Indian Net Net Stocks for January 2022
A monthly list of Indian Net Net stocks to help you outperform the market
This is part of the Indian Net Net Stock Portfolio strategy that is discussed in depth here. Please read that first to be armed with the full-context behind the following Indian Net Net stocks for January 2022:
The Indian Net Net strategy spits out a collection of net net stocks every month to invest in, with equal allocation. One should remain invested in those stocks so long as those stocks are in the monthly lists. If a stock is removed from the monthly list, then it is the signal to sell that stock.
A Reminder of the Long Term Expectations of Indian Net Net Investing Strategy
An average annualized return of 47% and average annualized outperformance of 25.89% over the BSE500 Total Return Index, at a high IR of 0.74 shows consistent outperformance of the strategy.
A Reminder of the Nuances of Indian Net Net Investing
Net net investing is more of a portfolio strategy, rather than a strategy where you select individual stock winners. It is harder to confidently say that a single net net stock will generate good returns. But it is easier to have confidence that a diversified collection of such net net stocks will do well.
The problem is that in this strategy applied to the Indian market, you only have 6 net net stocks on average that make it into the monthly list. This leads to quite a concentrated portfolio! Hence, I suggest having an upper limit to how much money you are comfortable allocating to Indian Net Nets. It would not be wise for example, to have your entire retirement savings allocated to such a concentrated group of 6 stocks!
Look at this time-series of the Indian Net Net Portfolio’s monthly returns:
This shows that whilst overall, there will be periods of big returns, to really succeed, patience is required to sometimes tolerate consecutive months of negative returns, without deviating from the strategy.
Also, when buying or selling these net net stocks, it is critically important to use limit-orders, rather than buy at market prices with market orders! This is because the liquidity on these stocks are usually lower, so buying with market orders will usually increase your purchase cost significantly!
Subscribe and follow for updates!
Best,
Raj Arishtocrat from SEE ACT WIN