A framework to get you to a 50-100 bagger stock.
What it takes:
1. Small/Mid starting market cap - so that there is enough scope for the market cap to expand.
2. Institution worthy but under-owned by institutions - Secular multi year growth catalyst + scope for persistent buying over months and years
3. Neglect (during hold period) - not a mainstream idea - often they don't believe in it till the last one-third phase - ability to hold against consensus is the edge
4. Long Holding period - huge gains are made only if you’re willing to hold the positions for years and decades and have an aversion to selling or booking profits.
5. Drawdown - methodology to ignore 50-90% drawdowns. I don’t say ability to stomach as one can’t really stomach it. It essentially comes down to not even looking at it or avoiding calculating your returns or drawdowns. Vision helps (covered below).
6. Allocation - Just the right starting allocation (typically small enough) that you never feel the pinch even if it goes wrong and you can continue to hold on for as long as it takes
7. Vision - to see the big picture and the larger trend and not be bothered by events in the interim.
This in no way means one should follow this approach - there are many ways to make it work in the markets - but just to understand that this is what it takes.
Respected @nsitharaman ji and @FinMinIndia ,
Suggestion 1 of 3 for strengthening India's capital markets:
Long-term capital gains tax on listed equities should be abolished.
A long-term shareholder is not a speculator but a provider of patient risk capital. By investing in and holding businesses, investors help companies expand, create jobs, innovate and contribute to India's economic growth.
India requires enormous amounts of long-term capital to build world class enterprises, infrastructure and global champions. Tax policy should encourage households to move savings from passive assets, including imported stores of value such as gold, into productive businesses that create jobs, generate tax revenues and build national wealth.
The appreciation in a company's value is not created in isolation. During its growth journey, the government already collects corporate tax, GST, income tax from employees, customs duties, stamp duties and numerous other levies. Long-term capital gains are often the final outcome of economic activity that has already generated substantial tax revenues.
Most importantly, tax policy should clearly distinguish between investment and speculation. A long term shareholder is a partner in wealth creation, not merely a participant in market transactions. Tax policy should reward long-term ownership of productive businesses and distinguish it from short-term speculation.
India needs more patient capital, more entrepreneurship and more long term investing. Abolishing long-term capital gains tax on listed equities would be a powerful step in that direction.
Respectfully submitted.
@GabbbarSingh I am working remotely for more than 5 years and we don’t have any team building or fun activity. Just work and connect to team members as when required. It’s going so good. Everyone gets their time
This is a monarch butterfly migration arriving in the oyamel fir forests of central Mexico. None of these butterflies has ever been here before.
Their great-great-grandmothers left this exact grove in March. By July those grandmothers were dead. The butterflies you're watching are four to five generations downstream, born somewhere between Texas and Ontario, and they just flew up to 3,000 miles to a tree none of their parents ever saw.
The brain doing the navigation is smaller than a grain of rice.
The mechanism is a sun compass time-compensated by a circadian clock running in the antennae. Cut the antennae and the monarch loses orientation within hours. The clock corrects for the sun's position drifting across the sky as the day moves. Add iron-bearing magnetite particles for magnetic field detection on cloudy days, and a 0.5 gram insect is running redundant inertial guidance.
The destination is more specific than the navigation.
They cluster on a few dozen oyamel fir groves in the Sierra Madre at 9,000 to 11,000 feet. The microclimate has to sit between 32 and 41°F. Below freezing kills them. Above 41°F burns the fat reserves they need to survive five months without feeding. The right band exists a few hundred meters thick on a few specific mountains. Outside it, the migration ends.
One generation each year is built differently from the rest. Summer monarchs live two to six weeks. The fall generation lives eight months. It postpones reproduction, fattens up, and carries the entire round trip in a single body.
The map is genetic. Nobody has fully decoded how.
A monarch hatched in a backyard in Toronto in September has never seen a mountain, never smelled a fir, never met an ancestor. It flies south for ten weeks, picks the right peak, and lands on the tree its bloodline has been returning to for tens of thousands of years.
The forest knows the families that come back.