Portfolio Management - Rate of Returns

Portfolio Management - Diversification Is Your Friend - Part 2

What is your method for stock picking?

FA or TA or just buying on any major pullbacks or corrections?

What is your objective of coming into the stock market?

Having a positive returns over a long-term period

If your objective is to have a long-term (20 - 30 years) positive returns on your portfolio with re-investing all dividends and periodic adding of sizable capital, do you really need to do any serious FA or TA?

I don't think so. Probably you just need to save enough money to buy some on major pullbacks and buy little more on major corrections and build up a well-diversified portfolio of dividend yielding stocks of at least 4-5%.

You are more likely to have a positive returns on your portfolio for a long term period e.g. 20 - 30 years. The reason is pretty simple as the stock market by nature is forward bias as every company by nature will want to grow its business and the market will eventually price in its enlarged business.

With a well-diversified portfolio across different sectors, you can easily afford to throw away some rotten eggs without serious damages to the portfolio returns.

To optimize rate of returns over a limited time frame

For a small retail investor without periodic adding of sizable capital, you may have to use both FA and TA  to optimize your rate of returns. It is definitely harder to optimize rate of returns using dividend re-investing strategy.

Stock Picking Method

So your expected returns will determine your stock picking method that you should follow.