Today on AI post, we have monkey as a central topic 🙂 No, we are not kidding. Today, we are sharing a famous fable (tale) from the world of financial literature which can benefit you on this leisurely weekend. It is an interesting tale with a few turn of events which teaches as many valuable lessons of investments in a funny way.
How often we wish to have a magical formula which can be used to find next multibagger. Well, you are in luck as legendary investor Joel Greenblatt has a magic formula for multibagger returns. This formula was backtested on S&P 500 and guess what, it gave an average yearly return of 30% and beat S&P 500 96% of the times. This formula was developed for US stock market and keeping in mind US accounting pratices & taxation laws at that point in time. While many mutual fund houses & researchers use this magic formula to filter stocks from Indian stock market, they seldom publish these results openly in public forums.
At AI Post, we are committed to bring best of investment knowledge to our Ace readers free of cost. No need to pay for training institutes 🙂 In this article, we apply Joel Greenblatt’s magic formula on Indian small cap stocks to see which stocks are worthy of this filter at current market prices.
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We have always maintained that small cap stock investment is way different from a large cap or vanilla stock investment approaches. This is very well understood at institutional levels but somehow when it comes to retail investors, people are happy to advise same approach for all. While basics remain same but mental model of a small cap investor has to be way different. It needs more mental toughness and firm belief to be successful small cap investor. There are not many text available on internet which focuses on pure small cap investment in India context. We are doing our bit as part of AI post to benefit our Ace Readers.
In this article, we will share why we think small cap investment is different and we hope you will benefit from it.
We have been following different investment gurus across the world and applying their investment philosophy on Indian stock exchanges. While many international gurus have never invested in India, today we are writing on our own desi guru Mr. Kenneth Andrade. He is a famous investment guru and held in high regards within analyst community. True to our philosophy, we are keeping the language simple and contents precise. Hope you enjoy it.
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AI readers will know that we are stitching up a series of articles on famous investment gurus. While none of them are into Indian stock market, we are applying their philosophy to search stocks within India’s small caps universe. Interestingly, since we have started this series, bullish momentum seems to be back into small caps. What a co-incidence! All investment gurus have theories aligned for long term investment but to our surprise, some of the stocks published under initial articles have gained 20% in short term. Certainly, their investment philosophy works in unique ways.
Coming back to the article series, today we have another legendary investor Walter Schloss on AI post. True to our philosophy, we are keeping the language simple and contents precise. Hope you enjoy it.
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In tennis, the word “unforced error” is described as a missed shot that is entirely a result of the player’s own blunder and has nothing to do with opposition’s skill. Mostly the player with lesser committed unforced errors wins the game. In investing also, if we can minimize unforced errors, the chances of getting multibagger return shoots up.
World of small cap investment is full of risks & rewards, but at times investors tend to go overboard & increase their risk unnecessarily. Blindly taking more risk does not increase return, in fact it’s detrimental to your wealth. In this article, we will figure out the most common mistakes which many small cap investors commit. We believe if a small cap investor can manage “unforced errors”, there is no stopping of his wealth multiplication.
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So far stock market correction (barring largecaps) has been spectacular. If we leave out the big event corrections like 2007 crash (led by proper financial industry collapse), this is indeed a historic correction for non-event periods. However, if you are in quality stocks, stay there and wait out this storm. If possible, add more on dips. Definitely dump garbage stocks. In our own stock watch-list (used for paid recommendation), new stocks are getting added every week as small & mid cap continues to tumble and becoming more attractive. Equity as an investment is best played over long term. Timing the market is futile as Mr. Market is full of surprises. Now-a-days general feeling is that stock market will not perform until 2019 elections but who knows what Mr. Market has got under his sleeves.
Coming back to the article series, today we have another legendary investor Peter Lynch on AI post. We had published similar posts on Warren Buffet (click) & Benjamin Graham (click) as correction is one of the best time to buy stocks. True to our philosophy, we are keeping the language simple and contents precise. Hope you enjoy it.
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We all know that economics & stock market are correlated. Macro & Micro economics ultimately influence stock prices in the long run. In this article, we will attempt to explain the correlation between the two in a simple language. Understanding this is essential to every investor. Economic analysis is one of the pillars behind equity forecasting. It plays a key role in arriving at probable future returns from equities. For HNIs, who invest across the world, economic analysis helps them to shortlist countries with expected future returns.
Our Ace readers may recall that this article was originally published on AI Post in Aug 2017 (link), predicting upcoming slowness in equities. Since market conditions have changed so we are updating & re-publishing this article in today’s context.
If you are a long term investor then ongoing correction is more of an opportunity rather than disaster. Currently, we are in a phase where there are plentiful opportunities. If you have the right process & patience then in the next couple of years, some of these small caps will touch a new high and in the process shatter previous all time high records. Coming back to process, we can take a clue from legendary investment gurus and apply their investment process to unearth such hidden gems.
@ AI post, we are writing a series of posts in which we publish stock watchlist of famous investors by applying their filters on Indian small cap stocks. Last week, we had Benjamin Graham (click here to read) and today we have Warren Buffet. We are keeping the language simple and contents precise.
“Be fearful when others are greedy and greedy when others are fearful” – Warren Buffet
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Smallcaps have fallen like a pack of cards. Correction has been severe but much awaited after sharp rally over the last couple of years. This correction has also opened up many exciting opportunities. This is the time when ace investor will buy promising smallcap stocks to enjoy multibagger returns in 2022-23.
