Many people ask me “what is an ideal portfolio” and till date I do not have an answer. Now I will tell you why.

Let us look for an Ideal Prime Minister and an Ideal cabinet which does the perfect things. Do you think this exists? No.

An ideal PM has to ONLY work for the bottom of the pyramid and make sure that they get 2 square meals a day, basic shelter and basic medical care. Which means the vocal population will scream its head that he is not spending on infra, foreign affairs, defense, education (other than basic education, it is time that the private sector took over education), sports….so this cannot work.

Remember in a country of 134 crores, it is only about 10L people who watch these noise channels and read noise papers. Sadly, they are the people who create swings even in our minds. We have no clue why we create a particular news but it is normally because some pressure group is losing power. So we had our Lutyens Delhi talking about intolerance, award vapasi, lynching and now MeToo. I am not trivializing MeToo but raking up issues just before elections is stunning – and it works. Metoo has served two purposes – taking the media attention from the Kerala Nun/Bishop case and make it look like it is NaMo’s fault.

Sorry for this political para – but look at an ‘ideal’ portfolio and what it should do?

It should be ‘ok’ for people who want to keep their money for 4 year to 100 years. This is almost impossible to achieve. The short term portfolio could contain those shares which have taken a hammering recently – like Omc, good nbfc, Tata Motors. However for getting a return it could take 2/3/4 years. In the longer run Omc, and nbfc may not be good investments, and Tata Motors could struggle selling electric vehicles.

In the short run if the US $ gets stronger, IT could do well, but then so could your portfolio consisting of companies like Alphabet and Apple – simply because of the stronger currency. However, if the US market was to come down your portfolio hit may be more than the currency gain. You are suddenly introducing a new risk in your portfolio. Sure, if the amount is say 5% of your portfolio, it is not a risk to worry about, but yes there is one more risk.

A school teacher or a retired person may worry about a 10% fall in the market, but a Rakesh Jhunjhunwala could be increasing his stake in DFHL when it falls 57%. The difference between me and my class mate (RJ) has always been guts – right from the time when I bought 50 Tata Power and he bought 5000 Tata Power (remember it was a 100 FV share) on a leveraged basis. Can I and RJ have a similar portfolio? Of course not. He is far more focused, hard working and has balls of steel. I cannot take that kinda risk. He always enjoyed the roller coaster ride. I prefer the normal rides!!