The year 2020 marked a pivotal turning point for many of us. For me, it was a time of introspection, a recalibration of priorities, and a shift toward disciplined investing. Each year since then, I’ve said “no” to something that didn’t align with my evolving investment philosophy. Here’s what I stopped—and the lessons I learned along the way.

2020: Saying No to Penny Stocks

It took me three years (2017-2019) to realize that you don’t make money in penny stocks; it’s just exciting because they seem cheap optically. I have burnt my fingers in Lanco, Videocon & Manpasand beverages to name a few !

The chaos of the pandemic underscored the importance of financial resilience. I realized that penny stocks, often speculative and volatile, added unnecessary risk to my portfolio. By saying no to these high-risk investments, I refocused on quality companies with strong fundamentals. This decision laid the foundation for a more robust and sustainable investment strategy. I have coded my marquee investments of my Portfolio since then as #PF.

2021: No More IPO Frenzy

The IPO boom was hard to resist, but I came to understand that the initial hype often overshadowed the reality of business fundamentals. I stopped participating in IPOs, choosing instead to observe how newly listed companies performed over time. This shift helped me avoid overvalued stocks and focus on proven performance.

Data shows that majority of the IPOs eventually trade below their initial offering price, highlighting the risks involved. Being a contrarian investor , i keep these stocks in my Watchlist & when i get the Valuations comfort , I don't shy away from loading my demat account :)

While this “No IPO” rule is one I have followed for the last four years, if ever something no-brainer comes to the Indian market, I will definitely think of breaking this rule. For now, I consider my CDSL IPO journey since 2017 a rare exception—it’s a 25-bagger as of today :) My 2021 Blog- Was a 10 Bagger back then .

2022: A Costly Lesson on Dividend Investing

Dividend investing seemed attractive initially, but I soon realized its true cost. High-dividend stocks often came at the expense of growth potential, limiting the overall appreciation of my portfolio. Additionally, reinvesting dividends became less impactful in a market ripe with opportunities for compounding. This approach made me miss out on significant growth prospects. Consequently, I stopped chasing dividends in 2022 and redirected my capital toward businesses with higher growth trajectories, aiming for long-term capital appreciation over immediate income.

While growth is my focus for now, I recognize that my strategy might evolve as I approach my 50s. At that stage, I may reconsider dividend investing to generate a passive source of income through stocks with good dividend yields. But for the time being, prioritizing growth remains my primary objective.

2023: Saying NO to my bias about Microcaps & embracing SMEs

For years, I had overlooked small and medium enterprises (SMEs) due to three misconceptions: dismissing them as too small players, believing they were only accessible to big investors, and assuming they were all scams. However, a deeper dive revealed their untapped potential. Investing in SMEs is akin to being a venture capitalist(VC), offering access to early-stage growth. Imagine the retail investor of India now having the option and access to so many entrepreneurs who are challenging the bigger giants.

I must admit, reading blogs and tweets by Ian Cassel finally convinced me to say yes to microcaps, and the journey so far has been beautiful, with a 50%+ CAGR. Ever since I read the book 100 Baggers, it has been life-changing. I know that one day I will crack one of them for sure. Just one 100-bagger can be life-changing—that’s the power of investing. I have a hunch that it will be one of the SMEs or small caps, which I have coded as #FMF.

By saying no to my previous biases, I unlocked a new avenue for value creation in my portfolio. I must appreciate SEBI for its stringent regulation of this space, ensuring that nothing goes unnoticed and that they quickly intervene whenever issues arise.

2024: Embracing Concentration Over Diversification

For the first seven years of my investing journey, diversification was my guiding principle. However, after careful deliberation and analyzing my own portfolio, I decided in 2024 to shift my strategy towards being a concentrated investor. This means I will now focus on making only 3-4 high-conviction bets per year. I will thoroughly convince myself before saying yes to any new idea. As for my existing stocks, I plan to let them run for decades, trusting in their long-term potential. Moving forward, I will be very selective, ensuring that each investment aligns with my refined strategy of concentration over diversification.

Two key moments shaped this bold decision.

First, the story of Naspers’ 6% bet on Tencent, which grew to become 99% of their portfolio, always amazes me every time I read about Koos Becker !

Second, a chart presented by Siddhartha Bhaiya at a conference opened my eyes to the power of concentration, leaving a lasting impression . Here is a graphical representation of the same :

Final Thoughts 

As I reflect on my last five years of investing, I’ve shared the key lessons learned from saying “no.” In contrast, the first three years of my journey were filled with countless “yeses,” leading to numerous ghost stories of missed opportunities and mistakes. Each decision to say “no” was not about restriction but about gaining clarity. By shedding unproductive habits, I’ve aligned my investments with my long-term goals.

Despite having eight years of market exposure, I still consider myself a student of the markets. I look forward to breaking more biases and learning new things in 2025.

To conclude, I recall two quotes that have profoundly influenced my evolution as an investor, prompting me to reassess my biases and strategies each year:

1. Charlie Munger: “Invert, always invert!”

2. Steve Jobs: “Deciding what not to do is as important as deciding what to do.”

See you in 2025, and stay mad about stocks!