“I think too often, young analysts believe that the goal of an analyst is to demonstrate how much they know about a company and build a perfect earnings model.
I don't think I've ever seen an analyst model their way to a great stock idea! I view the goal of the analyst as developing conviction that the consensus is wrong about something important. Then their job is to communicate why they believe they are correct and the consensus is wrong and to compute the valuation impact.
Once we own a stock, their job is to actively monitor new information to assess if their view or the consensus view is coming to fruition. There are a lot of important areas the consensus can be wrong: management quality, business quality, long-term potential differing from current results, valuable non-earning assets, and so on.
To make excess profits, you need to hold a nonconsensus view and be right.” - Bill Nygren (quote courtesy - Joe Koster)
I don't think I've ever seen an analyst model their way to a great stock idea! I view the goal of the analyst as developing conviction that the consensus is wrong about something important. Then their job is to communicate why they believe they are correct and the consensus is wrong and to compute the valuation impact.
Once we own a stock, their job is to actively monitor new information to assess if their view or the consensus view is coming to fruition. There are a lot of important areas the consensus can be wrong: management quality, business quality, long-term potential differing from current results, valuable non-earning assets, and so on.
To make excess profits, you need to hold a nonconsensus view and be right.” - Bill Nygren (quote courtesy - Joe Koster)
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Why are Investors Paying 2x More for Relaxo than HUL?
Rahul Shah wonders whether Relaxo's significantly higher valuations than HUL are justified?
http://www.eqtm.in/r9N6K
Rahul Shah wonders whether Relaxo's significantly higher valuations than HUL are justified?
http://www.eqtm.in/r9N6K
👍1
Life hacks:
Overthinking → Write
Feed your soul → Pray
Think clearer → Meditate
Improve mood → Exercise
Expand your mind → Read
Understand better → Teach
Confused → Take a walk in sun
Improve attitude → Express Gratitude
Burnt out → Cut social media and sleep
Source: Wise wonderer (Twitter)
Overthinking → Write
Feed your soul → Pray
Think clearer → Meditate
Improve mood → Exercise
Expand your mind → Read
Understand better → Teach
Confused → Take a walk in sun
Improve attitude → Express Gratitude
Burnt out → Cut social media and sleep
Source: Wise wonderer (Twitter)
👍20❤1
Adani Group shares are under heavy selling pressure today.
The trigger seems to be a report by Hindenburg Research which has flagged off serious valuation and corporate governance issues at the group.
This reminds me of my own piece I wrote back in June 2021 around why I haven't recommended a single Adani group stock yet across any of my services.
Perhaps a good time to revisit the piece. Posting it here for your easy reference.
The trigger seems to be a report by Hindenburg Research which has flagged off serious valuation and corporate governance issues at the group.
This reminds me of my own piece I wrote back in June 2021 around why I haven't recommended a single Adani group stock yet across any of my services.
Perhaps a good time to revisit the piece. Posting it here for your easy reference.
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Why I Haven't Recommended Any Adani Group Stock Yet - Profit Hunter by Equitymaster
https://www.equitymaster.com/profit-hunter/detail.asp?date=06/23/2021&story=1&title=Why-I-Havent-Recommended-Any-Adani-Group-Stock-Yet#aPrev
https://www.equitymaster.com/profit-hunter/detail.asp?date=06/23/2021&story=1&title=Why-I-Havent-Recommended-Any-Adani-Group-Stock-Yet#aPrev
Equitymaster
Why I Haven't Recommended Any Adani Group Stock Yet - Profit Hunter by Equitymaster
What explains my reluctance to recommend Adani group stocks?
❤1👍1
The Adani Correction: An Opportunity of a Lifetime?
Rahul Shah wonders whether the Adani correction has created a great buying opportunity.
http://www.eqtm.in/Zr45Y
Rahul Shah wonders whether the Adani correction has created a great buying opportunity.
http://www.eqtm.in/Zr45Y
👍6
With the budget uncertainty out of the way, the runway seems to be clear for ITC to put in a good show in 2023.
Can it go to a new high in 2023? Check out this video I did a few months back to know the answer.
Can it go to a new high in 2023? Check out this video I did a few months back to know the answer.
👍1
Should Investors look at #AdaniStocks after the Fall or is it a Falling Knife and should be Avoided? My colleague
@adityavora89
shares his thoughts in this thread...
