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Stock allocation Vs. stock picking

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                                 It' s from the Upanishads: 

You are what your deep, driving desire is

As your desire is, so is your will 

As your will is, so is your deed

As your deed is, so is your destiny 

(Brihadaranyaka Upanishad)

                  Your life becomes where your desire goes. The most important thing to building a portfolio is not stock picking but giving the right allocation. better put more time thinking about the right allocation than finding new stocks.

                     When somebody tells you that I had made five-time money last year in one stock. but the problem is he had put only 1% of the portfolio so the overall portfolio is not gain from this stock. right knowledge is important for your conviction and conviction is important for allocation. people find that fund managers have the right knowledge and conviction from starting point but that is a myth. here, I will tell you about how people build conviction about allocation over some time. what I do is:

                   If I got any tailwind stock or sector I will put some skin in the game like 1000 rupees. after that, I start searching about business over their website ( annual report conference call, investor presentations)  and once I have the right knowledge then I will put more allocation to that stock if the valuation is right. that is all about quantitative factors which I know. The most important thing is trustful management but how can we find out that is the important thing. " trust builds when words reflect in actions" over a period when you understand them and put more allocation. this is how you can build your conviction about any stock. 

           "Borrowed conviction is more dangerous than borrowed money."

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