6 years ago I had written an article on the benefits of having a concentrated portfolio of stocks. Some of the things what I had mainly discussed in that article was 2 things:

[1] How to select stocks: How should you zero in on a list of stocks (i.e. Universe of Stocks)

[2] How to select 5 stocks: from the Universe based on your total savings and goals

I had taken an example of 3 types of portfolios which investors are likely to construct following these principles and I had aptly named them as:

The Harmless | The Moderately Hopeful | The Overnight Millionaire


Stocks in each model portfolio were drawn out of a larger list of stocks in each category (Universe of stocks)

The Harmless: the idea here was to select a group of large-cap stocks which will compound at their historic CAGRs. My expectation was that this portfolio will generate ~ 15% p.a. (as the combined average CAGR was of these companies back then).

The Moderately Hopeful: This was a bunch of stocks either trading below their historic valuations or were mid caps which are likely to gain market share in the coming years. My expectation was that this portfolio will generate ~ 20 % p.a.

The Overnight Millionaire: This list included stocks which were favorites of all punters and investors hoping to catch beaten down multi-baggers. Basically, everything that you should have avoided. I expected this to end badly.

Call it a coincidence or some super educated forecasting, the numbers look eerily similar to my predictions. Here is how each of the portfolios would have performed (assuming you had invested Rs. 500 in each stock, your basket investment, and total returns are highlighted in Green and Red:

The main focus of the above article was to explain how you do not have to take any risk at all to make between 15-20% return provided you are able to invest with a 5-6 year time frame. This is where the rich become richer and how maximum wealth is created.

Things are no different today. On this page, I have updated each of the above portfolios to include 5 stocks with a prediction for the next 6 years (available for viewing to premium members till Sunday).

…….. and again, more than being harmless or hopeful, you will do well to avoid trying to become an overnight millionaire.


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