Investing secrets from the man who retired after making $170 million in the stock market, Insights from Star Fund Manager who never sell yet make massive gains
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Detailed Key Takeaways from the book I am reading Currently
5 Decent Articles to read and Key Takeaways from them.
A simple investment strategy that invested in the most valuable brands
Difference between a great company and a great investment (When you are likely to under-perform and when you are likely to out-perform)
Star fund manager Interviews who never sell yet make massive gains
How to decide which sector to avoid in a cyclical business (Video Clip)
Selling Criteria for Cyclical business (Video Clip)
2 Special Investing Related E-Books
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The Simple Path to Wealth (Part-1)
JL Collins takes this old style of investment book writing and disregards it completely. He creates the stuff that your mind wants to run to when it is tired of reading about stocks. Instead of esoteric equations about measuring a stock’s alpha and comparing it to its beta, he compares the entire stock market to a large mug of beer and explains why it’s still worth buying even when it comes along with an unpredictable quantity of foam.
You’ll be relieved to hear that you can be very successful by holding only a single Vanguard fund over your entire lifetime. You can branch out and get a little fancier if you like, but there is nothing to lose, and everything to gain, by keeping things as simple as you can.
Although very few people actually follow it, I have found that the road to a wealthy life really is simple and quite enjoyable to follow, so it only makes sense that a book about it should have those same fine traits. This one does.
Since money is the single most powerful tool we have for navigating this complex world we’ve created, understanding it is critical. If you choose to master it, money becomes a wonderful servant. If you don’t, it will surely master you.
“But Dad,” my little girl once said to me, “I know money is important. I just don’t want to spend my life thinking about it.” For me this was eye-opening. I love this stuff. But most people have better things to do with their precious time than think about money.
The people who make investing endlessly complex, because if it can be made complex it becomes more profitable for them, more expensive for us, and we are forced into their waiting arms.
Here’s an important truth: Complex investments exist only to profit from those who create and sell them.
Avoid investment advisors. Too many have only their own interests at heart. By the time you know enough to pick a good one, you know enough to handle your finances yourself. It’s your money and no one will care for it better than you.
Money can buy many things, but nothing is more valuable than your freedom.
The beauty of a high savings rate is twofold: You learn to live on less even as you have more to invest.
When you can live on 4% of your investments per year, you are financially independent.
What is so simple and clear now I personally had to learn the hard way, and it took decades.
For me, the pursuit of financial independence has never been about retirement. I like working and I’ve enjoyed my career. It’s been about having options. It’s been about being able to say“ no.” It’s been about having F-You Money and the freedom it provides.
From the beginning, I was a natural saver. Watching my money grow was intoxicating. I’ve never been sure how this started. It might be hardwired into my genes.
“ We don’t care about fancy cars or a bigger house. If you kept working what could we possibly buy with the money that would have more value than you being home with our daughter?” Put in those terms, the choice was easy. It was far and away the best “purchase” we ever made.
You’ll also see I’m not a fan of the “multiple income streams” school of investing.
I could pick investments that would outperform the basic stock index. It took me far too long to accept just how impossibly difficult a task that is.
Our unwavering 50% savings rate. Avoiding debt. We’ve never even had a car payment. Finally embracing the indexing lessons Jack Bogle—the founder of The Vanguard Group and the inventor of index funds— perfected 40 years ago.
One of my very few regrets is that I spent far too much time worrying about how things might work out. It’s a huge waste, but it is a bit hardwired into me. Don’t do it.
Whatever you choose, it won’t be what happens each year even if it turns out to be reasonably correct in measuring the decades. Nobody can predict the future precisely, and that’s something to remember any time you are looking at exercises such as these.
Debt: The Unacceptable Burden
Debt has been promoted as, and largely embraced as, a perfectly normal part of life.
This book is about guiding you toward financial independence. It is about buying your financial freedom. It is about helping you become wealthy and putting you in control of your financial destiny.
Look around at those people again. Most will never achieve this, and their acceptance of debt is the single biggest reason why.
If you intend to achieve financial freedom, you are going to have to think differently. It starts by recognizing that debt should not be considered normal. It should be recognized as the vicious, pernicious destroyer of wealth-building potential it truly is. It has no place in your financial life.