@adityavora89
shares his thoughts in this thread...
Case for indexing
(Jana Vembunarayanan
Feb 4)
Warren Buffet made a compelling case in favor of indexing in the 2021 Berkshire Hathaway's AGM.
In 1989, 65% of the top 20 global companies were domiciled in Japan.
After three decades, 65% of the top 20 global companies are from the US. No companies from Japan made into the top 20. None of the top 20 companies from 1989 made into the top 20 list in 2021.
The mental model of an investor from 1989 will be filled with oil, steel, and banks. What are the chances of that investor unlearning old things and relearning new things to move all their positions into tech companies?
The "dumb" index picked all the top 20 companies. The no nothing indexer picked the top 20 companies without burning a single neuron. All the index investor needed was a zen like mind to hold it through thick and thin.
Having a zen-like mind during the downturn isn't easy. Stand in front of the mirror and ask yourself how you behaved during the 2008, 2020, and 2022 market meltdown. Smart people made logical points on why they should be in cash during March 2020. All those points looked rational, except that the market didn't bother what smart investors thought.
How many of the current top 20 will continue to be in the top 20 in the next decade? What are your chances of picking those winners now? An index investor need not worry about picking winners. It happens automatically.
Approximately five years ago, I wrote about my 3-bucket investing framework investing. The 3 buckets were indexing, picking individual stocks, and investing with money managers. Am I still following the same 3-bucket framework?
The indexing bucket remains my most crucial investment. I persist in buying index funds consistently, regardless of market conditions. My initial index fund purchase dates back to 2006, and I haven’t sold any yet.
I still own individual stocks, but I have decreased the quantity. I went from owning a double-digit number of stocks to just a few. This was because the cost of holding too many stocks was too great, and I could potentially achieve comparable or better returns by adding that capital to index funds. I use the time saved to learn other things. Less is more.
My allocation to the money manager bucket almost went down to zero. The people I partnered with are good human beings and knowledgeable. However the math just doesn't work in their favor. Fees cost between 1-3%. Taxes on capital gains due to portfolio churn costs 2-3%.
Fees and taxes add up to 3-5%. They have to beat the market returns by 3-5% just to be on par with the index. Doing it consistently over 20-30 years is a herculean task. Additionally, I don't enjoy the process of entering all the capital gains information while filing taxes.
Long story short, my 3-bucket framework shrunk to a 2-bucket framework.
Identifying winning fund managers and winning stocks ex-ante is hard. Markets aren’t completely efficient. I’m sure there will be 0.1% - 1% of investors who will outperform the market over the long run. The question that each one of us must ask is if we’re in that 1% elite group.
Change is the only constant. 2020 took humanity into a roll coaster ride, teaching me that I have to learn more about life's unpredictability. Is Google Search the only option? Enter ChatGPT. The notion that software programming cannot be automated is challenged by GitHub Copilot's arrival.
Who knows even the indexing approach mightn't work in the future. Nothing is certain in life. As of now, indexing is the only free lunch. Like the little man Haw in Who Moved My Cheese, we need to hang our shoes around our neck as we might need them anytime.
(Jana Vembunarayanan
Feb 4)
Warren Buffet made a compelling case in favor of indexing in the 2021 Berkshire Hathaway's AGM.
In 1989, 65% of the top 20 global companies were domiciled in Japan.
After three decades, 65% of the top 20 global companies are from the US. No companies from Japan made into the top 20. None of the top 20 companies from 1989 made into the top 20 list in 2021.
The mental model of an investor from 1989 will be filled with oil, steel, and banks. What are the chances of that investor unlearning old things and relearning new things to move all their positions into tech companies?
The "dumb" index picked all the top 20 companies. The no nothing indexer picked the top 20 companies without burning a single neuron. All the index investor needed was a zen like mind to hold it through thick and thin.
Having a zen-like mind during the downturn isn't easy. Stand in front of the mirror and ask yourself how you behaved during the 2008, 2020, and 2022 market meltdown. Smart people made logical points on why they should be in cash during March 2020. All those points looked rational, except that the market didn't bother what smart investors thought.
How many of the current top 20 will continue to be in the top 20 in the next decade? What are your chances of picking those winners now? An index investor need not worry about picking winners. It happens automatically.
Approximately five years ago, I wrote about my 3-bucket investing framework investing. The 3 buckets were indexing, picking individual stocks, and investing with money managers. Am I still following the same 3-bucket framework?
