Hello All !!
I am thankful to everyone here. Someone whom I value very high has patted me on back saying: “You are more than I thought, what you are?” I am very glad today. So, I decided to start a topic for the 1st time.
I have read quite a few books. Say 8-10 books at least 2-3 times and yet I don’t understand what are the things that I need to check in an investment. I don’t have a philosophy of my own.
So, I have designed my own method::::
I read a lot on VP & yet reply 1 in 100 times only. A silent reader.
I take a topic & read it religiously 3-4 times. Let there be 286 replies or 600 replies.
I have made of list of questions, doubts, queries that the seniors & able guys ask in this forum ask about an opportunity that has come up. So far, I have read discussion about 11 stocks .
I save all the questions in notepad. Its growing slowly.
This way, I am weaving a web about how to see an opportunity.
Every time, I see an opportunity. I filter the opportunity with those questions. If its a GREEN in 75% questions. I buy that stock, the moment it dipped. I put all my money and faith. That’s all !! No more questions.
I made a descent 30% return in a span of 4 months by buying
V2 retail @ 33
Prima Plastics @ 52
Atul Auto @ 370.
I am open to criticism, feedback. I want to become better everyday of course with your help.
if you are investing on long term basis
then must check on screener the company last 5 year results
check the management credentials
buy in instaments
My two bits - If you are not a short term investor, then you may not want to weigh all questions equally. I keep promoter/management integrity as a must have. I may make money in very short term (a few months) if a company with dishonest promoter is highly undervalued, but in the longer term such promoters have taken money out of my pocket. You may treat positive answers to a few questions as must-haves to invest.
~best of luck!
@ pranav_pratap, @manomagg3
I have often read this…I have also made it very clear in my notes about MANAGEMENT QUALITY [MQ]
But, what is that exactly I should learn about them ?
Which are the parameters that I should check?
A few things, I have learnt from this forum
- Have they issues frequent warrants ?
- Are they taking exorbitant salaries ?
- Are they diluting equity on very regular basis ?
- Are they sitting with idle cash for long time with no objective ?
- Have they been doing SALES with their subsidiaries ?
- Are board members their relatives ?
I have 8 more parameters as 1st level filtering. Can you please throw some light on some fraud practises other than above and help me learn more
How could I check management credentials ?
Are there any parameters ?
I knew, most of you are like super duper seniors in this & all my questions might sound naive to you.
But, please bear with my ignorance and desperateness to learn things the right way
@FocObs . I am also a novice to stock market. I have also been silently following most posts here and I have started making my own judgements. The good thing is that slowly I have started gaining conviction in the stocks I own, though I am in loss in some of them.
I would check the management credentials by these parameters other than what you mentioned.
Have a loók at their dividend payout. Did it increase when the Net profit has increased? If not check why they havent increased- may be they need it for capacity expansion, some other needs?
Has the company paid increased taxes to the govt with increasing profits?
Thanks a lot.
I have added 2 more questions to my arsenal.
Few things I have realized over the years (free advise, feel free to ignore):
- As long as you are not ‘gambling’, any method you adopt which gives you a gain more than inflation is fine. Value investing, growth investing, contrarian, penny stocks, anything is fine as long as your net worth goes up. Forget the dogma/philosophy, just look at your net worth.
- In theory you need just one stock to get rich, in practice you need to diversify to about 3-5. Unless you have a hell lot of time to spend, going beyond this number is not worth the time spent.
- You should be so confident of the stock you buy, that you should be willing to commit all the capital to it (obviously you won’t do it in practice but the level of confidence should be that high). If you’re not this confident, pass.
- This means that you will do very few trades. As Buffett says, you should aim to do just 20 trades in your lifetime. Think about it.
- Since the goal is to increase your networth you must be willing to commit large percentage of your networth on every trade. If you’re not confident, just wait. (When waiting, I ‘park’ my money in the nifty jr index fund, it has beaten nifty comfortably)
- Valuepickr is valuable, but it is just another source. If you can’t build the confidence to buy a stock entirely on your own, realize that you are investing on borrowed conviction or worse acting on tips (essentially).