Your brain tends to shut down on the subject with the vague hope it will all resolve itself in some magical way and in the magical time of later. Living with debt becomes hardwired in your financial attitudes, habits and values.
Eliminate all non-essential spending, and I mean all of it. Those routine $ 5 coffees, $ 20 dinners, and $ 12 cocktails add up. This is what will free up the money you need to pour on the debt flames that are burning up your life. The more you pour, the sooner you stop burning.
It will require you to rather dramatically adjust your lifestyle and spending to free up the money you need to direct toward your debt. It will require serious discipline to stay the course over the months, maybe years, it will take to eliminate your debt. But here’s the good news, and it really is awesomely good:
A few cautionary words on “good debt.” Occasionally you will hear the term“ good debt.” Be very cautious when you do.
Houses are an expensive indulgence, not an investment. That’s OK if and when the time for such an indulgence comes. But don’t let yourself be blinded by the idea that owning one is necessary, always financially sound, and automatically justifies taking on this “good debt.”
Those who live paycheck to paycheck are slaves. Those who carry debt are slaves with even stouter shackles. Don’t think for a moment that their masters aren’t aware of it.
I may not have owned a Mercedes, but I owned my freedom. Freedom to choose when to leave a job and freedom from worry when the choice wasn’t mine.
Can everyone really retire a millionaire?
“I wonder if it would actually be possible for every single person to retire a millionaire?”
The short answer is a qualified “Yes!” it is possible for every middle class wage earner to retire a millionaire. Though it’s never going to happen. And that’s not because the numbers don’t work.
The numbers tell us that, compounded over time, it actually takes very little money invested to grow to $ 1,000,000. Over the 40 years from January 1975 to January 2015 the market has averaged an annual return of ~ 11.9% with dividends reinvested (~ 8.7% if you spent your dividends along the way). 1 At that rate just $ 12,000 invested in the S& P 500 stocks in 1975 would be worth over a cool million ($ 1,077,485) today.
Don’t have $ 12,000 lying around? That’s OK. If you started in January 1975 and invested $ 130 per month ($ 1,560 a year) by January 2015 you would have had $ 985,102.2 Not quite a million, but not a hand full of mud either. Want nothing less than the full million? Kicking it up an extra $ 20 to $ 150 per month— or $ 1,800 a year— would have gotten you to $ 1,136,656.2 Your million plus a new Tesla and Corvette.
Money is a very relative thing. Right now I have roughly $ 100 in my wallet. For some (very wealthy) people out there, $ 10,000 has less relative value to their net worth. For (even wealthier) others, it’s $ 100,000. For still others (the vast number of very poor in the world), $ 100 might be more than they’ll see in an entire year.
Spend less than you earn— invest the surplus— avoid debt As we discussed in the introduction, do only this and you’ll wind up rich. Not just in money. But if your lifestyle matches or exceeds your income, you forfeit your hopes of financial independence.
How to think about money
Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn.
Warren Buffett is rather famously quoted as saying:
Rule #1: Never lose money.
Rule #2: Never forget rule #1.
Unfortunately, too many people take this at face value and leap to the conclusion that Mr. Buffett has found a magical way to dance in and out of the market, avoiding the inevitable drops. This is not true and in fact, he is on record speaking to the folly of trying: “The Dow started the last century at 66 and ended at 11,400. How could you lose money during a period like that? A lot of people did because they tried to dance in and out.”
The truth is that during the crash of 2008-9, Buffett “lost” about 25 billion dollars, cutting his fortune from 62 billion to 37 billion.
But unlike many others, Buffett didn’t panic and sell. He knew that such events are to be expected. In fact, he continued to invest as the sharp decline offered new opportunities. When the market recovered, as it always does, so did his fortune. So did the fortunes of all who stayed the course.
Mr. Buffett talks in terms of owning the businesses in which he invests. Sometimes he owns them in part—as shares—and sometimes in their entirety. When the share price of one of his businesses drops, what he knows on a deep emotional level is that he still owns precisely the same amount of that company. As long as the company is sound, the fluctuations in its stock price are fairly inconsequential. They will rise and fall in the short term, but good companies earn real money along the way, and in doing so their value rises relentlessly over time.