The indexing bucket remains my most crucial investment. I persist in buying index funds consistently, regardless of market conditions. My initial index fund purchase dates back to 2006, and I haven’t sold any yet.
I still own individual stocks, but I have decreased the quantity. I went from owning a double-digit number of stocks to just a few. This was because the cost of holding too many stocks was too great, and I could potentially achieve comparable or better returns by adding that capital to index funds. I use the time saved to learn other things. Less is more.
My allocation to the money manager bucket almost went down to zero. The people I partnered with are good human beings and knowledgeable. However the math just doesn't work in their favor. Fees cost between 1-3%. Taxes on capital gains due to portfolio churn costs 2-3%.
Fees and taxes add up to 3-5%. They have to beat the market returns by 3-5% just to be on par with the index. Doing it consistently over 20-30 years is a herculean task. Additionally, I don't enjoy the process of entering all the capital gains information while filing taxes.
Long story short, my 3-bucket framework shrunk to a 2-bucket framework.
Identifying winning fund managers and winning stocks ex-ante is hard. Markets aren’t completely efficient. I’m sure there will be 0.1% - 1% of investors who will outperform the market over the long run. The question that each one of us must ask is if we’re in that 1% elite group.
Change is the only constant. 2020 took humanity into a roll coaster ride, teaching me that I have to learn more about life's unpredictability. Is Google Search the only option? Enter ChatGPT. The notion that software programming cannot be automated is challenged by GitHub Copilot's arrival.
Who knows even the indexing approach mightn't work in the future. Nothing is certain in life. As of now, indexing is the only free lunch. Like the little man Haw in Who Moved My Cheese, we need to hang our shoes around our neck as we might need them anytime.
👍9
Not Tata Motors or Maruti, this Auto Stock Could Produce a Surprise in 2023
Rahul Shah wonders whether this small auto stock can outperform the larger ones in 2023.
http://www.eqtm.in/Dp4r9
Rahul Shah wonders whether this small auto stock can outperform the larger ones in 2023.
http://www.eqtm.in/Dp4r9
👍2
LIVE NOW: 3 Stocks to Ride India’s Third Giant Leap
In just minutes from now, I will reveal the biggest prediction of my career for the first time ever.
MY research says, India is set to take a leap of epic proportion.
I have already identified my first 3 stocks to ride this giant leap.
Join me immediately by clicking the link below…
http://www.eqtm.in/e2ZTk
In just minutes from now, I will reveal the biggest prediction of my career for the first time ever.
MY research says, India is set to take a leap of epic proportion.
I have already identified my first 3 stocks to ride this giant leap.
Join me immediately by clicking the link below…
http://www.eqtm.in/e2ZTk
👍6
Charlie Munger's Rules highlighted by Warren Buffett in his latest shareholder letter....highly recommended....
1)The world is full of foolish gamblers, and they will not do as well as the patient investor.
2)If you don’t see the world the way it is, it’s like judging something through a distorted lens.
3)All I want to know is where I’m going to die, so I’ll never go there. And a related thought:
Early on, write your desired obituary – and then behave accordingly.
4)If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results.
5)Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.
6)You can learn a lot from dead people. Read of the deceased you admire and detest.
7)Don’t bail away in a sinking boat if you can swim to one that is seaworthy.
8)A great company keeps working after you are not; a mediocre company won’t do that.
9)Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.
10)Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.
11)There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count
on getting rich twice.
12)You don’t, however, need to own a lot of things in order to get rich.
13)You have to keep learning if you want to become a great investor. When the world changes, you must change.
14)Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never.
15)Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.”
1)The world is full of foolish gamblers, and they will not do as well as the patient investor.
2)If you don’t see the world the way it is, it’s like judging something through a distorted lens.
3)All I want to know is where I’m going to die, so I’ll never go there. And a related thought:
Early on, write your desired obituary – and then behave accordingly.
4)If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results.
5)Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.
6)You can learn a lot from dead people. Read of the deceased you admire and detest.
7)Don’t bail away in a sinking boat if you can swim to one that is seaworthy.
8)A great company keeps working after you are not; a mediocre company won’t do that.
9)Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.
10)Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.
11)There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count
on getting rich twice.
12)You don’t, however, need to own a lot of things in order to get rich.
13)You have to keep learning if you want to become a great investor. When the world changes, you must change.
14)Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never.
15)Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.”
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