Despite the fact that I knew pretty much all of this when I started, I still got waylaid by all the news and talk and what not. My portfolio swelled to 72 stocks, many stupid ‘tracking’ positions, checking moneycontrol every few minutes and scattered thoughts. But then I saw the light. Went on a portfolio diet, and now I focus more on my business and my family. my stocks are fewer in number and higher in conviction.
I don’t think, I will ever be able to stick to “20 stocks in Lifetime” because I already have moved in & out with 8 stocks. But, I shall rather stick to the advise of concentrated portfolio about 5-6 stocks.
I don’t know, how to get a certain high conviction to buy stock. I have just designed my own method by using the inputs given by seniors here. I am on a course to improve my knowledge & its application. I am very open to refine my methods eveyday
But, I thank you very much for this line “Forget the dogma/philosophy, just look at your net worth.” Its quite encouraging !!
@FocObs I am a very naive when it comes to investing and like you I am also learning. May I ask what resource you use to find information about management. just google or some specific site.
Also if you dint mind can you share those questions in this post
Good stuff Kiran. Do you think you could share some of the questions that you use to evaluate a business / stock? I’m also a newbie
Jerin, Prof. Bakshi has recommended the book “The investment checklist” by Michael Shearn, which contains lots of questions which can be used to understand the business basics and evaluate the business.
There is a dedicated book “The investment checklist”
Its meant for me…I guess.
It shall be my next read…
I am actually very interested to share my WORD FILE here. So, that everyone can contribute a little and make it very big.
I am organizing all my questions, trimming them, re-arranging them.
Once I am done. I shall share my word file, which currently has 40 MCQs [approximately]. Initially, it used to be 70+. Now, I have removed some very obvious MCQs.
I search for all my answers in Annual Reports only.
Sometimes I google using some keywords fraud, scam, cheat, defaulted
As this shall be my 1st share in VP. I want to be a little cautious so that I wont look like an idiot.
However, I confess : All my questions are copy paste from various discussion on VP.
So, the person who reads all the posts in VP religiously is likely to call me COPY CAT & I take pride in it.
Here is the doc file which I created. Click Me
I shall modify it at least 50 times between today & next year.
You can always help me improve it with suggestions & constructive criticism
@FocObs Appreciate your help. It takes a lot of guts to share your learning and many thanks for that.
As WB says - The best investment you can make is on yourself…
Hi @FocObs, Did you manage to revise the previous version you shared! Can you share your rich learnings with newbies
Hi, I have just gone through your thread. We’re sailing in the same boat. But I invest in two set of stocks. One is Core portfolio which consists of Torrent, Repco, HMVL, NMDC etc., the other which consists of technofunda picks, mmb picks, fb bets for learning and some quick bucks… 2nd part is too risky.
I would like to hear from you. How do you conclude either to invest or to give a pass after finding answers in your checklist? Say for example FIIs invested? Say its is yes! then what’s your call wrt the stock…
holding cyclical stocks and commodities play in core portfolio can be very
risky. In core portfolio I prefer holding consistent growers like Repco,
Piramal Enterprises, Indian Hume Pipes (three years’ visibility), NESCO,
Oriental Carbon and Aditya Birla Nuvo.
I hold cyclicals like capital goods and financial turnarounds in non-core
portfolio though these could outperform core holdings when the cycle turns.
@Shivkumar Cyclical stock like NMDC is at very low. I entered it at 90/- Yes. I know it may not give returns as other stocks and tests patience. But it has good balance sheet, decent cash flows. apart from that dividend yield is nearly 8-9% offers some MOS… Once the cycle starts moving upwards these are the ones which give huge returns I think… We witness upward movement in Cement, Steel recently, And the govt. reforms and measures on imports may give some positivity to NMDC… Just my view…