Random Portfolio Test– It either Humbles or Humiliates! Part 1 of 3

This is a 3 Part Post ( It will be long but totally worth your time and give you a good perspective on how to look at your performance. )


Part 1 – What is the Random Portfolio and Older Articles on It.

Part 2 – The Random Portfolio Result for 1) 2018 peak to Now. 2) Pre Covid High To Now. 3) Covid Lows to Now. 4) From Nifty ATH to Now.

Part 3 – What is the Total Performance of NSE Stocks. How many stocks are up 100-200-300% from Covid Lows.


Part 1

What is the Random Portfolio & Why do this Exercise ?

We had a super year in 2014 and I started managing some money for friends and family from 2013-2014. Obviously I was very happy with a high triple digit performance.

Needed to mellow down that excitement.

This logic of random portfolio was there from 2008/2009 when there were huge swings from bull to bear to bull and random outperformed both ways.

But wanted to create a template to do this exercise in every cycle going forward.

I could make a template with the help of my friend Prashant Krish. Now my team mate Harsh Doshi does the iterations for the last few years.

The very first Random Portfolio post was in 2014 and since then have written quite a few Posts on it.

Its a simple template. ( Not tried to fine tune as need to keep it simple.)

Random Portfolio Selection Filter

•The only filter was stock should be above 5 rs and listed on NSE. ( to remove unusual big movers or duds. We changed this to 5 from 10.  )

  • ( We have taken only NSE stocks as BSE has quite a few manipulated stocks and its tough to clean that data )

•25 stocks selected randomly ( rand function) with an equal weightage of 4%.

•Time Period – Different Start Times.

•No shuffling of stocks. Just buy and hold.

•No brokerage applied.

We created 5 random portfolios on the above selection criteria. We did just 1 iterations.


This Exercise is Painful but Necessary!!

  • From a bottom of the cycle it is extremely difficult to beat the Random Portfolio. Even with a much more concentrated portfolio.
  • Also after a great year this is the Feeling. “ Kabhi Kabhi Lagta hai Apunich Bhagwan Hai”.
  • As soon as you see that you have not outperformed the Random Portfolio or only by a small Margin. It Humbles you and makes you feel Grateful to the Market and not Your Genius.
  • When you underperform the Random Portfolio by a Big Margin – It is like Humiliation. But then you take solace in the fact that you have outperformed the Benchmarks.
  • It would be rare for a Portfolio to underperform the Nifty from the Bottom of the Cycle. Do not ask me that feeling and I pray none of us go through that !

It either Humbles you Down or Humiliates You. 

Both the things help you get perspective and get back to your desk and continue to work harder and smarter.


Below is a list of Posts which we have done over the years on Random Portfolio


1) October 2014 -  Best time for Advisors to show Performance Reports/CAGR to sell their services – Part 1

A year when Random Portfolio average was 133% !!

2) January 2015 - Now is the Best Time for Successful Investors to give Gyaan on Investing.

Random Portfolio Return of 85% in a year against 31% Nifty and 55% CNX Midcap

3) February 2017 - Double in 3 years and 10x in 10 years– Every Investor Wants? Is it going to be Difficult or Impossible ?

A nice quote from the post

I personally think the new Full Time Investors and IFAs who have built in 20-25% cagr into their excel sheets are in for a rude shock in terms of the lower than expected returns over period of time as well as the shocks and lumpiness with it.

4) July 2017 -  Doubled your Money in Last 3 Years ? Skill or Luck ?

3 year Random Portfolio Cumulative return of 132% average ( more than doubled)

“The Market is supreme and provides the returns to even Bad Processes in Good TImes. Be careful.”

5) 1st January 2018 - Diversified Random Portfolio beats the Benchmarks Yet Again.

“not a single correction of more than 5% in the Nifty all through the year.”

“Random Portfolio Returns of 52-60% against Nifty 28.5% and Smallcap 57% Midcap 47%”


The next post in coming couple of days or by weekend. Very interesting observations from the first draft of work done.

We will also look at the “Maine Bola Tha Syndrome”



Feel free to comment on the posts or send a mail to nooreshtech@analyseindia.com or whatsapp on 7977801488

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