than done most of the time)
5. Important: Learn to control fear (Thus selling at low)
6. Most important: Learn to control that greediness - all of us have (Thus following the crowd and falling into trap)

Finally; All of us have done many mistakes and are still doing many mistakes in the market. It is very challenging to earn profits "consistently". 'And yet that is one of the big reasons why I like investing'.

16How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Sat May 14, 2011 10:42 pm

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

thanks hunter(+ rep from me...) thanks guys.... (Every one + rep from me..)

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics

chamarahs wrote:
Re: How do we rightly manage Our portfolio.......
by hunter Yesterday at 1:30 pm


-Pls share some more details about how you managed s far.
For example;
How many different stocks were you handling at any given time?
What is the basis you bought shares and sold them?


in my last portfolio( bwtween four months)

buying selling

wapo 200 Rs.330 Rs.241
guar 200 Rs.450 Rs.380
gran 200 Rs.215 Rs.170
tafL 400 Rs.177 Rs.145
dial 1000 Rs. 11.10 Rs.10.50
ldev 500 Rs.58 Rs.78


Timing is also important.... good financial reports of GUAR can be expected not the time to sell low... TAFL is not picking up.. Question

18How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Sun May 15, 2011 10:43 am

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

i had a Question for your all........

if we going to buy share... is it good to buy small amount of shares(100) or big amount of shares(1000 or more)...... in each company....

Hiru


Manager - Equity Analytics
Manager - Equity Analytics

If you purchase small quantity and if prices starts going down then you have greater chance of reducing average price per share by purchasing further quantities at lower prices.

However, if you are certain that prices will go up, it would be advisable to go for a big quantity initially.

Also remember that if your purchase value is lower than certain amount (refer CDS Fee post for details), the relative transaction cost is higher than for higher value purchases. This is not a big issue to consider-I think.

RockStock


Manager - Equity Analytics
Manager - Equity Analytics

chamarahs wrote:
Re: How do we rightly manage Our portfolio.......
by hunter Yesterday at 1:30 pm


-Pls share some more details about how you managed s far.
For example;
How many different stocks were you handling at any given time?
What is the basis you bought shares and sold them?


in my last portfolio( bwtween four months)

buying selling

wapo 200 Rs.330 Rs.241
guar 200 Rs.450 Rs.380
gran 200 Rs.215 Rs.170
tafL 400 Rs.177 Rs.145
dial 1000 Rs. 11.10 Rs.10.50
ldev 500 Rs.58 Rs.78

It seems you followed the crowed and victimized to buy at top.
It is said that "Be fearful when others are greedy, and be greedy when others are fearful."

Try to find some fundamentally good, liquid shares that you can buy at discount these days and keep them for some time.

Get into the bus when it stops, don't try to get in when it runs at speed of 100 kmph

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics

chamarahs wrote:i had a Question for your all........

if we going to buy share... is it good to buy small amount of shares(100) or big amount of shares(1000 or more)...... in each company....


small amount in several stocks.. I do not know what the others feel. Question

22How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Wed May 18, 2011 12:05 pm

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

thanks Smile

23How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Wed May 18, 2011 12:31 pm

ISURU

ISURU
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

An Excellent discussion!

24How do we rightly manage our portfolios Empty Re: How do we rightly manage our portfolios Wed May 18, 2011 12:57 pm

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Aamiable wrote:
chamarahs wrote:i had a Question for your all........

if we going to buy share... is it good to buy small amount of shares(100) or big amount of shares(1000 or more)...... in each company....


small amount in several stocks.. I do not know what the others feel. Question

That is good when you are not sure what you are doing

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

what is the best way................ to do it.........

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