"Identifying Multibaggers - Road to financial retirement"

• Welcome to the world of equities - Understand how to allocate between equity and debt Differentiate between Gambling Speculating and Investing
• How the greats differentiated between Investing and Speculating
• Equity Markets climb a wall of worry - Bull Markets start amidst complete pessimism and bear markets amidst complete optimism
• The Investment Cycles -Integrating the Performance with the perception
• The two approaches to Investing Top down and Bottom up
• GDP and Stock Markets - Very positively correlated over the long term. Read the empirical evidence on India and Japan.
• India - Cross Section of Business opportunities
• The Foreign Money - Who is bringing what
• Markets react temporarily to political news but the reaction to fundamental news is permanent - Buy amidst all the bomb blasts, terrorist strikes, political upheavals etc.
• Stock Computational Tools - The complete Directory of wealth
• Always buy a good company at a good price. Never buy a good company at a bad price Infosys in March 2000 was a very good company but at a bad price
• Cyclical stocks need to be sold into the boom of the underlying commodity rather then be held as long term investments.
• Debt is not the Dirty Four Letter word It is not that dirty as long as your RoCE is greater then the cost of capital
• Dividend - Watch the fine print a Stock having a 7% dividend yield goes down 15% you still lose 8%
• Growth Rate - The one last thing that the markets would pay for. Growth never comes and if you have to pay for it do so because market will pay for growth and nothing but the growth.
• Diversification - A substitute for ignorance. The Robert Hagstrom Study - Concentrated portfolios outperform diversified ones.
• The Market Cap Argument - Check how the real multibaggers evolved from companies within the very small market cap base. After the markets become saturated these companies hit their top and plateau out.
• Various things that make a Potential Multibagger
• Is the Management Fair or Foul - Use the Secret Sensors to decide
• Why should HLL trade at a PE of 5 times that of Tata Steel or why should VST trade at a discount to ITC inspite of having a common foreign parent? Note down the drivers behind a PE ratio.
• The biggest money is made during a PE Re-Rating and the biggest money lost during a De Rating
• Filter all news & events to decide whether or not they affect the market cap
• Case history of a few multibaggers - Infosys, Bharti Televentures, Pantaloon
• Sustainable Advantage - The Ultimate tool
• The economic Value added (EVA) - One of lesser publicized and better tools of equity valuation
• Breaking the final numbers - The Du Pont anal

top

back