Recently, I attended FLAME Investment Lab, Alumni Meet which was held at Pune.
Some learnings from the gurus over there are as below. These thoughts pertain to both life and markets. Some of these thoughts, I'm yet to interpret properly. So, pardon me, if some of the point below are not clear. I haven't taken the names of the gurus or fellow participants who mentioned these, as wasn't sure if they wanted to be named in public domain.
25. Dilution
Guru: Didn't shy away from cyclicals. It is know that cyclicals: you get in when PE is optically high and exit when PE is low.
Circle of competence is important. Develop your expertise in an area.
Some learnings from the gurus over there are as below. These thoughts pertain to both life and markets. Some of these thoughts, I'm yet to interpret properly. So, pardon me, if some of the point below are not clear. I haven't taken the names of the gurus or fellow participants who mentioned these, as wasn't sure if they wanted to be named in public domain.
1. Profile
Visibility precedes death.
Better to stay low profile.
2. Mindset
99% people focus on expenses. (How to save on costs)
Only 1% people focus on income generation and wealth generation.
3. Most important to have an open mind.
Mind is like a parachute, best works when it is open. When conversing with managements of companies, have an open mind.
4. Fire in the belly
An investment guru's words: "We used to sleep on floor. We didn't have the fear of falling".
5. On Reading
Not just important to read. It is equally important to retain & retrieve.
So, Read. Retain. Retrieve.
6. On lifestyle discipline
Intense.
Keep giving 1 hour to body & 1 hour to mind, everyday.
Cut you life horizontally rather than vertically. (Vertical cutting is akin to saying that I'll bother about my body or exercise after I become 50 years old).
7. On R-O-T-I
Return on Time Invested
Many don't think in terms of R-O-T-I.
Even money, you may borrow. But time, you cannot.
Increase productivity, by avoiding procrastination.
8. Communication
Very important. We tend to believe communication and execution are the same. But, they are very different. Do courses on communication, if available.
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<You may ignore the below>
9. Appreciation.
A senior investment guru, used to criticize somebody on his face (openly). He would appreciate him on his back. (?) Reward for good work used to be more work.
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10. On what our generation needs to learn
Ability to delay gratification
Ability to sit on cash is rare.
11. On Mindset for Investing
Hen keeps pecking grains, all day.
Lion once in a while, goes for a big hunt. Returns to its den and chills out.
Buy Big. Sit Tight.
12. Successful Stock
Be sure of,
Growth, Cashflow, Risk.
Wait for,
Mood & Momentum.
13. On When to Sell
Market goes bad
Management goes bad
If you find something better
14. On What to Sell
If a stock in your portfolio becomes half the price, will you add ?
If answer is no, then sell it
15. Position Sizing
Don't buy a stock unless you "see" it becoming a multi-bagger
Allocation: 9 stocks, 10% each and 10% cash.
Visibility precedes death.
Better to stay low profile.
2. Mindset
99% people focus on expenses. (How to save on costs)
Only 1% people focus on income generation and wealth generation.
3. Most important to have an open mind.
Mind is like a parachute, best works when it is open. When conversing with managements of companies, have an open mind.
4. Fire in the belly
An investment guru's words: "We used to sleep on floor. We didn't have the fear of falling".
5. On Reading
Not just important to read. It is equally important to retain & retrieve.
So, Read. Retain. Retrieve.
6. On lifestyle discipline
Intense.
Keep giving 1 hour to body & 1 hour to mind, everyday.
Cut you life horizontally rather than vertically. (Vertical cutting is akin to saying that I'll bother about my body or exercise after I become 50 years old).
7. On R-O-T-I
Return on Time Invested
Many don't think in terms of R-O-T-I.
Even money, you may borrow. But time, you cannot.
Increase productivity, by avoiding procrastination.
8. Communication
Very important. We tend to believe communication and execution are the same. But, they are very different. Do courses on communication, if available.
--------------------------------------------
<You may ignore the below>
9. Appreciation.
A senior investment guru, used to criticize somebody on his face (openly). He would appreciate him on his back. (?) Reward for good work used to be more work.
--------------------------------------------
10. On what our generation needs to learn
Ability to delay gratification
Ability to sit on cash is rare.
11. On Mindset for Investing
Hen keeps pecking grains, all day.
