Devina Mehra warns that investors often hold onto obsolete stocks, risking capital trapped in unproductive holdings. Experts advise rigorous portfolio audits to identify and exit ‘zombie’ companies and outdated securities, fostering smarter long-term investment strategies.
Devina Mehra’s warning is simple: many investors are carrying dead weight in old portfolios without realising it. In her column for Business Today, she said nearly three-quarters of all stocks ever listed on Indian exchanges no longer trade, even though only about 4,500 shares are actively traded now. That gap matters because long-forgotten demat accounts can hold securities inherited from parents, bought decades ago or altered by mergers, bonuses and other corporate actions.
The deeper problem, Mehra argued, is not just illiquidity but habit. Investors often keep a stock because they once paid more for it, or because they are emotionally attached to the original idea behind the purchase. That can leave capital trapped in positions that no longer fit their goals. Her test is blunt: if cash were available today, would the investor buy the same stock at today’s price?
That same discipline is echoed by other market writers. TIKR has argued that investors should sell when a company’s fundamentals have clearly broken, rather than waiting for a hoped-for recovery. TradeThesis makes a similar point about “zombie holdings” , positions that remain in a portfolio simply because nobody has made an active decision to own or exit them. The common thread is that the purchase price should not govern the decision to keep holding.
For investors trying to clear out such holdings, the first step is an audit of the entire demat statement, not just the names that are still familiar. Stocks that trade rarely, have been delisted, or no longer resemble the businesses they once were deserve scrutiny. Quant Investing and State Street Journal both note that true zombie companies are often burdened by debt and weak cash generation, which can make them value traps rather than bargains. The broader lesson is that a portfolio clean-up is not an admission of defeat; it is a way to make sure every holding still has a reason to be there.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
