THE PORTFOLIO CONSTRUCTION

Today we will learn about how to create long term strategic portfolio for generating wealth in period of 10 years, and generating huge income generating assets like CA Rakesh Jhunjhunwala, Warrenbuffet,etc. When we are constructing such a long term portfolio for the purpose of creating wealth and not earning a profit from trading in certain commodity,shares,etc. Such portfolio takes a time of about 7 to 10 years before creation of huge wealth. These portfolio consist of three types of stocks :-

• Emerging Leaders
• Near Leaders
• Clear Leaders

Emerging Leaders

These type of companies can be termed as new companies which are are emerging in their fields like Uber in transportation of passengers swiggy in food delivery Flipkart in all e-commerce,etc. These companies can be called as newly incorporated public companies. This type of companies can also be called as shooting stars as if they perform well they would give multiple times profit and if these companies failed they wouldn't return you much.these companies have no much experience of facing difficult times or recession so it is doubtful that these companies May perform good or bad incoming time as market will not be booming always.

Near leaders.

These companies are established in market for our long time and have credible net worth in the market. They are not leaders right now but they are in process of becoming clear leaders for example Domino's in in food industry in India is about to become a clear leader.

Near leaders have right to become a clear leader for that we have to consider certain things such as current players in market vision of the company and its execution. Near leaders have right people And right business process.

CLEAR LEADERS

Clear leaders clear leaders are the companies which have gone through do a process of becoming a leader that is they have faced many problems and they know how to tackle themselves in difficult Times we can identify clear leaders as they have right people right process and right institutionalisation. Examples of clear leaders Reliance Industries Tata Steel.

Now let's see the composition portfolio

Clear leaders should consists of 60% of capital.

Near leaders should consist of 30%.

Emerging leaders should consist of a 10%.

We should invest our major capital in in clear leaders as they they have capability to expand themselves and face bad times these clear leaders would result in a a good amount of gain and ensure safety of capital as defined in definition of of investment by Benjamin Graham the intelligent investor.

For near leaders they have a potential of growth in stocks these shares would contribute maximum profit in your portfolio as clear leaders have already achieved growth and the near leaders have potential to to grow clear leaders.

Now let us talk about emerging leaders these leaders have much more potential then near leaders but the probability of earning profit by these leaders is remote we will learn about the factors to be seen while investing in emerging leaders in our next post on emerging leaders.

The percentage specified by me are not fixed they can be altered as per the risk appetite of a person.

While investing in emerging or  near leaders we should consider the tangibles and intangible as discussed in in the blog of the art of investing.