How do Indian Investors pick stocks for long term investment i.e. 5 to 10 years?

Not only Indian, every Value Investor in the world follow a common concept.

You cannot outsmart the crowd by analyzing a company because smarter people have already done it.

Then what does these Value Investors do to beat the market again and again by great margins. They determine their circle of competence and never get out of it.

Stick to sector/industry you understand. Play with few stocks. Don’t push all of you money on every tip you get from so-called wolf of the street.

I remember a long term Investor - Nimesh Shah - one of the top 10 retails Investors in stock market.

I’m tracking his Portfolio since a long time, one thing interest me a lot is that his portfolio is sector driven.

He didn’t invest in many stock or sector instead conversated his funds to limited stocks & sector that he understand.

Keenly look at this snapshot from Economic Times.

You can easily locate the 4th head above. None other than Nimesh Shah.

But I want your attention on the stocks which are driving his Portfolio. Again look at the image and read out loud that 2 stock governing his PF.

• Asahi India Glass
• Sona Steering System

What fun in this? Just a card in the deck of stock market.

Have you found out what’s common in them. huh?

They are Auxiliaries companies to Auto Mobile Industries. Asahi India Glass makes glass for automobile and other is easily understandable by the name, steering.

He targeted the Auto ancillaries sector.

What the rationale behind this?

Everybody knows that the Automobile industry was touching the sky. Sales growth, Profit growths. Margin expansions. Increasing income levels among Indians, increasing the expenditure on Automobile.

While the whole market was crazy behind Auto Mobile stocks like Maruti Suzuki, Bajaj Auto, Hero Motocorp or any other shitty stocks….. this man (Nimesh Shah) wasbusy finding out the companies which are assisting automobile Industry.

Smart move. Isn’t it?

And that’s why, find your circle of competence and stick to it.

It can be anything you understand. Like if you’re a Software Engineer than you may stick with IT sector. If you’re a Doctor then you should stick with pharma stocks. If you’re a Finance analyst then stick with banking stocks.

It’s that simple & it’s that hard.

. . .

I write at Sowmayjain.com where I share everything I know about stock market. Consider reading more about Nemish Shah here: Nemish Shah: One of the Top 10 Indian Retail Investor (Plus his Stock Holdings)