Investing in a raging bull (or bear) market
This is all about fear and greed, the two major emotions that drive investors. Fear is perfectly understandable. Nobody wants to lose money. But until you master it, such fear will be deadly to your wealth. It will prevent you from investing. Once you are invested, it will cause you to flee in panic for the exits every time the market drops.
The curse of fear is that it will drive you to panic and sell when you should be holding.
The market is volatile. Crashes, pullbacks, and corrections are all absolutely normal. None of them is the end of the world, and none is even the end of the market’s relentless rise. They are all, each and everyone, expected parts of the process.
Over the decades you’ll be investing, countless smaller corrections and pullbacks will occur as well.
Therefore, if we know a crash is coming, why not wait to invest? Or, if currently invested why not sell, wait till the fall, and then go back in? The answer is simply that we don’t know when the crash will occur or end. Nobody does.
Don’t believe me? Think you can? Test yourself here: You may have heard that a lot of people think a stock market crash is just around the corner. That’s certainly true, but there are also lots of people who say we are just at the beginning of this boom and we will never see the S& P this low again.
Every day, heavily credentialed experts are predicting a market crash. At the same time, equally credentialed experts are predicting a boom. Who’s right? Beats me. Both are predicting the future and nobody can do that reliably.
So, why all the predictions? Simply because booms and busts are exciting! Get it right and your Wall Street/television reputation is made! Predicting them equals ratings, especially if the predictions are extreme.
For serious investors, however, all of this is useless and distracting noise. Worse, if you pay attention to it, it is positively dangerous to your wealth. And your sanity.
Could we be at a moment similar to January 2000 when the market peaked and went on to lose almost half of its value? Or in July of 2007 when it did the same? Sure, it is easy to see that pattern in retrospect.
What we do know is that each of these milestones was surpassed at times like today when people were every bit as convinced that the market was too high and ready for a crash. With that said, let’s assume we do know that right now, at 2,102, the S&P 500 is at a peak and about to crash. Maybe a magic genie has told us so. Clearly, we’ll sell (or at least not buy). But now what? We want the gains only the market can deliver. So we want back in at some point. But when? Is this a 10% pullback? If so, we’ll want to buy at 1,892 or so. What if it’s a 20% decline, the official definition of a bear market? Then we don’t want to buy until around 1,682. But what if we do that and it turns out this is a crash!! Damn! In that case, we should have waited until it dropped all the way down to 1,200 or so. Where’s that pesky genie when we really need him? The point is that to play this market timing game well even once, you need to be right twice: First, you need to call the high. Then you need to call the low. And you must be able to do this repeatedly. The world is filled with sad investors who got the first right and then sat on the sidelines while the market recovered and marched right on past its old high. Market timing is an un-winnable game over time. How can I be so sure? Simple:
The person who could reliably do this would be far richer than Warren Buffett, and twice as lionized. Nothing, and I mean nothing, would be more profitable than this ability.
Whether you invest today or sometime in the future, I guarantee your wealth will be cut in half more than once over those 60 years. You’ll suffer many other setbacks as well. It is never fun— but it is the process— and the price you and everybody else must pay to enjoy the benefits.
There’s a major market crash coming!!!! and even famous economists can’t save you
The typical investor is prone to panic and poor decision-making, especially when all the cable news gurus are lining up on window ledges
What happened in 2008 was not something unheard of. It has happened before and it will happen again. And again. In the 40-odd years I’ve been investing we’ve had:
The great recession of 1974-75.
The massive inflation of the late 1970s and early 1980s. Raise your hand if you remember the WIN buttons (Whip Inflation Now). Mortgage rates were pushing 20%. You could buy 10-year Treasury Notes paying 15% or more.
The now infamous 1979 Business Week cover: “The Death of Equities” which, as it turned out, marked the coming of the greatest bull market of all time.
The Crash of 1987, including Black Monday, is the biggest one-day drop in history. Brokers were literally on the window ledges and more than a couple took the leap.
The recession of the early 1990s.
The Tech Crash of the late 1990s.
