My
messages are for fundamental value investors only. All else, traders, must stay
away. My time frames and reasons to buy is not match to traders, and even my
profit expectations from an investment will be higher.
1.
It’s
very difficult to find multi-baggers. It’s extremely difficult to find five
multi-baggers at a time. It’s impossible to find ten multi-baggers at a time.
2. Do not
focus on chasing gains in every opportunity the market offers. Instead of
chasing opportunities, be extremely choosy in selecting stocks and make a
portfolio with target to double in a year.
That could
turn Rs.1 Lac into Rs.10 Crores in 10 years.
|
After
1 year
|
After
2 years
|
After
3 years
|
After
4 years
|
After
5 years
|
After
6 years
|
After
7 years
|
After
8 years
|
After
9 year
|
After
10 year
|
|
2
Lacs
|
4
Lacs
|
8
Lacs
|
16
Lacs
|
32
Lacs
|
64
Lacs
|
1.28
Crores
|
2.56
Crores
|
5.12
Crores
|
10.24
Crores
|
3.
Select a
stock that can be held for at least a year because there is a clearly identifiable
story behind it, that may go say 3 times in a year because the EPS will rise,
accompanied by some PE expansion from a low PE-base, so that with some degree
of errors also, the stock should go up twice in a 12 month period.
4.
Not
many such stocks would exist, especially with good or even reasonable track
record. At least, not many such are clearly visible that can be held for 12
months and at the same time providing 3X-4X returns within that time. Therefore,
whenever one is seen, stick to it, and give it time to unfold over that 12
month period. If necessary, stick to just 2 to 5 stocks - instead of chasing
1-3 month trades in 15-20 stocks.
5.
This
method of concentrated portfolio and seeing it grow also saves one from
Operators` suck-ins, because, many stocks indeed doubles but not necessarily
for the right reasons and not really from cheap valuations. When it is almost
impossible to accurately judge the future profits, provide excessive importance
to present valuations and past track records – because there are no guesses in
there.
6.
The key
to making money in stocks is known as "Buy Right, Sit Tight". Money is
made by sitting, not trading. It takes time to make money. Nobody can catch all
the fluctuations.
7.
If one
truly knows what the price will be "daily / weekly / monthly basis",
he is either God or is an Operator. The rest, at best, would make an
"excellent guess" why and how a business may perform and, therefore,
how its stock price should behave "over time".
8. Valuations
will change based on actual business performance. Therefore, quarterly results
must be taken as the proof of the correctness of that "guess",
although just one bad quarter, in between, almost always will not be the
correct indicator of a guess going wrong and vice versa.
9. Investment
is like “watching grass grow” - patiently. In that context, SMSs, questions
about short term price movements, time-to-time advice seeking etc. is
irrelevant. Stock price changes over medium to long term depend on how much
extra profit will be made. Therefore, instead of the stock price and targets,
focus on why Net Profits will increase.
10. Diversification
is for HNIs / FIIs / Mutual Funds, who have to spread their crores of rupees in
that manner because they cannot put that much money in 4-5 stocks. The Market
Cap of the stocks will just not be able to absorb that kind of money during buy
and during sell. Therefore, all the opinions in news, analyses, and articles
written by these institutions always reflect about diversification.
