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Does these stories really going to work in this market
Recent days star investors and many fund managers are giving interview to many podcasters and news agencies. Some of them are telling their stories how the found Multibaggers. Story of one the star investor is Star investor changed his mind from trader to become investor. That was a time when information about the stocks and companies performance very less in the public domain. No social media, no major business channel. Few Newspaper used to cover the market's in print media. He found one of the Advertisment that Punjab tractor needed MD or Director for their business and another few lines were written that tractor industry is getting revival and they are going to perform well. He decided to take his lifes first long term bet on this stock and kept patience for 2 years. Stock has moved 7x from his buying prices. Later on Punjab tractor merged in mahindra. Now the time has changed a lot. Digital media to print media everyone providing the data of companies and stocks. People are already knowing these are few industries going to boom for next few years. Valuation of such companies before they start performing in their business, market already adjusting it to their share price. Opportunitiese are getting captured in early phases. For a normal investor finding out multibaggers before rally is almost next to impossible. Our goal is to make 23-25% in a year that means making double in every 3 years. There are many strategies by which you can find Multibaggers. But this worked for very few people. What a common investor needs to do is capture opportunities in compounding stocks. In market few are Multibaggers and few are compounding stocks. Stocks whose valuation is 15-20 but in future next 5 years growth is going to be 2-3 times. This makes PE of stocks goes to 35-40 due to constant growth for few years. If profits and revenue growth makes stock to grow 2 times then PE rerrating makes it 4 times. This double effect creates multibagger. But what if stock valuation is already as per market. In this situation market adjust only growth factor to share price. Stocks like Pidilite, marico they are already at good valuation. Only we are going to get benefit of growth in this. What we should do to increase ours returns. Buying best compounding stocks at lower valuation. But remember that keep those companies out of list where corporate war is on peak like paints. Dabur, reliance, tcs, itc these are few looking to be attractive at this level. This is not recommendations just example Keeping adding blue chips if they deep more. How many stocks you should add to your portfolio and what should be allocation is really skillful work.2
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