#INVESTING
I Had Always Been Mostly #Trader With Dash Of #Investing Thrown In Between When Started Out In World Of Stocks. Last 5 Years Have Been Revelation on Investing Front. I Have Formed My Own Investing Philosophy & it Has Been Hugely Rewarding In Terms Of Strategy ..(1/n)
I Had Always Been Mostly #Trader With Dash Of #Investing Thrown In Between When Started Out In World Of Stocks. Last 5 Years Have Been Revelation on Investing Front. I Have Formed My Own Investing Philosophy & it Has Been Hugely Rewarding In Terms Of Strategy ..(1/n)
And The Potential it Holds Out For Future! The Basic Premise For My PhiloSophy is CAGR (Compounded Annual Growth Rate). RJ is RJ Because of Phenomenal 40%+ CAGR Since 80's. So Basically, Achieving High CAGR Over Long Period Of Time is All That Is To Wealth Creation (2/n)
Now For CAGR, Name Of Stocks Don't Matter To Me, Neither What Business They Are In. Obviously, if Fundamentals of Business Are Good, More Investors & Traders Are Going To Back The Price UpTrend, So Fundamentals Are Critical, But Thats Not All There is To Investing (3/n)
CAGR Depends On Two Parameters- Price Appreciation & Time. Everyone Knows Price Appreciation But Time Invested Is Least Appreciated or Understood By Many. To Give Perspective, RELIANCE is Bluest Of BlueChip. Somebody Who Bought at 310 In Crash of 2009 Made 14% CAGR (4/n)
While Someone Who Bought in Jan2016 at Higher Price of 520 Made 31% CAGR. Why? Because He Simply Avoided No Price Appreciation TIME From 2009-2016. So Obviously, If Your Are In Best Phase Of Price Appreciation, You Make BEST CAGR. Thats Where Importance Of Timing Lies (5/n)
Now, People Struggle to Time The Trend & After Failing, Take Umbrage To Good Company & Good Fundamentals. To Me, Thats Plain Lazy, Because Market is All About Cycles - Uptrend, DownTrend, Sideways Trend. Even Index can't Hide From it, As We have seen in 1992,1994,2000,2008 (6/n)
And To Analyse Long Term Price Cycles We Need To Look at Monthly & Quarterly Charts, Not Daily. Have Been Able To Identify Tons Of Stocks Which Gave 5x,10x,Even 50X returns. As I Was in Strategy Development Phase, Had No Conviction To Invest In All & Missed Quite A few (7/n)
Point Is, Stocks Provide Phenomenal Opportunities To Generate Above Average CAGR if We are able to Understand Price trend on Longer Term Monthly, Quarterly Charts. All it Takes Is Observing 1000's Of Charts & Longer Term Trends. Identifying Trends is Actually Quite Simple (8/n)
Staying With trend, Thats Another Story. Also, Critically, EXIT is Most Important Component of Trend Based Investment. You Gotta Know When Trend Has Matured & When To Fold Investments. Not Knowing the Same Has Been Source Of Misery of Many Portfolios in Current MeltDown (9/n)
AnyOne Who has Done Business Knows Majority Business Don't Generate Steady Profits, Profits Are Lumpy. Max Profit Is Generated When There Is Supply Demand Mismatch Causing Temporary Pricing Power lasting Few Quarters To Few Years. It's That time When Stock Reacts Big Way (10/n)
Like Recent Graphite Or Chemicals Story..Now Value Investors Will Say It Won't Last. Well, I Don't Care As Long As I Know My Exit. If Stock is Going to give me 10x Returns in 2 years Time, I Am All For it & The Risk, Rather Than Waiting for 10 yrs For BlueChip To Give 10X (11/n)
In Investing, It's not Battle Of Quality Vs Cyclicals, It's The CAGR Which Is Ultimate Winner If Able To Time Entries & Exits.And there Will Be Duds In The Process.. My Experience.. Winners Take Care Of All,even If Duds go BankRupt (Which Shouldnt Happen with Exit Strategy (12/n)
Current Sell-Off is Going to Create Opportunities & Those Opportunities Will Be in Newer Stocks Which Didn't Participate in Last Bull Market. So Take Effort to Understand Longer trends, keep Looking For Strong Stocks & Jump-In Once See New Trend Developing. All The Best (13/13)
