Are You Prepared To Hold Multi-Bagger ?

Every one want multibaggers and wonder how fast a stock has grown to make holders of the stock rich.For instance CanFinhome was trading at 317 on 1st June 2014 and the stock hit 3232 on 30th June 2017 which is 919% profit in just three years.If you have to benefit from a multibagger you have to postion yourself as a long term investor and needs lot of preparation to  set your mind to hold a stock ignoring all your temptations to book profit and stay focused on all the developments of the company.

Investing, like life, offers several paths to success.Not everyone can succeed using only one methodology.There are successful value investors, momentum investors, traders with very short term horizons,highly leveraged hedge funds, as well as very long term growth investors.Not everyone can succeed at multiple investment  disciplines.A value investor may not necessarily turn into a successful leveraged speculator,just like a successful scientist will find it difficult to win an Olympic gold medal in sprinting.Various factors determine your investment success,including your risk appetite,your psychological ability to tolerate volatility,your existing financial commitments,and your ultimate financial goals.All these factors combine to create your own unique investment personality,Onceyou discover your investment personality,the greatest success can be achieved by staying within your investment comfort zone rather than going out of it.That is why you will notice that Warren Buffet essentially stays within his comfort zone of medium term leveraged speculation, and RakheshJhunjunwala,who seems to be good at both trading and long term investing,does both.Just as these investors have their personalities,the multibagger investor has a specific personality.

Here are some of the characteristics of a multibagger investor:

  • Long Term Horizon: If you check the prices of your stocks every day,you are probably not very well suited to mutibaggerinvesting.You need to think in terms of at least 5 to 10 years as your investment horizon.This means that you should not look to your multibagger investment for day-to-day excitement or entertainment.Mutibaggers are not made in a day.
  • The ability to Convert Observations from Day-to Day Life into investing Theses:This means that you need to have some familiarity with the stock market.Once you observe what you think is a powerful real-world trend, you need to understand which stock may benefit from it.For example,if you find that there is buoyancy in real estate prices ,you need to quickly be able to figure out which real estate stocks may be worth buying.Or,if you see that there is a mass migration from scooters to motorcycles,you need to know which stock is likely to benefit from that trend.
  • Financial Freedom:You have to be able to leave your potential multbagger investment alone for long periods of time.If your daughter is getting married next year, you cannot plunge into a stock hoping that it will return five times your money in one year.More likely than not,you will lose a lot of money by such a move.Never invest money you need into a potential multibagger.And once you invest money ina potential multibagger,unless you develop reasons to believe that this stock would not in fact become a multibagger,be willing to leave it alone.
  • High Risk Appetite: Equity markets world-wide are volatile.In India, they are like the scariest roller coaster ride invented in the world.A lot of experienced investors from the developed world cannot handle the volatility of the Indian stock market.Potential multibaggers in India tend to be more volatile than either the Sensex or Nifty. Unless you are prepared for a wild ride, and are willing to suffer stomach churning volatility, you should not try to invest in potential multibaggers.
  • Intellectual Flexibility: Multibaggers come in different sizes,shapes- and from different industries at different time.A dogmatic investor who says that he will buy only stocks from a certain sector with certain valuation will not be able to find, or harvest,multibaggers.If you do not like commodities,you wouldn’t have been able to catch Sterlite.If you are un-willing to buy highly leveraged companies,you would not have caught Aban Offshore.

We AAAProfitAnalytics is a SEBI Registered Equity Advisory Company leaded by team of experts who have great experience in wealth creation in the Indian Stock Market. We are a Specialist in buying high quality stocks that give return of 10-14% return in period of 30-40 days .


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