- Raamdeo Agrawal advises investing only in stocks you fully understand to maximise gains
- He recommends maintaining a concentrated portfolio of 15-20 stocks for effective research
- Agrawal suggests spending time daily on a small set of stocks to monitor their progress
This Diwali as investors gear up for Samvat 2082, Motilal Oswal Financial Services' Chairman and Co-Founder, Raamdeo Agrawal, has a simple but important advice for retail investors — only invest in stocks that you truly understand in order to maximise gains in the stock market.
In a message to investors, Agarwal also emphasised the important to keep a concentrated portfolio and also highlighted the key benefits of research before investing.
“A portfolio should have a small set of stocks that you can look at every day. That's the way I do it," Agrawal told NDTV Profit.
“Having a few stocks allows one to spend time properly researching those stocks. You should not be oversitting on too many stocks. Have a few of them, so you can ride them all the way.”
The market veteran's advice comes at a time when Indian markets have witnessed a correction and underperformed global peers in recent months.
With valuations still hovering around 22 times multiple, picking the right stock has become key, now more than ever.
When asked about the ideal number of stocks in a portfolio, Agrawal said investors do not usually require more than 15-20 stocks, although he did acknowledge the formula doesn't work for everyone.
“I don't think you should need more than 15-20 stocks in your portfolio," he said. "The right number of stocks you should have is to have as many stocks you should. If you only have three stocks, then invest in only three stocks.”
The Mutual Fund Option
Raamdeo Agrawal believes individuals who do not have time to monitor stocks all day can always invest in mutual funds.
“If you don't have time, simply invest in mutual funds. They're actually performing far better than a retail investor, who doesn't have reach. Unless you are a master at picking stocks, go and invest in mutual funds," he concluded.
Raamdeo Agrawal's interview is part of NDTV Profit's broader Diwali coverage, where we speak to various money managers and market veterans about how and where to invest going into Samvat 2082.
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