SIDDHARTH's Blog

Don't fall prey to sentiments. Do not buy just because everybody else is buying, Do not buy because someone else has made money on a certain company. Always buy based on your own inherent opinion of the sector and research on the stock. 

The second thing I often find in Indian investors is we do not diversify enough. Not just across asset classes but even between companies. Diversification is extremely important. And I would recommend people to build a more balanced portfolio, it might not outperform everything else in the short run. But over the long run, considering how cyclical different sectors are, having that balance in diversification really helps. 

Third, this is a bit nuanced, something that I like to do, is having a bit of hedging in every portfolio. It does not have to be a natural hedge on the same sector or same company you are going long in. For example, let say commodity cycle are turning and steel prices are going down, but steel companies valuations has skyrocketed. If you want to be long pharma, take a little bit of short in steel. Try to play that relative strength and weakness among different sectors, rather than just vanilla on what you like.