Lion once in a while, goes for a big hunt. Returns to its den and chills out.
Buy Big. Sit Tight.
12. Successful Stock
Be sure of,
Growth, Cashflow, Risk.
Wait for,
Mood & Momentum.
13. On When to Sell
Market goes bad
Management goes bad
If you find something better
14. On What to Sell
If a stock in your portfolio becomes half the price, will you add ?
If answer is no, then sell it
15. Position Sizing
Don't buy a stock unless you "see" it becoming a multi-bagger
Allocation: 9 stocks, 10% each and 10% cash.
If you over-own a company, company will own you not otherwise. It is difficult to get mentally detached.
16. Valuation
Will profits in 5-6 years become equal to current market cap ?
(Seems to be very conservative. Try to understand this further)
P/S of 1 or 2. (Check this. Seems very conservative)
Look for a multi-bagger, not just a doubler.
If revenue is there, some change in company can magnify profit.
(You can take out water, only if it is there in the well)
16. Portfolio Structure
Mixed crops. Some will yield result in 6 months, some after several years.
17. Accuracy of Info
No data is better than wrong data :)
Be extremely careful with your data
18. On importance of Cashflow
16. Valuation
Will profits in 5-6 years become equal to current market cap ?
(Seems to be very conservative. Try to understand this further)
P/S of 1 or 2. (Check this. Seems very conservative)
Look for a multi-bagger, not just a doubler.
If revenue is there, some change in company can magnify profit.
(You can take out water, only if it is there in the well)
16. Portfolio Structure
Mixed crops. Some will yield result in 6 months, some after several years.
17. Accuracy of Info
No data is better than wrong data :)
Be extremely careful with your data
18. On importance of Cashflow
FCF
19. On importanace of Mgmt
In India -> Management, Management, Management
20. Meeting management
Be well prepared and on-time. Should be mutually beneficial.
Purpose of 1st meeting should be to get 2nd meeting.
21. On leverage
Companies already take leverage. So not necessary to take debt at your individual level.
22. Re-rating of stocks
In India, it has bee observed that when companies reach a PBT of Rs 500crore, then tend to get re-rated.
Only about 65/135 stocks have sustained such profit (??)
23. Importance of Scalablility
Probability of something becoming big
vs Certainty of something becoming big
24. Technicals
You may use to identify when to buy/sell.
To see if a stock is overbought or oversold (technicals ?)
To see overvaluation - use fundamentals (?)
25. Dilution
Check quantum and frequency of dilution.
Frequent dilution may not be good
Like Daku Mhmd Gazni. He would come and rob the same store all the time.
26. Illiquid stocks
Like Abhimayu ---> You can get in, but won't know how to get out
27. Philantropy
Quality of money is judged by how you spend it.
Anonymous philantropy
28. My biggest learning
This too shall pass...
29. Importance of writing down/recording your thought process.
30. Have the ability to understand, what the company does
31. Does the company have a huge enough opportunity, that I can hold it for a long time
32. A stock which others don't think is good, but you think it is good (based on your reasoning/understanding) - that is where you make big money
33. Keep yourself in a situation, where you keep looking for new ideas. You may come across something, that you find so attractive...
However, re-deployment is not so easy.
34. Unorganized to Organized sector shift.
35. A company when it moves from worst situation to bad situation might make you more money than a company in bad situation moving to good situation.
But, say if the company doesn't move from worst situation to bad situation....when things don't work, you got to be mentally ok.
36. On Observing people
What they say, what they do
See a person ...how he behaves both in tough and good times.
Smaller company---helps to meet management
37. You deserve to make big money when you 've some insight or know something that others don't. Otherwise you are only playing with price.
38. Other thoughts
Vipassana Mediatation is great.
Cashflows matter
Have a checklist.
Try to put a stock into say QGLP framework (Ramdeo Agarwal's QGLP framework). See why the company deserves this moat.
Guru: If company is too small in size for him...he would buy at least 5% of the company (?)
Guru: Didn't shy away from cyclicals. It is know that cyclicals: you get in when PE is optically high and exit when PE is low.
Circle of competence is important. Develop your expertise in an area.
Focus on investing in your own self.
PMS is a thankless job
Institutional side: like a golden handcuff (?)
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