We have seen a full cycle within smallcaps. This cycle gets repeated every 5-6 years. Last time it happened around 2012-13 and ace investors enjoyed returns few years later. However, mastering this is not easy since in every cycle, multibagger stock name will change. Today’s multibagger may not necessarily survive this correction. So, key to superlative gains is to wisely choose next set of multibagger stocks.
@ AI post, we are writing a series of posts in which we will publish a stock watchlist of famous investors. It may be wise to analyse what legends will buy in today’s market post correction. This list is curated by us based on their principles. More than stock list, there is a lot of learning as we touch upon investment principles of these legends.
We want everyone to understand the concepts and since we know that people don’t have more than 5 minutes of attention span, so we are keeping the language simple and contents precise. For the purpose of this study, we are running filters only on smallcaps, so midcap & largecap are not considered. True to our ace reader’s interest!
Today, we have Benjamin Graham. Next week will be his disciple Warren Buffet.
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Arguably, it is a tough year for small caps. Nifty small cap index has fallen by -17% from 1st Jan 2018 till date. At individual stock level, it has been more severe. While there is a lot of discussion of this correction, there are limited articles which explains this fall and advice investors. In this article we are trying to bridge that gap by explaining the real reasons of this fall and what should be the best coarse of action for investors.
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This year small & mid caps are witnessing good amount of correction. This is not a normal correction but a deeper one as there have been multiple rounds of mini corrections within this phase. The euphoria of small investors has vanished as they get depressed with huge losses, especially those who made fresh entry in Jan’18 are finding it hard to digest. In this article, we share our thoughts & views on how to handle such deep corrections.
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Lot of investors joined stock market in the bull years of 2016-17. Most of them made good money only to loose it all in 2018. In our conversation, 8 out of 10 small cap investors are back to early 2017 levels as small caps is receiving consistent hammering since Feb’2018. Naturally, various questions are coming to investor’s mind, is 2018 a year of bears? Shall I exit stock market and come back when bulls are in operation? In this article, we present our view on it including the real drivers of poor performance and what possibly lies ahead.
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Keeping up the tradition, we continue to post different varieties of topics under AI Post. Today, we are publishing investment story of one of our subscribers. He wants to keep his name confidential but agreed to share his investment experience with us. There are plenty of lessons in his story and I am sure at some point of time, all of us have committed to same mistakes during early days of our investment journey. Without wasting more time, over to him.
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Most of the readers of AI Post are either young or middle-aged people, who are tech savvy and use smartphones extensively. If you are one the them, today’s article is dedicated to you.
We all know that inflation is the biggest enemy which we face in our financial life. Interstingly, inflation can be different for different sectors. For example in telecom, instead of inflation, it is deflation as call rates keeps on dropping. For groceries, it is in the range of 6-8% for last 20 years. Do you know the worst of them? It is not one but two. It is Medical Inflation (14% annual) & Education Inflation (10% annual). In some ways, they are related as well (we will explain it later). The problem is that no one can escape medical inflation as our human bodies are bound to grow old and catch diseases. The question is not “if” it will happen but “when” it will happen. You are ace reader of AI Post, you should be prepared and not caught unaware.
In this article, we will discuss trends in medical inflation, role of private insurers and medical colleges, and how badly it can impact us in future. Of course we have a solution as well and it is not just buying insurance. We are stock advisor and not insurance advisor, but we continue to encourage our readers for their overall well-being even if it is not linked to our core business activity.
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India is the largest importer of defence weapons in the world. Even China and United States lag behind India when it comes to weapon import. With third largest armed forces of the world, India imports almost 60% of weaponry from abroad. This has a huge fiscal impact as large amount of foreign currency leaves our country and puts pressure on balance between exports and imports. Current Government is pushing “Make in India” policy for defence equipment manufacturing within the country. Defence budget in 2018 Union budget is roughly ₹ 404,365 crore. This means huge opportunity is waiting to be tapped. In this article we explore some of the listed stocks which should benefit from this phenomenon.
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We continue to share our approach and process with “Ace Readers” which can benefit them in the long run. Many research houses will feel shy in sharing their methodology but we do not. It is imperative that as “Ace Reader” of AI Post, you gain knowledge and wisdom over a period of time. The objective is to share pieces of information to make you a better investor who is prepared for long term wealth creation. Coming back to today’s post, this is the second and final article of the series which talks about nitty gritties of constructing a good portfolio. In the previous article, we shared our checklist for picking a multibagger stock. (click here to read)
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There are more than 5000 companies listed on Bombay Stock Exchange (BSE). Out of this, large cap are typically the first 100, mid cap comprises of next 300-400 odd stocks, the rest of the universe of around 4500 companies belong to small caps (though all are not actively traded). Most research houses track and focus on 200 to 400 stocks at maximum stretch which leaves huge number of small caps (around 4500) under-researched and under-represented to investors. If you look at it, this is almost 90% of stocks not covered by research. This leaves a huge opportunity for common public to research and unearth multibagger gems from this lot. The problem is that it is easier said than done. Since we specialize in small caps, we are going to spill beans on our secret sauce of what we look into before identifying potential multibagger from the world of small caps.
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US president Donald Trump is in news again, this time for his announcement of imposing import duty on metals, primarily of 25% on steel & 10% on aluminum has sent metal stocks plummeting. In this article, we analyse the impact of import duty on major steel companies in India and what lies ahead with such policies in force.
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Wishing our ace readers a bright and colorful HOLI Market will open again on Monday like everyday but […]