We recently wrote a post detailing rules for Dead Monk’s Portfolio (DMP). Therein, we mentioned that we plan to divide DMP into different parts i.e., core and satellite(s). This approach will help in addressing requirements of dividend income, capital appreciation & long term stability.
But before delving deeper into DMP, you must understand that it is built around our risk appetites, our understanding of markets & our strengths and more importantly, weaknesses. Since it is born out of our personal vision for our equity portfolio, DMP will always be like a magic mirror for us. It is there to show how our equity portfolio should look and be like.
And since your risk appetite and investing style may differ from us, we suggest that you use DMP as a snapshot of what stocks we own / plan to own in our long term portfolio. This should not be taken as an investment recommendation from us.
So have a look at DMP below…
To put on record, we are very risk averse (atleast the author is) J. The author still holds a large part of his assets in fixed deposits, mutual funds & cash. At present, equities form only 10% of the overall portfolio. You won’t be wrong in thinking that these guys are running a blog on stock investing and themselves have only 10% of their money in stocks! But low levels of equity exposure are due to our past financial commitments. But slowly moving out of that phase, we now plan to increase our equity exposure. And we won’t be boasting if we were to say that this time, we are far more structured than we have ever been (Boasting ;-) (Read details of portfolio structure in previous post)
After DMP has been applied, this is how author’s investment portfolio would look like:
- 4-5 Dividend Stocks (~ 50% 0f equity portfolio)
- 8-10 Large Caps + High Growth Potential Stocks (~ 30% of equity portfolio)
- 4-5 Cyclical / Risky Bets (~ 20% of equity portfolio)
- 2 mutual funds (ongoing SIPs – Large Cap & Multi Cap)
- 2 planned SIPs to be started in 2012 (Mid & Small Cap) & 2013
- Fixed Deposits
Author plans to invest whatever he saves every month (& receives as dividends) in a few of these 15-20 stocks.
But how to decide when to invest in these stocks? Should they be bought at current levels?
We will try answering this question in our next post which would be based on Warren Buffett’s quotation – “Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."
We will also weigh these stocks on parameters like P/E, P/BV, Dividend Yield, dividend growth, PEG ratio, etc and try to arrive at intrinsic values, graham’s number etc.
We also plan sharing our stock watch-list. This contains stocks which may form part of our portfolio in future.
Please remember that we will never suggest you to blindly go ahead and buy the stocks from the above list (or even include these in your personal watch list). Reasons is simple and explained by dead monk’s disclaimer - No matter how careful we are, as an investor, we will never be able to eliminate the risk of being wrong.
PS - '15 stocks' in title refers to all stocks mentioned except cyclical and miscellaneous ones.
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