9/11.
And that little dust-up in 2008.
The market always recovers. Always. And, if someday it really doesn’t, no investment will be safe and none of this financial stuff will matter anyway.
Everybody makes money when the market is rising. But what determines whether it will make you wealthy or leave you bleeding on the side of the road is what you do during the times it is collapsing.
The market always goes up. Always. Bet no one’s told you that before. But it’s true. Understand this is not to say it is a smooth ride. It’s not. It is most often a wild and rocky road. But it always, and I mean always, goes up. Not every year. Not every month. Not every week and certainly not every day. But take a moment and look again at the chart of the stock market in the last chapter. The trend is relentless, through disaster after disaster, up.
There’s a major market crash coming!! And there’ll be another after that!! What wonderful buying opportunities they’ll be.
I tell my 24-year-old that during her 60-70 odd years of being an investor, she can expect to see 2008-level financial meltdowns every 25 years or so. That’sThat’s 3 of these economic “end of the world” events coming her, and your, way.
The thing is, they are never the end of the world. They are part of the process. So is all the panic that surrounds them. Don’t worry. The world isn’t going to end on our watch. It is hubris to think it will.
The market always goes up
The Crash 1987, Black Monday (After a Wild Week on Wall Street, the World is Different)
As any educated investor does, I knew that the market was volatile. I knew that on its relentless march upwards there could and would be sharp drops, corrections, and bear markets. I knew that the best course was to hold firm and not panic. But this? This was a whole ‘nother frame of reference.
I held tight for three or four months. Stocks continued to drift ever lower. I knew this was normal, but unfortunately, I knew it only on an intellectual level. I hadn’t yet learned it deep enough in my gut. Finally, I lost my nerve and sold.
I just wasn’t tough enough. That day when I sold it was, if not the absolute bottom, close enough to it as not to matter. Then, of course and as always, the market again began its inevitable climb. The market always goes up.
It took a year or so for me to regain my nerve and get back in. By then it had passed its pre-Black Monday high. I had managed to lock in my losses and pay a premium for a seat back at the table. It was expensive. It was stupid. It was an embarrassing failure of nerve. I just wasn’t tough enough.
My mistake of ’87 taught me exactly how to weather all the future storms that came rolling in. It taught me to be tough and ultimately it made me far more money than the admittedly expensive education cost.
What is the worst possible performance a bad stock can deliver? It can lose 100% of its value and have its stock price drop to zero. Then, of course, it disappears never to be heard from again.
Now let’s consider the right side of the curve. What is the best performance a stock can deliver? 100% return? Certainly, that’s possible. But so is 200%, 300%, 1,000%, 10,000%, or more. There is no upside limit. The net result is a powerful upward bias.
Why do most people lose money in the market?
The vast majority of investors in mutual funds actually manage to get worse returns from their funds than the funds themselves generate and report. Let that little nugget sink in for a moment. How can this be? Our psychology is such that we can’t help trying to “time” the market. We tend to jump in and out, almost always at the wrong times
We believe we can pick individual stocks.
You can’t pick winning stocks. Don’t feel bad. I can’t either. Nor can the overwhelming majority of professionals in the business. The fact that this ability is so rare is the key reason why the very few who apparently can are so famous.
Oh, sure. Occasionally we can and, oh my, what a heady feeling it is when it works. It is incredibly seductive. Picking a stock that soars is an intense and addictive high. The media is filled with “winning” strategies that feed on this delusion.
We believe we can pick winning mutual fund managers
Actively Managed Stock Mutual Funds (funds run by professional managers, as opposed to Index Funds) are a huge and highly profitable business. Profitable for the companies that run them. For their investors, not so much.
So profitable that there are actually more mutual funds out there than stocks. According to the U.S. News and World Report, 5 as of 2013 there were about 4,600 equity (stock) mutual funds operating in the U.S. Recall there are only about 3,700 publicly traded stocks in the U.S. You read that correctly. Yeah, I’m amazed too.
