Investing in Indian Stock Market

Ramesh Damani Habit of reading international press. Know what is happening in other countries/international cos Stock market is about looking ahead & not looking behind Big picture thinking about valuation Opportunity size Bull market or Bear market. Leader in bull market. When bear market starts gets punished too like crazy Bull market: each time the leader falls, others come in to take the value up again. Similar in bear market, but in opposite direction Look at business level valuation. Valuation of similar cos in other parts of world. Relative valuation. Worth of 100cr...this much stake or 2 flats in posh Mumbai Simple one-line thesis (my observation) Market gives you money when you are uncomfortable Averaging up If u truly believe in idea...u think management also doesn't know somethings abt the co, undervalued and risk-reward in ur favour....then bet big. Portfolio should afford u to do so Buy when bear market bottomed out....Have patience to be in for...

Bill Ruane, one of the most successful stock pickers of his generation. When Warren Buffett closed his investment partnership in 1969, he recommended Ruane as a replacement for himself. Until his death in 2005, Ruane’s Sequoia Fund generated stunning returns. He almost never granted interviews, but we spoke at length about the four guiding principles he had learned in the 1950s from “a major star” named Albert Hettinger. “Those simple rules have been of enormous importance to me,” said Ruane. “They formed the basis for a large part of my philosophy ever since.… And they are the best advice I can give people.” First, warned Ruane, “ Do not borrow money to buy stocks .” He recalled an early experience when, by using leverage, he “took six hundred dollars and multiplied it many times.” Then “the market cracked” and he was hit so hard that he sold out and was “back almost to square one.” As he discovered then, “You don’t act rationally when you’re investing borrowed money.” Second, “ Watch...

 1. Invest in 8-10 names . Lesser the better. No less than say 4. Otherwise it is not possible to be on top of the companies nd have any sort of informational advanatage 2. Invest in great companies at a fair price. Great quality business. Competitive adavantage/moat. ROE/ROCE is good Growth (past) and future long runway with growth visibility 3. Valuation: First do Business Analysis . Understand various levers which will affect the business. Then valuation can be just a quick mota -mota thing. Like for eg. seeing a person from distance, u can say a person is fat. U don't have to know his weight. Similarly, valuation can be a back of the envelope thing, once u do the business analysis appropriately. Think of bull, bear, base scenarios.  

  Mental Aggression . Mindset to grow Enrepreneurs need speed nd scale Make peace with yourself. Envy waste of energy Persistence matters Ask .  Willing to ask. Various ppl Network. Power of associations, alumni networks, good university education (not the degrees but the networks/contacts) I ndependent thinke r. Don't shy away from not doing the social consensus. Do be extraordinary, one needs to do things what ordinarily is not done Take an idea you like and obsessively follow it to see benefits from it Make part of your life the va rious ideas you think can make a change and scale it up in your implementation Power comes from truth, caring, genuinely helpin others etc. It a utomatically attracts ppl to you Satsangati . Surround yourself with people better than you and you can't but improve yourself FOMO: Be aware of Fear of Missing Out. Don't fall a prey to it Bet size needs to be big, when you convinced. Patience : Investing is a game of extreme patience. It is like wa...

Read the wonderful book:  The Matchmakers: The New Economics of Multisided Platforms   Today's turbocharged matchmakers, the so-called platform companies have great indirect positive network effects. Matchmakers have existed in the past, since millenia. Today, with new tech, internet, smartphones, OS etc, things have got turbocharged. These are easy to understand, but many will fail, not scale up, not reach critical mass Important questions to ask for these multi-sided platforms ? 1. Is it s olving a signficant friction/problem 2. Who are the participants ? How do they benefit frm the platform 3. Does it have indirect positive network effects ? 4. How will the platform reach critical mass, how will it get ignited 5. Is there a subsidy side, money sid e. How is the pricing going to be ? How will it generate value for all stakeholders (sometimes, these pricing r counterintuitive..by giving cashback to one side of participants, u may feel bus. is not doing right thing ) Buzzwords...

Recently, read this book: "Why I stopped wearing my sock" by Alok Kejriwal. Wonderful read, about his business story. Autobiographical with nuggets of business wisdom. Some takeways: 1. Ability to sell - higly important You have to sell your product/service to your customers (for money or for making them just consumer your product) You have to sell yourself and your company to attract talent/recruit You have to sell yourself/company to your investors, creditors You have to sell your product/service to crack deals with your partners, vendors and suppliers Salesmanship is one critical thing in business 2. Recruitment Keep a note of  the people you interact with while doing business. Be it your vendors, suppliers, customers etc. Your next star employee might very well come from them. 3. Get started. Get going and start implementing. Too much time gets wasted in ideation and discussion and many brilliant ideas never get started or someone else will. 4. En...