MY BIGGEST MISTAKE IN STOCK MARKETS

3)Darshan Mehta
Chief executive officer, Anagram Stockbroking

In the early nineties, the primary market was extremely active, and,
like many retail investors, new issues made up a good chunk of my
portfolio. Back then, pricing of public issues was regulated–and,
invariably, conservative.So, even if you held on to allotted shares for
no reason other than inertia, you made a notional profit. I was allotted
2,000 shares of Essar Shipping, which I held on to because their cost
was significantly lower than the prevailing market price. My portfolio
of 85-90 scrips was filled with the likes of Essar Shipping–neither led
by a quality management nor the flavour of the season. I slept on them,
and lost out–my portfolio depleted in value substantially.On top of
that, the sheer size of my portfolio made it impossible for me to track
even those companies in which I was invested. One fine day, I gave the
list of my holdings–a whole lot of them worthless–to my broker, and
asked him to sell it at whatever price he got. But the damage had been done.

Lessons:Maintain a lean portfolio. Don't grow too big for your boots.
There's no point in having a portfolio of 90 stocks if you cannot track
them. If diversification is what you seek, you can achieve the objective
with just 10 stocks. What matters is not how many stocks you have in
your portfolio, but what kind of stocks these are. Moreover, the fewer
stocks in your portfolio, the easier it is to track them.Don't lose
sight of your initial objective. Invest with an objective in mind. Once
that objective is met, look to exit unless there are very good reasons
to stay invested. In rising markets, new issues ride on the coattails of
the bullishness, and list at hefty premiums to their issue prices. But
once the euphoria subsides, so does the share price. So, keep your
options open.