The article goes on to say about 7% of funds fail each year. At that rate, more than half (2,374 of those 4,600) will fold during the next decade. With so much money at stake, investment companies are forever launching new funds while burying the ones that flounder. The financial media is filled with stories of winning managers and funds and lavishly profitable advertising from them. Past records are analyzed. Managers are interviewed. Companies like Morningstar are built around researching and ranking funds.
The fact is, few fund managers will beat the index over time. In 2013, Vanguard posted the results of their research on this. Starting in 1998 they looked at all of the 1,540 actively managed equity funds that existed at the time. Over the next 15 years, only 55% of these funds survived and only 18% managed to both survive and outperform the index.
82% failed to outperform the unmanaged index. But 100% of them charged their client’s high fees to try.
While we can clearly see those that succeeded now, there is no predicting which funds will be in that rarefied 18% going forward. Every fund prospectus carries this phrase: “Past results are not a guarantee of future performance.” It is the most ignored sentence in the whole document. It is also the most accurate.
Other academic studies suggest that when looking at longer time periods, even an outperformance rate of 18% is wildly optimistic. In the February 2010 issue of The Journal of Finance, Professors Laurant Barras, Olivier Scaillet and Russ Wermers presented their study of 2,076 actively managed U.S. stock funds over the 30 years from 1976 to 2006. Their conclusion? Only 0.6% showed any skill at besting the index or, as the researchers put it, the result was “... statistically indistinguishable from zero.”
They are not alone. Brad Barber of UC Davis and Terrance Odean of UC Berkeley found that only about 1% of active traders outperform the market and that the more frequently they trade, the worse they do.
With this terrible track record, you might be wondering how is it that so many fund companies run ads that claim most, if not all, of their funds have outperformed the market. With so much money at stake, it is not surprising that they have their tricks. One is simply to selectively choose a time frame for measurement that happens to work in their favor. Another just takes advantage of all those dead and dying funds.
Mutual fund companies launch new funds all the time. Random chance is enough to predict a few will do well, at least for a while. Those that don’t are quietly closed and the assets folded into something doing better. The bad fund disappears and the company can continue to claim its funds are all-stars. Cute. There’s lots of money to be made with actively managed funds. Just not by the investors.
Excerpts and Learning from Articles/Blogs
1) The Avedisian Rules, a distillation of how Edward Avedisian, an ordinary, amateur investor, sowed the seeds of wealth and then reaped them for others.
1. Save money and keep it simple
He lived a stripped-down life. he never carried any debt. Lacking any demands on his money, he put everything he could into the market.
“To him, the risk was minimal,” he said. “he had no obligations, and that allowed him to plow everything back in.
Avedisian learned early on that a key to investment success was to focus on a few critical variables in a business and how they might set up a company for radical outperformance.
By committing to doing research on individual companies, he chose the route most great investors from Buffett to John Templeton to Peter Lynch have chosen
Avedisian tried to identify a few, great businesses that he could buy and hold for decades. When he gained conviction on a business, he concentrated his bets; at any one time, he said, he usually owned less than a dozen companies.
The cardinal rule of The Avedisian Rules: Owning a few great businesses that can grow for generations will generate you great wealth. The magic of compounding will see to that.
2. Stay calm, stay invested and keep your own counsel
he paid attention to a business's competitive advantage and whether it was waxing or waning instead of tying to time market and he enthusiastically agrees with the Peter Lynch mantra, “water your flowers and cut your weeds.”
investing is a solitary pursuit. Collaboration and seeking others’ counsel is fine, he said, but “ultimately it’s your yard, and you have to decide what you’re going to do.”
Be self-reliant. Avedisian said that investing was in many ways a contrast to his day job, which involved performing with others in a large ensemble. On the other hand, he said, the craft of investing was identical to that of making music. Both require creativity and interpretation, and while one is primarily solitary and the other collaborative, both come down to the individual.
3. Some things you should not try at home
Save money, rely on yourself, stay calm and stay invested
4. Find a higher purpose
Avedisian invested for about 40 years. As anyone who has tried to make money in the stock market over a sustained period can attest, it is difficult to stay the course.
Two things kept Avedisian going, he said. First, it was fun — the challenge kept him engaged. Second, and perhaps more important, he wasn’t investing
for himself. He had others in mind.
