I am proud of VP and processes we have developed. I have learned immensely from the VP.
Also Mr. N is also on VP and he also has good things to say about VP.
Mr. N does not mean it to be the criticism, instead he is just asking you to go to next level by proving that your process works in the downturn as well or your process works when valuations are crazy high. In the process you will find many things previously unnoticed and get an opportunity to refine the process further.
Mr. N is the person who introduced me to the writings of Nassim Nicholas Taleb (The Black Swan, Fooled By Randomness etc.) and one thing Mr. Taleb brings out clearly is you might just be plain lucky.
I donāt take it at all that we are just lucky but I also donāt deny that luck played no part.
We have witnessed a crash every few years (1984, 1992, 2001, 2008). So he is asking will your processes and concepts hold ground when you see a crash in say 2016 or 2017 or 2018. Thatās all!
Mr. Nās challenge is worthy to be accepted by VP community I think.
Rupesh
thats a fair point and i am not criticizing N or you. What i am saying is that no. of multibaggers is a wrong metric. Its an outcome, but not always of a good process.
As far as handling a crash, my personal experience is that there is really not a process you can build to avoid it. the best you can do is understand your company better than everyone and if the long term prospects remain good, then market crash or no crash, hold on to it. it comes down to temprament and the amount of pain you can bear.
To think of it, why should an investor react to a crash anyway if your investing life is 10-20 years, there is no immediate need for cash and the company has excellent long term prospects. imagine what loss one would have incurred if you held the likes of sun pharma or asian paints or nestle and sold based on a crash in 2008 ?
anyway just my view. btw, there a lot of hidden single letter investors on the forum
Sorry. It was not my intention to hijack this thread and deviate the conversation off-topic.
Will dial down the superlativesā¦
But the underlying point remains, VP has set the foundation to be better prepared for the next crash.
Important question as Donald pointed out is to have the right perspective which is, "Am i confident enough of the process/conviction to remain standing after the tide goes out during the next crash?"
That is a very much each one of us has to answer it on their own.
Speaking for myself, i am still ways off but all the tools are available at VP and it is up to me to ākeep reaching, recognizing and reactingā
I donāt think Mr. N is counting multi-baggers. He is just saying that some companies in Nifty 50 or Sensex 30 has also given multi bagger returns and these companies are generally Stalwarts (In Lynch language). If stalwarts are becoming multi-baggers, meaning you can say you are in a fantastic bull run.
Regarding why should a investor worry about crash when he is holding for 10 years, there are few examples:
Think that you got into Yahoo 1999 at 30$ or 50 $ or 100$ (I know I know technology company, Mr. Buffet warned you but still) - you didāt make any money in 15 years!! Current yahoo stock price is 40$.
Think that you got Reliance Industries in 2008 at 1500 Rs. Todayās price is 2050 (adjusting for bonus). You got less returns by holding Reliance Industries for 7 years than fixed deposits.
So getting the stocks at right valuations is important not just for short term (2-3 years) but also for long term. Also I know you can not anticipate for Black Swan events but we still need to have some response mechanism to it.
But that is the point of Mr. N. When you have Black Swan events out of your favour, how do you respond?
And Iām very paranoid when I see companies trading at 40 or 50 or even 90 P/E and one thinks that they can go on like that. If a Black Swan event comes and P/E compression happens, one might not be able to recoup losses for a decade or even two decades.
I also see bubbles forming up in economies (Donald mentioned it somewhere). I think we averted crashes for now - due to chain reaction of Greece and China Stock Market crash. But I canāt get rid of the feeling that another crash is just around the corner.
Thatās why Donaldās point of 10 years is right on money. I believe (largely due to Mr. N), we entered into a lot of stocks when valuations were extremely attractive and we got bull run to reward us. We also havenāt faced any daunting negative Black Swan events yet. 10 years is a good time period where we can expect some crash/negative Black swan event.
I am very confident that we (@VP community) will figure it out the response to next crash. We might even have it figured out - we just donāt know it yet. When that happens, we would have reached a new milestone.
Hi Donald,
This is a super presentation and covers VP pulse as much as possible in a single ppt.VP is a true Gold mine for anyone willing to work hard. New learners like me can understand the depth of research and hard work that goes into a VP stock only when they try to know a business thoroughly.
For Example - recently I was researching Kaveri Seeds, read Annual reports in chronological order from 2009,industry report whatever else available on public domain.Whenever I thought I have a fair understanding of the business and canāt progress much more, I came back to the thread and read the posts.Every time I saw how the analysis/research was taken to the next level (beyond my imagination) and had to go back and read more.
To be honest it was quite scary, I realized how I did not know much about investing. With so much information/Analysis to digest in a single stock, I had no idea how to navigate through all this ocean of information everywhere. How to generate the next idea! From my journey so far ,I feel sometimes beginners need reassurance from experts whether they are in right direction or not instead of hand holding,this guidance can increase energy levels exponentially.
@Donald - thank you so much for taking us through the journey of Valuepickrā¦the amount of hardwork, knowledge, dedication and passion that the team has put into bringing this forum to the great heights is incredible and the reasons for its success is pretty evident.
Every time I come back to this forum I am amazed by the knowledge that one can gain on every aspect of investingā¦my big takeaway has been that there is seriously no shortcut to being a successful investor- its hardwork, hardwork and more hardworkā¦with some amount of luck! Most importantly that everyone can be successful through this rigour of hardwork and discipline.
The concepts on capital allocation, quality of business, quality of management, art of valuation etc have been distilled with immense clarity and simplicity and are jewels for any newbie or experienced investorsā¦the scuttlebutt and collaboration on any research adds exponential value to any analysis and is best exemplified by the work done on VP!
May this collaborative effort reach even greater heights from here and I do hope to continue my association with Valuepickr for a long time!
Thanks for the appreciation for Team VP.
Glad the next gen of serious learners like you are finding our process for capturing back learnings, useful. Today we find there is a huge number of guys showing serious intent in learning the craft well - we are already seeing several young passionate learners like you and @rohitbalakrish_, @karanmaroo and many more putting in exemplary efforts and making significant value-added contribution to ongoing discussions.
We are at an inflection point in the shared journey. More & more guys like you are getting attracted to the win-win VP model of open-source free value-addition to each other and the Community. We hope to keep challenging ourselves in raising the bar higher - on learning, on collaboration - widening & deepening the network, and bringing in refinements to our current grasp of the ART of Investing.
Canāt agree with you more on the approach to learning the art of analyzing a company. Identifying a high conviction stock, analyzing it thread bare will be like doing a Project Work ( like we did at school or college). I have been having this idea since long but, after reading your post, I plan to embark on one.
Lloyd Electric remains my high conviction pick. Invested from 33 levels. Now average price of holding is 90. Anyway, thanks a lot for your post. ā¦Mohan
Such guts to ask a question like above? Iām not by any means a stalwart but let me tell you, the seniors here layout a framework and develop thought process so members can develop their own thinking and come up with ideas and put forth for forum memberās suggestions/opinion/criticism to develop a story further. It is neither the responsibility of the seniors/moderators nor they work for us to come up with ideas regularly for your/others to invest.
Iām sorry if my post hurt you, but just could not take it that way and it is not my intention to hurt someone.
This is a beautiful forum and let the members contribute for mutually beneficial association. It is better that seniors teach us to fish rather than provide a daily sustenance of fishes for consumption.
Moderators - please feel to edit my post if you feel so.
This is Nitin. Based on your expertise, let us connect and exchange ideas.
Please let me know your email ID and we can connect. Mine is sharekharid@gmail.com
