You are very right. Risk begets reward. Big risk begets big rewards.
But, while the risk is taken by you, the reward is for the guy on the other side of the trade!  The guy who sold you the lemon and run off with the cash!
In the markets, tortoise always wins at the end of the race, even though the hare looks like its winning from time to time (and thats mainly because of all the media hype thrown around about this new company and that new product; though sometimes the upstart company does get to become a bluechip).
Let me recite one more thumbrule before getting down to specific stocks, sectors, etc.
Back in 1980s and early 90s, Indian stock market was rich with under analysed and under-reported companies, which were hidden gems. Also, due to tax breaks given for dividends and capital gains, many of these companies which were sitting on HUGE reserves on a tiny equity base (merely to avoid paying tax), many of these companies suddenly unlocked their tijori and came up with a series of bonus, stock splits and increased dividends thereby putting enormous amounts of tax-free profits into shareholders hands. I remember, one year Premji earned more than 600 Crs as dividends all tax free!
First you will try to structure how you are going to operate ...
0. Portfolio design (figure out how your portfolio is going to be structured)
1. Stock Selection (figure out which stocks you want to keep in your portfolio & why)
2. Determine market state (figure out whether its opportune time to get in)
3. Entry (what is our method of entry, all-in-one-transaction, phased-out, etc)
4. Exit (whenever necessary)
Then you will go about shortlisting your stocks
- First figure out sectors you want to be into (Pharma, FMCG, IT, BFS(financial), etc)
- Then find out the top 3-5 stocks in each of these sectors (these stocks must have been around for a long time, have great management, performed steadily over business cycles and distributed profits generously)
- Then figure out their bargain buying zone (stocks have gone from Price/Earning of 7 to 170, where will you enter?). Typically, entering at low multiples means you are paying bargain prices for the stock and are protecting yourself on the downside and leaving lots of room on the upside for the multi-baggers you want!)
Once you find a good, long term company, you never leave it. To give you an example ...
HCL Tech earned Rs.14.25 per share in Jun2008 and at its bottom was available around Rs 90. That is a P/E of 6.30, which was a real bargain, considering, just an year before, it had earned Rs 18.63 per share and was trading at Rs 350 (P/E of 18.. In that one year, it bagged some of the biggest $100 million projects among all IT majors, so the pipeline was rich.
Since then the company has steadily progressed, earning 18.50 (2009), 17.88 (2010), 22.68 (2011), 33 (2012), 55.97 (2013), 91.37 (2014) and 97.84 (2015). In other words, it added Rs 337 to your share and paid you around Rs 80 in cash dividends and you only paid around 90 for it! 
It hit a peak of Rs 2117 (multi-bagger of over 23 times your purchase price), returned all the money you paid for the share via dividends and is now trading at an equivalent of Rs 1700 today. All in just 7 years!
Lastly, when you bought it, its Net Worth was Rs 4180 Crs. Today its Rs 24,224 Crs.
Now, you see what the so-called experts mean by insisting on sticking with Bluechips with the main part of your portfolio and having a small amount into riskier small and mid cap stocks.
Like fish in the ocean, the smallest caps last the least (smallest fish gets eaten by the medium fish), the midcaps last a little longer and many more survive and grow into large caps and the large cap bluechips last the longest and I have seen some companies (Tata Steel/TISCO) being passed on as family heirlooms! 
Just in case you believe you can't figure out head or tail of what I have said, just remember that its all some jargon and common sense and a person with the investing experience you have can easily wrap your mind around all this once you spend a couple of weeks understanding the lingo. Its well worth the time invested because of the huge amount of fun and profit you will have in the years to come, outwitting the "market" by investing wisely - the right company at the right time and price - and holding onto your investments forever!!! 
And going by your name, I believe you are Madu and for them all this runs in the blood (I have many Madu friends who are real good at this). So, very shortly you will also be an "expert"! 
More (sectors, stocks, etc) later.
cheers