2) Difference between a great company and a great investment (we often do not acknowledge that
Chart 1 (on the left) is what many such investors believe in by implication – that earnings and share price of businesses move in tandem, and therefore, identifying a great company automatically makes it a great investment.
In practice, however, the world dishes out a situation that is more along the lines of Chart 2 (on the right). When the market identifies a business that is growing its fundamental value (earnings or free cash flow) at a constant click, it initially gets exciting, and valuations move ahead of fundamentals for a few years. At a certain point, the market realizes that it is paying too much for this business, and the stock prices flatline, for many years (Coca-Cola (1998- 2016), IBM (1999-2010), Hindustan Unilever (1999-2010), Colgate (1994-2009), L&T (2007- 2016), Mphasis (2009-2020), Wipro (2000-2018), Dr. Reddy’s Labs (2015-2020), Siemens (2008-2014, 2015-2020) and the list goes on).
A great business in Chart 2 above is a great investment at points A and C, but a lousy investment at point B. The distinction between the two is often the difference between average and superior long-term investment returns.
3) The king of buy and hold (How Nick Train, the star fund manager from the UK, never sells and yet make mammoth gains)
→ What would you do in a 1999 or 2007-like scenario? Continue to invest? or Wait?
I am mostly concerned with avoiding obviously bad or "losing" investment behavior - such as over-trading, or backing low-quality companies and I'm willing to stick with basic investment principles that seem to me likely to work overtime, even accepting there will be periods when they don't.
looking back over the thirty or more years of my career it seems to me every one of those negative calls I made on markets was just plain wrong. They've gone up a lot over time and, in hindsight, there was always something to be enthused about. And likely there always will be
→ What according to you, indicates the market is expensive or cheap?
It is a better bet to assume that equity markets are always cheap.
On companies
→ You ascribe a lot of significance on dividend-paying companies. What if companies skip dividends to invest in growth?
Yes, dividends are interesting, particularly the long-term dividend histories of industries and companies. But maybe not for the reasons you might think.
Longevity, tradition, and predictability are important investment criteria for me. If a business has not just survived but thrived over previous periods of technological change then there is a possibility, never a certainty, that it will continue to do so. For this reason, I am interested in the long-term dividend histories of companies.
If a company has proven capable of paying growing real dividends over long periods it is a signifier that there is a business model or set of assets that have retained relevance and offered protection against past disruptive technology change and the effects of monetary inflation.
If at all possible I avoid companies that appear to be certainly vulnerable to technology change - however "cheap" they may appear. That seems to me to be the most difficult approach of all.
→ You hold companies for many years. When, in your view, does a company start losing the plot and is on the sure path of decline?
I don't like it when a theoretical cash-generative business model stops generating free cash. Also if debt builds up for no good reason alarm bells ring. A long time ago I made a bad mistake investing in the music industry. I failed to understand how technology was unraveling the record labels' superior economics based on copyright. The problems soon showed up in falling free cash flow and rising debt.
Smart managers of a company with temporary problems will find a solution to those problems than that I will successfully switch out of said challenged company into a better one. That might sound defeatist - but in a competitive capital market, with other investors highly alert to risks and opportunities everywhere it is hard, particularly after costs, to demonstrate that regularly trading in and out of companies adds value.
On stock picking
→ What is a bagger? What are the qualities you look for in a bagger
It seems almost a pointless truism - that the best investment you can make is one which rises many times over and that you never have to sell. But my observation is that few people invest in such a way as to give themselves the best chance of multiplying their capital - because they're always, as the cliché runs, pulling up the plant to look at the roots.
In the end, I think there is a psychological factor here. There are those who love to trade - to take cutely timed profits and move on to the next idea. Variety keeps them engaged. Then there are the hoarders. People who painstakingly accumulate holdings in valuable companies over the years, harbouring them during periods of underperformance, buying more on the dips - monitoring the gradual build-up of book value and dividends over time. It takes patience. Both are equally valid. Perhaps the most important learning for every new investor is to figure out what psychological type they are.
An old friend of mine - an investment banker actually - likes to point out that the dividend per share he receives today from his longest-standing personal equity holding is higher than the price per share that he paid for the stock - although, admittedly, it was purchased 25 years ago. Isn't that amazing? Only equity can do that for you. But you have to own the right company and you have to be patient.
