13/09/2009

Choosing stocks and building portfolio



Stocks are categorised into sectors based on the business focus and industry.
Usually, based on the broader market and macroeconomic conditions, some sectors out-perform the others and therefore it is advisable to identify the sectors whose outlook is good in the current market conditions.



Diversify:  
You should diversify by identifying more than one sector, and within a sector, by selecting more than one stock to invest. An ideal equity portfolio would have 8-10 carefully selected stocks.
Shuffle:
It is also important to track market developments and keep shuffling the portfolio based on changes in the market conditions.