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I post this because one of our member requested me to elaborate this on a separate thread. so i tried my best to explain this.
How to mitigate the risk of high gained portfolio.
It is very simple, but better to define your own plan.
Assume that you invest 20 mn in CSE. you do a proper analysis and then pick set of counters and you decide the composition and you build up the portfolio in few days.
Then the risk mitigation action points:
Action point has a milestone and action, what I understood is it is not good or practical define milestones based on ASPI (I did this ), best way is it go with your portfolio total value or price index you created.
First action point when your gain reach 50% and every 10% after that , build up 10% from whole portfolio as a reserve.
Action point 1 triggered when portfolio is 30 mn , and 3 mn will be withdrawn.
Same action point will be triggered when your portfolio become 29 mn (why 29m , you invested 20 mn , you reserved 3 mn, when the sum reach 32 mn its 60% , at this time it is 32-3 is your portfolio value). Now you have to increase the reserve only by 0.2 mn (now it is 3.2 million), continue like that.
Second action point , when it reaches 100% , make your reserve 20% from total you have. there is a point that your portfolio become 36 mn and reserve become 4 mn, at that point increase reserve upto 20% . that means 8 mn reserve should be there, then withdraw 4mn and
Now your portfolio is 32 mn and reserve is 8 mn.
Third type of action point , every single counter has a target price when that price reached or when you see a potential issue , revisit that target and move them to safe counters (probably these are the candidates for withdrawals to grow reserve) . believe me my target price for RCL was 120 (bought around 62)
,expo 15/= (bought around 3.10 , revisited more than 10 times) , now i have non of them in my portfolio, but that was my target price .
Reserve is a waste? Of course. You will get only FD rates, open online FDs you can cash them online.
Do you use this “reserve”? Yes , whenever there is a panic selling or some negative development , if you are too sure and feel the proximity of positive trend. But you have to keep that newly bought portfolio tracked and when it reach its target gain (probably 15% ), sell them and immediately fill the reserve (if those newly bought share has more potential then pick some other high risk shares and somehow restore the reserve, to be frank this is the point I cannot sleep until reserve is restored).
Don’t mixup other investment or FDs you have with this reserve; this is a part of your portfolio.
I don’t know this kind of plan is suitable for a person who enter at this point. I entered the market in 2020-May . so we were too sure that we can definitely exceed 100% gain. But for a new comers who joins the market today, there should be a different plan.
How to mitigate the risk of high gained portfolio.
It is very simple, but better to define your own plan.
Assume that you invest 20 mn in CSE. you do a proper analysis and then pick set of counters and you decide the composition and you build up the portfolio in few days.
Then the risk mitigation action points:
Action point has a milestone and action, what I understood is it is not good or practical define milestones based on ASPI (I did this ), best way is it go with your portfolio total value or price index you created.
First action point when your gain reach 50% and every 10% after that , build up 10% from whole portfolio as a reserve.
Action point 1 triggered when portfolio is 30 mn , and 3 mn will be withdrawn.
Same action point will be triggered when your portfolio become 29 mn (why 29m , you invested 20 mn , you reserved 3 mn, when the sum reach 32 mn its 60% , at this time it is 32-3 is your portfolio value). Now you have to increase the reserve only by 0.2 mn (now it is 3.2 million), continue like that.
Second action point , when it reaches 100% , make your reserve 20% from total you have. there is a point that your portfolio become 36 mn and reserve become 4 mn, at that point increase reserve upto 20% . that means 8 mn reserve should be there, then withdraw 4mn and
Now your portfolio is 32 mn and reserve is 8 mn.
Third type of action point , every single counter has a target price when that price reached or when you see a potential issue , revisit that target and move them to safe counters (probably these are the candidates for withdrawals to grow reserve) . believe me my target price for RCL was 120 (bought around 62)
,expo 15/= (bought around 3.10 , revisited more than 10 times) , now i have non of them in my portfolio, but that was my target price .Reserve is a waste? Of course. You will get only FD rates, open online FDs you can cash them online.
Do you use this “reserve”? Yes , whenever there is a panic selling or some negative development , if you are too sure and feel the proximity of positive trend. But you have to keep that newly bought portfolio tracked and when it reach its target gain (probably 15% ), sell them and immediately fill the reserve (if those newly bought share has more potential then pick some other high risk shares and somehow restore the reserve, to be frank this is the point I cannot sleep until reserve is restored).
Don’t mixup other investment or FDs you have with this reserve; this is a part of your portfolio.
I don’t know this kind of plan is suitable for a person who enter at this point. I entered the market in 2020-May . so we were too sure that we can definitely exceed 100% gain. But for a new comers who joins the market today, there should be a different plan.
