Saturday, 23 Jun 2018

some of the characteristics of a multibagger investor

  • Long Term Horizon: If you check the prices of your stocks every day,you are probably not very well suited to mutibagger investing.You need to think in terms of at least 5 to 10 years as your investment horizon.This means that you should not look to your multibagger investment for day-to-day excitement or entertainment.Mutibaggers are not made in a day.

 

  • The ability to Convert Observations from Day-to Day Life into investing Theses:This means that you need to have some familiarity with the stock market.Once you observe what you think is a powerful real-world trend, you need to understand which stock may benefit from it.For example,if you find that there is buoyancy in real estate prices ,you need to quickly be able to figure out which real estate stocks may be worth buying.Or,if you see that there is a mass migration from scooters to motorcycles,you need to know which stock is likely to benefit from that trend.

 

  • Financial Freedom:You have to be able to leave your potential multbagger investment alone for long periods of time.If your daughter is getting married next year, you cannot plunge into a stock hoping that it will return five times your money in one year.More likely than not,you will lose a lot of money by such a move.Never invest money you need into a potential multibagger.And once you invest money ina potential multibagger,unless you develop reasons to believe that this stock would not in fact become a multibagger,be willing to leave it alone.

 

  • High Risk Appetite: Equity markets world-wide are volatile.In India, they are like the scariest roller coaster ride invented in the world.A lot of experienced investors from the developed world cannot handle the volatility of the Indian stock market.Potential multibaggers in India tend to be more volatile than either the Sensex or Nifty. Unless you are prepared for a wild ride, and are willing to suffer stomach churning volatility, you should not try to invest in potential multibaggers.

 

  • Intellectual Flexibility: Multibaggers come in different sizes,shapes- and from different industries at different time.A dogmatic investor who says that he will buy only stocks from a certain sector with certain valuation will not be able to find, or harvest,multibaggers.If you do not like commodities,you wouldn’t have been able to catch Sterlite.If you are un-willing to buy highly leveraged companies,you would not have caught Aban Offshore.

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