Throughout the module, we’ve looked into purchasing stocks. Now let’s talk about selling – more specifically when to book a profit. Let’s say you bought ARBL at around Rs.250 per share, and it is now trading near Rs.730/- per share- an absolute return of 192%, an exceptional accomplishment over the course of a year. So, should you sell out this stock? Well, whether or not to sell must consider any disruptions in investible grade attributes.
We must not purchase ARBL simply because it has dropped by 15%. The purchase of the stock should be based purely on its “investible grade attributes”, and if those are not demonstrated, we do not buy. Consequently, we keep stocks for so long as the investible grade attributes remain intact.
The company can go on exhibiting its assets for a long time. The point is, as long as these assets remain in good condition, we will retain our investment in the stock. Consequently, this will lead to a rise the stock price and generate wealth for you. When there are signs of any weakening of these resources, one can think of selling off the stock.
The amount of stocks that you keep within your investment portfolio can often be a topic of discussion. Holding numerous stocks will let you spread out potential dangers, while others suggest fewer investments that concentrate on one sector can bring more profit. Here is what some of the most respected investors have said in terms of how many stocks to include:
Seth Klarman – 10 to 15 stocks
Warren Buffet – 5 to 10 stocks
Ben Graham – 10 to 30 stocks
John Keynes – 2 to 3 stocks
I own 13 stocks in my portfolio and feel confident in staying under 15. It’s hard to dictate a minimum number, but I believe more than 20 stocks would be too many for an individual portfolio.
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Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF
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