Magic of compounding -109 times in 10 years!

	Active Topics Memberlist Calendar Search Help
	Register Login

Fundamental
The Equity Desk Forum :Market Strategies :Fundamental

Topic: Magic of compounding -109 times in 10 years!

	<< Prev Page of 27 Next >>

Author

Message

deepinsight
Senior Member

Joined: 18/Sep/2006
Online Status: Offline
Posts: 980

Posted: 28/May/2007 at 10:31pm

While 60% CAGR would get us to 109 times in 10 years - dont forget that 35% CAGR gets us to 20 times in 10 years.

This goal of 35% if achieved would already be an amazing achievement.

This kind of goal 60% CAGR over 10 years is quite inspiring - its important for us to make sure we do not take unnecessary crazy risks and avoid the obvious mistakes. Large capital loss can easily cost us years of growth as it happend in 2000 (on the nasdaq).

Omji: I find your thoughts on TED's working as a team on a singular goal of 60% also quite inspiring- hope we can add more to that idea.

"Investing is simple, but not easy." - Warren Buffet

IP Logged

basant
Admin Group

Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403

Posted: 28/May/2007 at 10:36pm

Originally posted by omshivaya

Not just Purchase price: but also the FACT that something which was supposed to be a growth story in fact unfolded as planned and it doesn't turn out to be a wicket...

Pantaloon is a very soid growth story but sometimes it is better to keep the tempo at a low ebb. The triggers would come when they list their subsidiaries and that would create value - value is not in their retailing business. That is what i wanted to say.

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

IP Logged

omshivaya
Senior Member

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966

Posted: 28/May/2007 at 10:37pm

Deep jee

The idea is if we target above 60%, we can at least reach 40-45%. That is why I dont want to even talk of 40-45%, bcoz if something goes wrong, the mind(which is a very manipulative SOB) will convince ourselves that what the heck at least we got 25-30%.

TARGET: Look for no less than 60% for 10 years

GROUP WORK: Doing it as a group will take care to some extent that unnecessary risk you are talking of!

Finally: It's as simple as that!!!!

Basant sir: Thank you. Wanted to hear it from your mouth.

We all have to go back to the day when we first started on TED. Continous push is important! 10 years ahead for us.

Edited by omshivaya - 28/May/2007 at 10:39pm

The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it

IP Logged

Vivek Sukhani
Senior Member

Joined: 23/Jul/2006
Online Status: Offline
Posts: 6675

Posted: 28/May/2007 at 11:01pm

Hey guys, this CAGR thing perplexes me......you gold on to a scrip for 11 months and it doesnt move, 0p.c. CAGR.....in the next month it doubles....100 p.c. CAGR.... its how you smooth out the return scale that matters....and one who buys in the 11th month makes a 1200 p.c. CAGR. I dont think setting targets for returns is ever justified.... absolutely futile... karma kiye jaa.... fal bhagwaan par chorr de!!!!!!!

just a thing one must always ensure.... regular cash flows...if thats not there, one will real hard doses of good luck.....

as monu says, My 2 cents....

Regards,

vivek

IP Logged

omshivaya
Senior Member

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966

Posted: 28/May/2007 at 11:48pm

The returns would always have to be taken from a 3-year standpoint, because the themes that would be needed to be invested into to get a 60% CAGR would be REAL SOLID themes, with a good long-term growth prospect. Typically these themes would be ones where there is a structural change genuinely expected to take place or where the addressable market is huge and the company is a niche player in that field.

These gems can't be found out if we keep an eye for 1-year. It has to be at least 3 years. Usually we wont miss such stories if we keep a 3-year standpoint.

Anyone investing in such themes should in my opinion be ahead of the curve to vision the upcoming opportunity and thus COULD also have a good probability of picking up at a good price, since the stock COULD BE undiscovered.

A 3-year view would give a 1 year timeframe of being discovered PROBABLY too, so there are many advantages of having a 3-year view than a 12-month view.

I don't know if we will again find such "structural change" themes again like Retail or TV18. Media is still in its infancy stage of "structural change" compared to Retail. This theme of "structural change" is my best option for getting that 60% CAGR, so out of many we have to keep track of this ONE theme for our 10 year target.

Also, this theme has everything it that an investor dreams of: industry/sector rerating, company rerating, long-term growth and much more.

I hope I made some sense here, just spoke what came thru me. maybe Basant sir can correct me if I am wrong, as he has been able to identify 2 such structural changes and MORE IMPORTANTLY, the companies that would make THE BEST profit from this change.

The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it

IP Logged

manishdave
Senior Member

Joined: 05/Aug/2006
Location: India
Online Status: Offline
Posts: 1371

Posted: 28/May/2007 at 4:38am

Can leverage help in getting magic figure(109)?

No body talked about it. Then probably 50% would do. I am ducking in anticipation of replies particularly from Kulmanji.

In my view if 109 if not impossible, it is next to impossible. Particularly after such a big run-up. I had very high returns in past few years(like most of us) but dont think performance will repeat.

But if you ask Mark Faber he would say why 109, even 1090 is possible too. It depends on fed. If they start printing money....

IP Logged

Vivek Sukhani
Senior Member

Joined: 23/Jul/2006
Online Status: Offline
Posts: 6675

Posted: 28/May/2007 at 8:13am

I raise my hand in acceptance, Manish....

Om, I am quite flexible with respect to my investment horizons...so long as the company is increasing its cash flows, I will be with that company.....if that company can do so for 50 years I wont mind staying with that company for 50 years.....however, if the company shows a reduced cash flow in the next quarter, I will be off....tell me , whats the point if you double your money very very fast, in say just a year and then the stock doesnt move for next 2 years......so, horizon setting, target setting etc etc., doesnt take us anywhere. And although Mr. Market may be irrational, there are very very few stocks which can stand the heat of Mr. Market if that is turned on......thinking of 25 p.c. returns when market throws you -25 per cent return???????-sure, one must dream, no obkections to that...

Infosys made a an all time high for that rally in 2000 at 1598 and on 03-10-2001, it was almost at a 2-year low of 269.50.... i use the example of Infosys as its one of the most respected counters and perhaps managed a decent return from 2002 onwards......many stocks and I repeat many stocks were battered beyond shape.....

I am not against the power of compounding but use it for your bond portfolio.....there making your investments 4 times in 12 years having invested @12 p.a. and re-investing the proceeds at 12 p.a back to back seems a very plausible goal....

regards,

Vivek

IP Logged

go4lalit
Senior Member

Joined: 27/Aug/2006
Online Status: Offline
Posts: 135

Posted: 28/May/2007 at 9:26am

I want to bring another point while getting a 60% CAGR for 10 yrs.

The point is that it is almost impossible to get linear 60% CAGR for 10 yrs. Although it is possible to get 30% CAGR for 10 yrs in linear fashion (like HDFC) but anything beyond 30% is very difficult.

The companies which manage 60% CAGR will actually generate the real return in a period of 4-5 yrs. For example Infy.. the real return came in a period 4-5 yrs. This is the period when the PE expansion happens and maket discovers its potential.

Even if Pantaloon doubles in the next 5 yrs, it will have 60% CAGR for 10 yr period, as it has been a 50 bagger in last 5 yrs. For the same sake pantaloon has a 60% CAGR in the last 10 yr period.

The moral is to get in very early before the market discovers it and pay the right price for growth stock.

Edited by go4lalit - 28/May/2007 at 9:27am

IP Logged

<< Prev Page of 27 Next >>

Printable version

Forum Jump

You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum

This page was generated in 0.063 seconds.

Bookmark this Page

Most Participated Topic