During last 18 years of my investment journey, I have made fortune (may be small one) but I was never dead sure in advance about which stock will create wealth for me and which will not. I have seen that out of 10 stocks, 3-4 stocks performed exceptionally well like 5-10x in 5 years, another 3-4 stocks performed like 2-3x in 5 years and last 2-4 stocks will not perform. My modulus operandi was to identify good quality stocks (mostly growth oriented stocks) and allocate minimum 5-10% in each one, continue to hold the stocks which are performing and replace the one with new set of stocks. This was my style of investment till 2008.

Post 2008, after seeing huge casualty even among high quality stocks, I changed my style of investment. Earlier I use to see upside potential of stock and invest accordingly taking some wild risk, now I focus more on risk part wherein I ensure that stock has limited downside at the same time there must be strong story supported by numbers (stock must be a part of major trend). Post 2008, I use to buy only on rare occasion when a stock price comes in my price range, I was having patience to wait,sometimeI waited without buying any stock even for 6 months or more. 

"To be very frank, let me tell you a secret....ONLY the stocks which you buy during extreme bad phase of the market cycle, you create wealth 10-20-30x kind, look around any investor who claim they made 20x, 50x or 100x......ask them when they bought those stock they will say 2002-03, 2008-09, 2011-13 and now 2018-19 (This may be the golden time again to buy stocks in big way). No one has created big wealth buying a stock during 2005-07, 2015-17 etc........So, net on net it is not the skill but it is the capital allocation & courage which makes money for investor! 

Coming back to the list of stocks, usually this list changes every 6 months or so.....You will find 60-70% of stocks remain same and rest 30-40% changes. On paper it's easy for me to change the 3-4 stocks and issue a fresh list of top 10 stocks but in real life it is painful to switch from non-performing stock to performing stocks, what I follow is mentioned below...

a) If a stock is performing well on price front, just hold it and ride as long as the fundamental is intact. Book partial profit when there is too much hype or exuberance about that stock.
b) If a stock is not performing well on price front due to poor quarterly results or due to some short term issues which might get resolved, you should continue to hold.
c) If a stock is not performing well on price front due to poor corporate governance (in 90% of the cases we know only after buying when the price falls and some unexpected story comes about poor corporate governance), immediately sell and exit. Accept that it was a mistake and mistake does happens.

Imp Note: Do not sell any stock which is good in terms of mgmt quality and has great future but stock is down and you see M2M losses. Remember that there is underlying business behind any company and businesses do not perform based on analyst projection instead they take time. Just hold them for next 4-5 years, you will make money. One example, I bought a company called "Confidence Petro" way back in 2011-12 at a price of around Rs 16 and by 2013-14 stock fell down to Rs 2 because the company failed to execute their new LPG dispensing business due to rise in crude prices at that time. I was holding this stock because management was okay and stock fell due to macroeconomic reason which is beyond the control of anyone. During 2017, I sold it around Rs 60-62 making handsome gain. So, even if you are holding the stockswhich are non-performing, they will also give excellent return if held for next 5-6 years provided mgmt quality is good & company remain afloat.

I have mentioned below the list of 10 stocks (5 micro cap and 5 small & mid-caps) which are feel holds good upside potential at the same time limited downside. These stocks must be bought in staggered way with minimum allocation of 5-8% in each one.

5 picks with Market Cap below 1000 Cr...

A*** F***

H*** F***

S*** I***

E*** I***

V*** O***

5 picks with Market Cap above 1000 Cr...

S*** E***

D*** T***

B*** L***

I***E***X***

B*** L***

To get the list of above 10 stocks you can give an email to mail@3Ccapitals.com or text "Top 10" to +91 7558960018

Regards

CA. Binoy J. Kattadiyil