A very unique way of looking at construction of portfolios. A very appreciated concept and first of its kind technique, which is beneficial for any investment philosophy. No matter if you are a fundamental investor or technical, this is for you.

1. IIF Bangalore – June’15
Presented by : Puneet
Khurana
Stoic Advisors
LLP
Portfolio Construction Strategy

2. What are we not going to discuss
Question like
 What stage of life is one in and what should we
invest in
 Personal allocations to various asset classes
 Financial Goals and financial planning
 Benefits of equity over other asset classes
Lots of very smart people in audience who are
convinced on equities and hence let’s discuss equity
portfolio construction
Puneet Khurana Stoic
Advisors LLP

3. Portfolio Construction
Puneet Khurana Stoic
Advisors LLP

4. A framework for stock selection
Investment Philosophy Quota Respect
Quota
0 %
100%
Puneet Khurana Stoic
Advisors LLP

5. Where to keep the dividing line?
Puneet Khurana Stoic
Advisors LLP

6. Where to keep the dividing line?
Puneet Khurana Stoic
Advisors LLP

7. Where to keep the dividing line?
Puneet Khurana Stoic
Advisors LLP

8. Stock Selection under Respect
Quota
Puneet Khurana Stoic
Advisors LLP

9. Stock Selection under Respect
Quota
Puneet Khurana Stoic
Advisors LLP

10. Stock Selection under Respect
Quota
Puneet Khurana Stoic
Advisors LLP

11. Stock Selection under Respect
Quota
Puneet Khurana Stoic
Advisors LLP

12. Stock Selection under Respect
Quota
Puneet Khurana Stoic
Advisors LLP

13. Stock Selection under investment
philosophy quota
Puneet Khurana Stoic
Advisors LLP

14. Stock Selection under investment
philosophy quota
You have to ‘STAND’ for something or you will ‘FALL’ for everything
Puneet Khurana Stoic
Advisors LLP

15. Stock Selection under investment
philosophy quota
Puneet Khurana Stoic
Advisors LLP

16. Value Driven Philosophy
After doing facts based analysis, the entry and exit
decision is based on some kind of intrinsic value
calculation which market participants believe to be
different from price.
Basic premise is that market is inefficient and
market participants are biased
Different investors have different view on the
frequency and magnitude of inefficiencies and
biases
Puneet Khurana Stoic
Advisors LLP

17. Bottom Up Analysis
- Deep Value (Cash Bargains, Debt Capacity
Bargains, Net nets and many more)
- Value with catalyst
- GARP
- Event based
- and many more….
Top Down approach
Puneet Khurana Stoic
Advisors LLP

18. Price Driven Philosophy
The price is considered to be the end product of
demand and supply at a particular given time.
A careful study is ensued by observing price
movements, Volumes and other market related
data
The field of study is called “Technical Analysis”
Puneet Khurana Stoic
Advisors LLP

19. Many types here too…
 Elliot wave theorists
 Market Profilers
 Trend Followers
 Swing traders
 Algorithmic traders
And so on….
Puneet Khurana Stoic
Advisors LLP

20. Which one to choose ??
“I realized that
technical analysis
didn't work when I
turned the chart
upside down and
didn't get a different
answer”
- Warren Buffett
Puneet Khurana Stoic
Advisors LLP

21. Which one to choose ??
Fundamentals that
you read about are
typically useless as
the market has
already discounted
the price, and I call
them "funny-
mentals”
- Ed Seykota
Puneet Khurana Stoic
Advisors LLP

22. A combination ?
Just as a doctor would be foolish not to use X-rays
and EKGs, investors would be foolish not to use
charts. - William O’Neil
Technical analysis is like a thermometer.
Fundamentalists who say they are not going to pay
any attention to the charts are like a doctor who say
she's not going to take a patient's temperature. –
Bruce Kovner
Puneet Khurana Stoic
Advisors LLP

23. Investment philosophy based stock
selection
 Stick to your philosophy
 The success or failure should be decided only in
long term ( give it few years)
 Back-Testing
Puneet Khurana Stoic
Advisors LLP

24. Portfolio Construction
Puneet Khurana Stoic
Advisors LLP

25. Allocation rules for Respect
Quota
Decide the quota
Diversify a lot
Puneet Khurana Stoic
Advisors LLP

26. Allocation rules for Investment Quota
I have nothing to say here
Can I anyways ?
Puneet Khurana Stoic
Advisors LLP

27. Portfolio Construction : My
method
Puneet Khurana Stoic
Advisors LLP

28. Stock Selection : Where have I
drawn the line ?
Puneet Khurana Stoic
Advisors LLP

29. Stock Selection 1
Puneet Khurana Stoic
Advisors LLP

30. Stock Selection 1
Puneet Khurana Stoic
Advisors LLP

31. Stock Selection 2
Who is this guy ??
- Bugsy Siegel
Puneet Khurana Stoic
Advisors LLP

32. Bugsy Portfolio
Puneet Khurana Stoic
Advisors LLP

33. Respect Quota
Puneet Khurana Stoic
Advisors LLP

34. Allocation Decision
Stock Portfolio 1: 5- 8- 12 model with averaging down
because of conviction
Stock Portfolio 2: Bugsy Portfolio : 4-5 ideas with 3-5 %
allocation with averaging up as the potential is realized.
Respect Quota: Not more than 2 % in any idea
Puneet Khurana Stoic
Advisors LLP

35. Best allocation strategy

36. Pleasure to have to spoken here
The Presentation and Mindmap can be
downloaded at
pragmaticinvesting.com
I send my weekly readings to a lot of people who
are interested in Investing, Psychology, Behavioral
economics and other interesting things. Interested
people can see here
My twitter handle: @PuneetK009Puneet Khurana Stoic
Advisors LLP