The proof of the pudding is in the eating. And our first serving is already out. The two model stock portfolios we introduced in the last issue have done embarrassingly well. Between June 18, our ‘listing’ date, and July 4, the combined value of the two portfolios has increased by over Rs 1 lakh! Even the safer of the two portfolios—called ‘Safe Wealth’—created wealth of over Rs 45,000 in two weeks. The net asset value of the two portfolios (or funds) rose by 5% and 8% in two weeks. Before you congratulate us, a few caveats are in order: The period between mid-June to early July was of exceptional buoyancy on the stock markets when the Sensex grew by 6%. So it could have been the case of a rising tide lifting all boats—including ours. More importantly, as we keep saying, past performance is no indicator of future. Our model funds are less than a month old.
Yet the whole exercise of creating and monitoring the funds has been instructive for us, and so we hope it would be for you too. From deciding on the number of stocks to setting caps for each stock and sector to small but significant things like keeping away money for brokerage, we have tried to make the exercise of portfolio construction realistic, relevant and therefore worth learning from. More than guaranteeing returns from our mock funds, we promise that by following them in the coming months you will become a more educated investor. And of course in time, as our funds mature through good and bad times, you will know if you should put your money where our mouth is. In this issue you will find detailed rationale for choosing each of the 17 stocks that form ‘Safe Wealth Fund’ and the current NAVs of both the funds.
Equal to the challenge of monitoring stock market is that of tracking real estate. This is one sector that Indians have flocked to in the largest number, many putting in their life’s savings at stake. What should they make of it now? That’s the question we have attempted to answer in our cover story by setting down eight new rules of housing. We got some clarity in working them out; hope you too will in reading them through.
-Rohit Saran