→ In a recent interview, you said you have not bought anything new for the last four years. Do you wait for a fat pitch, as Buffett says?
Doesn't Buffett say somewhere; "Often the best idea for new money is to buy more of what you already own"? I think it's interesting that this four-year period has coincided with a streak of competitive absolute and relative performance from the strategy. Activity is overrated!
On stock valuations
→ Exceptional companies with durable competitive advantages are often not cheap. Would you buy a Diageo at 40x or 50x earnings? What is the maximum you would pay?
To me, it appears that "exceptional companies with durable competitive advantages" are in fact cheap almost all the time.
The point is such companies are rare. It is plain wrong to expect them to be valued similarly to what is the vast majority of ephemeral, low-value-added businesses. I like to think about the conundrum of 20.
So, a rule of thumb for me is that an exceptional business can easily justify up to 30x P/E, or a real earnings yield of over 3%.
→ How can investors use the gilt rate to come up with a discounting rate to arrive at the intrinsic value? (Long Answer)
→ How do you value whether a company is undervalued or overvalued? DCF, free cash flows, or private market value?
On my time horizon, the caliber of a company is much more important than its value. You can be wrong about value in the short term, but still, have a great investment over time. My worst errors have come from overestimating a company's business model, not overestimating the worth of a fine company.
I pay a lot of attention to M&A activity in the sectors that I invest in. One actual transaction - when serious business people, staking long-term corporate capital, are prepared to buy or sell 100% of the equity of a business - is worth dozens of investment bank research notes.
On selling
→ When should a person sell a long-term investment and when not? Do you sell or clip your holdings in a heated market in anticipation of lower prices when markets will eventually crash?
Best to never sell.
4) 10 Facts About Bear Markets
5) The value of a brand
Write up on how you would out-perform the market if you bought the most valuable brands (simple investment strategy that invested in the 100 most valuable brands after they were announced each year)
Sridharan Anand's investing, business, psychology, and complex systems-related essays in one Complied Book
The E-book contains investing framework of some of India's most accomplished fund managers & CIOs.
Small Video Clips
➢ Guy Spier Interview with Safal Niveshak
Using Investment Checklist (16:28 to 22:08)
Focusing on things which are not changing/not likely to change (How Guy Spier Invest) (23:26 to 31:29)
8 Personal Finance & Investing Rules by Guy Spier (53:52 to 59:50)
➢ Jiten Parmar (Cyclical King) interview with Smart Sync Services
How being an entrepreneur will help you more in your investing journey! (17:03 to 19:09)
What did Jatin Parmar do when he made mistakes, Wait for a better price or sell immediately (33:04 to 34:44)
All about Cyclical Investing (38:47 to 49:45)
Wait during the pessimistic time (Waiting time), Experience of Playing Different sector cycles) (50:33 To 01:01:02)
Views on Various Sector like Cement, Paper, Auto, Financials, and Hotel (1:05:28 To 1:37:45)
How to Value Cyclical Business (1:38:35 to 1:43:16)
How to do management checks/Analysis/Meeting Management (1:50:52 To 1:54:13)
Allocation Part (1:59:46 to 02:02:57)
How to decide which sector to avoid in a cyclical business (02:04:03 to 02:06:36)
Selling Criteria for Cyclical business (02:13:50 To 02:20:03)
Mistakes to avoid (2:31:00 To 02:33:38)
➢ Vijay Kedia’s Interview with Equity Master
How Vijay Kedia picked 3 100X Returns stocks/got 100X Return in 3 stocks (Journey of Roller Coster Ride) (27:09 to 32:56)
March 2020 Covid Crisis Situation and Experience ( And How he got Tejas Network at 40!) (33:49 To 39:50)
Investing Style (40:43 To 45:09)
How to Analyze company management (45:20 to 48:51)
On valuation (48:51 to 52:30) | Portfolio Sizing (53:58 to 57:50)
Criteria for selling stocks (58:39 to 01:02:54)
Asset Allocation (01:04:54 to 01:06:47)