In a recent episode of “The 1% Club Show” on the Finance With Sharan YouTube channel, the CEO of Samco, a prominent figure in the Indian financial landscape, offered a blunt, counter-intuitive masterclass on how he manages his personal portfolio, valued at an estimated ₹2000 Crore. His insights cut directly through the conventional wisdom often preached to retail investors, advocating for extreme concentration, an acceptance of massive losses, and the revolutionary principle of not averaging down.
The Philosophy of Concentration: Why Cutting Winners is the Biggest Mistake
For most investors, the word ‘diversification’ is a holy grail. For the CEO, it is a tool for protection, not profit. His strategy hinges on taking large, concentrated bets and having the conviction to let those winners run for years.
He illustrated this with a prime example from his own portfolio: an investment of approximately $20 million that grew to $100 million in four years—a 5x return—and now represents nearly half of his family office portfolio.
The key takeaway is recognizing and resisting the temptation that most retail investors succumb to: cutting winners.
“The biggest mistake that investors make is they end up cutting winners. They’re like, ‘After I get 20% profit, let me leave.’… You never let your winners really run.”
This mindset ensures that small, successful bets are never given the chance to become portfolio-defining giants. He points to legendary examples: Warren Buffett’s public market portfolio is now nearly half-comprised of Apple stock, not because he bought it that way, but because he allowed a successful investment to grow into a massive, concentrated position.
The Truth About Returns: The 5/90 Rule and the 35% Win Rate
Challenging the common obsession with having a high success rate, the CEO introduced a harsh reality governed by the Pareto Principle, or the 80/20 rule, which in investing, he believes, is even more extreme:
“My sense is it will be 5/90. 5% of my investments will probably generate 90% of the return.”This uneven distribution of returns is true for the market as a whole. He noted that historically, three stocks (Reliance, Infosys, and HDFC) have contributed to roughly 60% of the entire move of the Nifty index from 1994 to the present day.
This conviction in concentrated returns informs his view on the importance of win rates:
- The Myth of the High Win Rate: Retail traders are often obsessed with an 80% or 90% win rate, but this typically leads to small average gains and massive average losses.
- Rakesh Jhunjhunwala’s Example: The late ‘Big Bull’ Rakesh Jhunjhunwala famously operated with a win rate of approximately 35-40% on his trading portfolio. This means he was wrong 60-65% of the time, yet he amassed a fortune.
The real secret lies not in how often you are right, but in your risk-reward ratio:
“The key to making money in investing and trading is how much do you make when you are right… If you’re right 50% of the time, but every time you’re right you make two bucks, and every time you’re wrong you lose one rupee, if you infinitely toss the coin, you’ll always make money.”The Mindset of a Winner: Why You Must Be Comfortable Losing
A key distinguishing factor for professional investors is their relationship with loss. The CEO shared that he is “extremely comfortable losing” multi-million dollar sums, sometimes running into 15-20 crores ($1.8-$2.4 million). This mindset wasn’t innate; it was forged by early, painful market lessons, like losing a ₹15 lakh portfolio as a teenager.
He encourages investors to adopt a long-term, statistical view, likening the process to cricket:
“I think if I’m going to be in the markets for let’s say 30, 40, 50 years, I think I may make about a thousand investments… what difference does it make if I go wrong in five or what difference does it make if I go wrong in the next one? Think about this as a cricketer. You’re going to play 30, 40,000 balls in your career. If you lose your wicket on one, it doesn’t mean… you shut your career and go back.”The Cardinal Rule: Never Average Down, Always Average Up
The most dangerous, yet common, mistake among retail investors is averaging down—buying more shares of a stock after its price has fallen to reduce the overall cost basis. The CEO vehemently rejects this practice:
“You actually should not average… you should not average your losers. You have to make sure you average up and not average down.”The logic is simple: the market is the ultimate truth-teller.
- If you buy a stock at 100, and it drops to 80, while the rest of the market (Nifty) is rising, the market is telling you that your investment thesis was wrong. Doubling down only compounds your mistake.
- If your stock rises from 100 to 120, the market is telling you that you are right. This is the moment to add more money, cementing your belief in a confirmed winner.
Strategic Advice for the Young Investor
For a 25-year-old starting their investment journey with a stable income, the advice is aggressive and clear:
- Asset Allocation (80-100% Equity)
With time on their side, a young investor has maximum risk-taking ability. The portfolio should be allocated 80% to 100% in equities. Time heals all drawdowns, including massive market crashes like the 67% fall in 2008.- Equity Split
A simple, diversified-yet-focused strategic split for the long term is recommended:
- 50% in Large Cap stocks.
- 30% in Mid Cap stocks.
- 20% in Small Cap stocks.
- Investing is a Business, Not a Hobby
Ultimately, the CEO’s most crucial piece of advice is a reality check for anyone juggling a 9-to-5 job and self-investing:
“If you treat investing like a business, it will pay you like a business. If you treat investing like a part-time hobby with part-time resources, it will pay you like a hobby. And the reality is hobbies don’t pay. They only cost you money.”If an individual investor cannot consistently outperform the Nifty (which has returned about 14% over 30 years) by a significant margin—he suggests 10% more—then they are better off handing their money to a good fund manager or simply investing in an index fund. If you have the time and drive, leverage your retail investor superpowers: the ability to take unlimited concentrated bets and the freedom from liquidity constraints that plague large fund managers.
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