So you want to make money in equities? or do you want to talk about many shares in the market?

You must be clear about these above 2 questions. Recently I met somebody who wanted to invest about Rs 10-15L – I had just given him 3-4 names. He wanted more. He wanted about 8 companies in which he would invest Rs. 15L – about Rs. 2L per company.

And he had no clue why – and I was asking him to buy Bharti Airtel, Reliance – kinda shares. One person buying 2k shares would have done NOTHING to the price of the share, but he was not in a mood to put more than Rs. 2L in one share. I showed him portfolios with 50k shares of big companies -where people had Rs. 30L – Rs. 1 crore in one company, but he could not fathom something like that.

It is not easy to build a portfolio, but you cannot be looking for 8 companies if all you have is Rs. 15L. Max this portfolio should contain is about 4-5 shares. My take – of course each one of us is different.

What is required to make money on the stock exchange?

1. Low entry costs: I have entered many stocks at very low levels, and would stick to them even during a bad period. The sheer dividends makes it worthwhile to do so. For e.g. I have NTPC bought at Rs. 90. It allows me to sell, buy back, etc. but the willingness to hold comes from the low cost – which means there is a very decent dividend yield – the rewards for holding.

2. Low Price Earnings: Apollo Hospital, Coromandel International, Eid parry, Cholamandalam finance, Shriram Transport Finance (exited much earlier), VIP Industries, etc. in my portfolio were yield shares not very long ago. It will still work, and please do try the same.

3. Insider buying: when executives (and owners) buy big time, it is a good indication of it being a good buy. HOWEVER U SHOULD do your own research – there are some stupid managers all over the world.

try these 3, will tell u more….

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  1. I do same thing. My holdings are for long term for the expence of higher education of my daugthers aged 1.5 and 5.5 years. Holding shares of 2 companies. Tech Mahindra 1000 shares @ average 1350 and Fortis Healthcare 13000 shares @ average 100

  2. Some wise gentlemen’s are talking Diversification is mandatory to avoid loss. But Concentrated Business always make very good profits and good organic growth. Diversified business always has some positive and negative hence it becomes null.

    really Confused.

  3. Subra Sir,

    In our previous articles, you have suggested to start with a portfolio of 10 lakhs and minimum of 50K per share ( meaning 20 shares for 10 lakhs).

    Now, I am sort of confused..

  4. Concentration risk is something I worry about – and if the quality of management is a slight question mark – the fall (like Satyam and GTB) can rip your portfolio apart. So Fortis is difficult to be in a long term portfolio – I am not talking of a short term here. Say over 20 years would u trust the current Fortis management? I will not. I may not mind investing (any day prefer Apollo) but i will be watching with a hawk’s eye for some mischief.

  5. this is for a much richer client, so Balaji this is different. And websites are for plural people – u need to take what suits u. I invest very differently when it comes to my own money and very differently for friend’s money. I am not answerable for my OWN money. With others my risk taking ability goes for a toss….

  6. My friend has 20 lacs. He wants constant money return from this amount for 20 yrs or may be more longer because he may not need this money for any reason as of these many years so what investment optiond with minimum risk. Any suggestions. Either any business idea. Stocks(but risk), LIC plans for monthly returns, mutual funds, what would be the best way to create wealth consudering he wont look for lucky and be more practical.

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