I am not an advocate of direct equity investing, but that means nothing!! Many of the readers of this blog are direct equity investors and many many more will become one in the days to come. A few years ago I remember reading a private research report saying that about 100,000 Indian families have benefited by the direct equity investing. This figure may have actually not changed much by now. Of course one of the biggest beneficiaries of this has been brokers (reminder: I was a corporate member at NSE). Many houses, offices, other assets have been funded by brokers commission – hey that is a different story!
Let us do a quick review of your portfolio:
1. If you have less than 20 shares your portfolio may not be well diversified.
2. Put your portfolio in a website which can do an analysis. I prefer www.valueresearchonline.com. Here you will get a quick analysis of your portfolio. Giants, Large cap, Mid cap,…..and the Industry break up.
3. Once you have this industry wise listing see how near or far away you are vis-a-vis the index. You cannot be very far away from this if you are trying for an alpha to the market.
4. If you are far away from the sensex industry break up YOU better have a solid reason for that, and be careful.
5. Chances are you have a decent bunch of shares, but no where near the sensex in terms of industry allocation.
6. If you have committed less than 25% of your networth to equities, why are you doing this exercise?
7. If more than 10% of your equity portfolio is in one company / industry you better know that company inside out. Do you?
8. Are you out performing the sensex? are you out performing a Prashant Jain, a Naren Sankaran,…and the likes?
9. Is your portfolio allowing you to sleep well at night?
10. If you have some more shares in the public listed companies in a demat account, does the account have a nominee?
Returns? OMG I did not talk about that!!
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