The UP elections 2017 have given a formidable mandate to the Modi's NDA Govt. Predictions have also been made on this momentum continuing on to the 2019 general assembly elections paving the way for a stretch of strong government focusing on execution, creating jobs and improving the quality of life in the country.
The euphoria of the elections were carried to the stock markets with 5+% moves and BSE SENSEX making an all time high. I do believe this is just the tip of the iceberg and start of a long term bull cycle for India.
However, as an investor I would like to have some stock caps to ensure I manage overall portfolio risk exposures.
An important risk management process I follow is; No stock in the portfolio has a weight-age of over 5%. (Depending on ones risk-appetite one may keep this between 5-20%, but not over 20%)
Now why is this important? Risk management would mean ensuring your portfolio is well balanced to prevent any downside portfolio risks. This just ensures when there are bad days (and there will always be) your diversified stock holdings with capped risk exposures protect your overall downside risk and allow you to sleep peacefully.
Another more structural portfolio approach is to have a clear weight-age between large, mid and small caps. I follow a 30-40-30 allocation strategy.
This strategy does force me to sell companies I truly love and believe in, but it gives me a good nights sleep!
The euphoria of the elections were carried to the stock markets with 5+% moves and BSE SENSEX making an all time high. I do believe this is just the tip of the iceberg and start of a long term bull cycle for India.
However, as an investor I would like to have some stock caps to ensure I manage overall portfolio risk exposures.
An important risk management process I follow is; No stock in the portfolio has a weight-age of over 5%. (Depending on ones risk-appetite one may keep this between 5-20%, but not over 20%)
Now why is this important? Risk management would mean ensuring your portfolio is well balanced to prevent any downside portfolio risks. This just ensures when there are bad days (and there will always be) your diversified stock holdings with capped risk exposures protect your overall downside risk and allow you to sleep peacefully.
Another more structural portfolio approach is to have a clear weight-age between large, mid and small caps. I follow a 30-40-30 allocation strategy.
This strategy does force me to sell companies I truly love and believe in, but it gives me a good nights sleep!
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