Going through some of my old investment books recently – starting with Peter Lynch. After being engaged full-time in the stock markets for 7 years you would think that I’ve inculcated most of the wonderful insights Peter Lynch shared in his 2 bestsellers – One up on Wall Street, Beating the Street. But I was wrong. It seems that I’ve picked up my fair share of bad investment habits. My portfolio almost resembles a Mutual fund these days. So I guess the mild out-performance over the BSE 500 in the last 1 yr should not be a surprise. I used to take far more chances, dig out stocks on my own, depend a lot less on research reports when I first started out. I also more or less didn’t spend much time on trying to guess the market direction or worrying over macroeconomic conditions. But the collapse in 2008 seems to have made me play a lot safer & hence suffer from somewhat underwhelming portfolio performance… at least relative to what I did between 2004-2007.

So I’ve been busy in the last 4-5 months overhauling my portfolio – introducing some smaller growth companies, sniffing out some value stocks and taking some calculated bets on turnarounds and cyclicals. Since I tend to stay fully invested some of my defensives had to be pared down. I’ve also exited the power equipment space since it seems on the verge of overcapacity. I’ve also sold most of my construction stocks at the start of the year since I figured interest rates will stay high and government lethargy has led to very little projects being awarded in the past 12 months. I’ve also exited many of the high-flying consumer stocks since they all trade at 35+ p/e. Some of these stocks have gone on to take out new highs but I guess one has to stay disciplined and exit when not comfortable with valuations. I’m reasonably confident that my newly revamped portfolio should outperform these consumer stocks over a 2-3 yr time-frame.

After Lynch inspired so many dramatic changes now it’s time to re-read Phil Fisher & Warren Buffett. I actually expect there to be less impact on my portfolio but we’ll see…

Advertisements