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Generic Boi Profile picture
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29 Jul, 6 tweets, 2 min read
The central narrative of my investment narrative has never been and will never be :

a) Catching stocks at the bottom
b) Catching potential multibaggers
c) Being obsessed with the chosen few 'potential multibaggers'
d) Buying 'safe' stocks and avoiding errors at any cost.

👇
a) Never caught these at the bottom :

b) Never treated this as a 'potential multibagger' when I bought it, just a better-than-average candidate among others.
c) In a good economy, there are more than 50-70 stocks that do well. Being obsessed with half a dozen chosen few never bodes well.

d) Made quite a bit of mistakes on the way and ended up making a higher yield than if I had stayed put in the 'safe' i.e stagnating stocks.

Taking risks and then taking corrective measures is better than not taking risks as a core philosophy.

You don't need 'the perfect stock' to hit home run; Just need a good process

Make a watchlist of 70 'good-enough' stocks. Buy the top 35 among them, keep the remaining 35 on watchlist. Keep a revolving door policy to swap those that deserve to be on the other side of the divide

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More from @techlunatic

Generic Boi Profile picture
30 Jul
When a stock falls, it opens up deeper arbitrage opportunities during a 'falling knives' scenario. This discount attracts a rapid influx of fresh cash until the arbitrage opportunity gap is filled (i.e the market stabilizes) to the point of 0 alpha. Image
Earnings yields is mostly stable and smooth curve. It's the stock price that fluctuates due to sentiments, liquidity, news cycle, perception etc.

Let's say the long term earnings yield was growing at 9%. If you bought at

(A), your returns = 5%.
(B), your returns = 15%
If you track yield, you'll get better entry points and get better bang for buck. If you track only price, there's a risk of getting trapped at (A) where all technical indicators are bullish.
Read 7 tweets
Generic Boi Profile picture
29 Jul
Stock prices respond disproportionately to free float availability (or lack thereof) than to theoretical Excel valuations. The growth rate x float decides the PE multiple, that's why every co. can't be 15PE. A co. with just 10% float will deviate that much from its DCF valuation.
If there's 2 similar co.'s, one listed (with 15% float available to investors) vs another co. unlisted. The market will arrive (rightly so) at wildly divergent valuations for both. The second co.'s valuation is based on 100% ownership, while the 1st one on a limited supply basis.
If both were listed with 100% float available to free-market forces, or if both were unlisted, then one can do a side by side DCF, otherwise sharing social media infographics comparing stats of Nestle vs Amul, vs ITC without considering locked up float shows lack of wit.
Read 6 tweets
Generic Boi Profile picture
29 Jul
"This stock in my portfolio has reported a dip in earnings yield, what to do?"

The answer depends on the yields of other stocks in the PF. Has this yield dipped from 15% to 12%? are others at 10%? this is still your best performer. ADD!

Are there higher yielding stocks? MIGRATE
Keep 30-35 names in the holding, and another ~35 in the watchlist. This is your universe. Don't bother with other names.

Maintain an Excel sheet on all 70 of your candidates to keep track of the yield on each. Keep adding/trimming weights based on relative performance.
You'll get an inkling if you've built a good portfolio when one stock's yield dips, the higher yield alternatives are all found WITHIN your PF.

If all high yield stocks are outside your holding, in your watchlist, then you need to clean your demat and buy your watchlist instead.
Read 4 tweets
Generic Boi Profile picture
23 Jul
A compilation of all my long threads 🧵 :

(One link per comment to keep everything neat.)

Let's begin 👇
Read 100 tweets
Generic Boi Profile picture
21 Jul
#PayTmIPO a cursory glance

Revenue growth rate is mediocre/stagnant.

Let's dig deeper to see if we can find any redeeming qualities. Image
#PayTMIPO

Marketing expenses have gone down. All other recurring expenses are constant. Image
#PayTMIPO It's still in losses but the losses have subsided a bit. Image
Read 6 tweets
Generic Boi Profile picture
25 Jun
There are FOUR inferences :

#1) When stocks fall but fundaments seem fine : Correction has started but people are unaware, and buying.

This is when the market has already commenced its first leg of downmove, but the news still isn't doing halla-gulla about anything bad.
#2) Stocks and fundamentals both are bad : Market has bottomed, and people have stopped buying.

This is when the news is doing maximum halla-gulla, people are shit scared and despite good prices, they wont hit the BUY button.
#3) Stocks are rising but fundaments are bad : Bull market has started, but people are not buying.

By this time the market has already concluded its first upmove, but the news is negative and the ground reality is yet to catch up. The smart money has taken it up on anticipation.
Read 8 tweets

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