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Multibaggers by Tejaswy Nandury (Book Review)

Multibaggers by Tejaswy Nandury (Book Review)

Highlights

  • Volatility is scary for most investors. However, price volatility creates fantastic opportunities for the long term buyer.
  • There are only three major reasons to sell a properly selected stock:
    • Overvaluation,
    • Permanent adverse developments which a management cannot innovate its way out of,
    • If the original reason for making the investment is no longer valid.
  • Identifying Good Companies
    • Large Market Potential
    • Good Sales Growth
    • Buying a Good Company in a New Industry Early in its Lifecycle
    • Leadership in the Industry
    • Companies that Focus on New Initiatives
    • Companies with Ability to Change Business Models to Suit Market Conditions
    • Companies with Good Reputation in the Industry
  • The stock price of a company symbolizes the expectations of its future performance. This expectation is usually best reflected in a traditional valuation metric, such as the Price-Earnings ratio, or Price / Book Value Ratio, or Price-Sales ratio. When the ratios are very high, it implies that expectations of performance are extremely high.

How do multibaggers fit into this framework differentiating gambling, speculation and investment?

Multibaggers offer you the chance to make a spectacular amount of money with a reasonable chance of success if you are willing to put in the work to identify the right companies, develop the psychology required to handle the issues surrounding the holding of a potential multibagger through its long journey and the discipline to exit at the right time. In a sense, multibaggers are like long shot roulette bets offering the highest payoff but, unlike the roulette bet, with enough information to dramatically increase your chances of success. No amount of analysis will help you in roulette in the long run. Not so in multibaggers. But in order to succeed, you need to do the hard work involved, and develop your psychology and discipline in a certain direction.

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