Thread by @TheCaptain182

I was studying the performance of #Jubilantfoods over the last 10 years & came across some interesting facts which assert that investing is easy, but yet so difficult.

1. It is more than a 35 bagger since its IPO in 2010. All of us loved Domino's pizzas & it was clear that the

product is awesome & their market is huge, yet how many of us bought it? More importantly - for those who bought, how many held through multiple drawdowns to generate a 35X?

2. It was almost a whopping 9 bagger in the first 2.5 years: from 80 in Feb'10 to 700 in Oct'12!

3. And then the stock went nowhere over the next 5 years until Sept'17. Now seriously ask yourself that question - how many of us have the patience to hold a non-performing stock in our PF for that long despite knowing that its a 9 bagger previously? Not many, I would assume.

4. The stock had fallen 60% in the above period! A great market leader also has to endure such high drawdowns. But they turn out to be excellent buying opportunities, in hindsight, of course.

5. After Sept'17, the stock quickly doubled to 1500, but again did nothing

for almost the next 2 years. It suffered multiple 40% drawdowns during this time.

6. The stock has again doubled in the last one year
again & now stands at 3000; more than 35X from its IPO price of 80.

Some simple lessons here -

a. You can make investing a lot easier when you know the company & its product really well. Read Peter Lynch's "One up on wall street." No analysis paralysis required.

b. Stock market returns are not linear. There will be some years when you get no returns at all, while in others you might get a 5-10 bagger in just a couple. If you get too good returns too soon, odds are high that the stock would go nowhere over the next few years.

c. Depending on your investing goals & psychology, it may be a good idea to sell when the stock has run up too much too fast & is pricing in the next few years growth. But just sitting on it through the drawdown might not be such a bad idea if you invested in it before

the run up & bought it at a decent valuation.

d. Coming to valuations - the lesser you pay for a company, the better returns you will get. Don't buy quality at "any price." That is just savvy marketing by some of the funds who want your money. Pay up, but don't overpay.

e. If a stock ran away & you just couldn't buy it, relax! A stock always falls 30%, 40%, 50%, 60% & even higher in bad markets. You can always buy it later, but avoid FOMO. Wait for the valuations to get reasonable & the stock to dip to its 200 DMA. They always do.

f. Use charts to get a perspective of the company's stock. Where is it in relation to its 50 or 200 DMA? Is it in an uptrend or a downtrend? How have the last 1, 3, 5 years returns been? It will help you make a better investing decision.

g. Fall in love with the company, but not its stock. A good company might not necessarily be a good stock; it depends when you bought it & at what valuations.

h. Lastly, you need lots of patience to make outsized returns in the market. But they come when a great company

is bought cheap during market falls, when everybody is pessimistic & held for a long time. That is how big wealth is created.

Remember wealth > income. Look to earn big returns from great companies, rather than income through minor gains.

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