Treat your portfolio as a system, not a stock basket: Vaibhav Porwal, Deserv

Vaibhav Porwal, Deserv

The biggest mistake investors make is treating portfolios as a loose collection of securities rather than a living system designed to endure market cycles, said Vaibhav Porwal, founder of Deserv, speaking at the Moneycontrol Dezerv Wealth Summit.

“A portfolio is a system which ensures your capital is protected, your wealth grows, and most importantly, that you are able to stay invested for a long period of time,” Porwal said. “Securities will come and go. Even asset classes can become irrelevant at times, but the system should outlast you.”

Drawing from past market cycles, Porwal pointed to 2007, when excessive equity exposure - often funded through leverage - compromised portfolio stability. He believes the lesson remains relevant today, even as market leadership shifts. “This year hasn’t really been about equities. It’s been about gold and silver. And suddenly, everyone wants exposure there,” he said.

According to Porwal, this tendency to chase recent performance is the biggest behavioural trap. “At the peak of any cycle, it becomes very difficult to distinguish between skill and luck,” he said, cautioning investors against attributing short term gains to superior decision making.

Portfolios should be split into two parts: a core and a tactical layer, he added. The core portfolio remains largely intact and includes domestic and global equities, along with fixed income. Tactical adjustments are made at the margin to account for changes in the economic cycle, allowing limited exposure to assets like gold, silver or real estate. “Never disturb the core,” Porwal stressed.

On stock selection, he said decisions are driven by three factors: valuations, crowding and narrative risk. “If prices move without earnings growth, there is a problem,” he said, adding that overcrowded trades and extreme enthusiasm around themes are red flags.

Looking ahead, Porwal believes discipline will be the biggest edge for investors. “Information and analytical advantages have largely disappeared,” he said. “The real differentiator over the next decade will be the ability to stay disciplined in a market obsessed with instant gratification.”

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