Starting with just Inr 10,000 and a small monthly Contribution, any investor can use this method to create their own golden parachute a million-dollar retirement portfolio. All you need is time.

That is something nobody seems to have any more or really appreciate. But at 48 years age I understand 30 years can slip by in an instant. It may seem like forever but it’s not. Instead today it’s all about the fast money. In the market this stock, that stock, nobody has the patience to ride the rough spots anymore-

However, there is one thing that never changes in the investment world; when you buy solid companies and reinvest the dividend in them you can build true wealth. The best part is you’ll never have to rely on your retirement reason to fund your golden years.

Of course, seasoned income investors have known this for years. That why the truly rich don’t spend their days glued to the financial news. The biggest factors behind these well- worn strategies is time itself and time never fails.

 ” Throughout my career what I did was, I never just analyzed the technical research, rather I analyze both technical and fundamental research. I would always recommend my fellow investors that one should always perform both the researches to get a clear idea. Both technical and fundamental research are important. Fundamental research provides us with information that should we invest in the present? or should be invest in the near future? Technical research provides us with information that what should be the right time to add the stock again. For example, if we invest on any stock that stock might fall down 30 to 40% so we can get a clear idea technically or fundamentally if we should hold the stock, exit the stock or add some more of them. As said by Mr. Warren Buffett,” if you’re not ready to see 50% of your value defoliating in stock market then don’t invest in stock market.”

 Now coming to multibagger stocks, most of the youth and new investors have a limited idea about it. So, let me just elaborate a bit for you guys.

So, what are Multibaggers?

For the purposes of this website, I am restricting the definition of multibagger to any stock that can generate a return of greater than 1,000%, i.e. a ten-fold return over a 5- to 10-years period. After a rigorous analysis of all the Multibaggers that the India stock market has produced since 1990, we have identified common characteristics that stocks which produce these types of out-standing returns possess. Since investors can only take advantage of identifiable opportunities, one of the criteria that we used to narrow down our list was that an alert investor should be able to identify such opportunities. We did not consider companies with limited disclosures that made it impossible to identify them as possible Multibaggers in our study.

It is also important to note that all companies that fit the criteria we have outlined will not become Multibaggers. There are challenges in business execution, management capability, technological factors as well as new products, competition, etc., that will restrict some companies from being able to reach the levels that an investor might dream up for them. One of the key skills is to be able to get out of such situations without getting emotionally attached and stay with only those stocks that go on to become Multibaggers.

Identifying Multibaggers

The first, and probably the easiest, step in multibagger returns is to identify stocks that have the potential to generate extraordinary returns that have the potential to generate extraordinary returns. In order to understand what makes a multibagger, we researched stocks that appreciated more than 1,000% in the Indian market in rolling 5-year periods from 1990 to 2008. Using this data as a starting point, we distilled out the characteristics that were common to all Multibaggers and trade to identify what made them so. These international Multibaggers give us some clues as to the direction that India could take in the future. But one needs to be cautions and not extrapolate too much since India is charting its own unique course due to its inherent opportunities and constraints.

One key qualitative criterion we used was that at the at time of purchase, the potential for having multibagger returns had to be identifiable. The reason for highlighting the identifiable multibagger potential at the time of purchase is that the world of global finance is so dynamic that the unexpected occurs regularly. Almost no one can predict how exactly the world will change. Due to this reason, Multibaggers that are totally unexpected and inexplicable are regular features of great bull markets. Our requirement that potential had to be identifiable weeded out stocks like Jai Corp, Marathon Nextgen Really or BF Utilities which in the 2003-2008 period, generated tremendous returns (59,900%, 5,84,718%, and 37,847%, respectively). While some of these stocks could have been value picks in 2003, it was very difficult for an investor who was not an insider to either get information about these companies or identify them as having any multibagger potential in 2003 (or in 2008, for that matter!).

Are All Good Companies Multibaggers?

In general discourse, people often refer to certain companies as good companies. There is also an implicit assumption that such companies will make good investments. We beg to differ. Good companies will become Multibaggers only if they are bought at proper prices. Good companies can also generate losses for investors if investors buy their shares at the wrong time.so do not automatically assume that because you are buying a great company, you will get a multibagger return. However, if you are able to buy a great company at a time of high pessimism, you are more likely to generate a multibagger return over the long time.

How to Generate Multibagger Returns?

There are four parts to generating a multibagger return:

• Identifying a suitable company;
• Buying its stock at the right time;
• Holding the stock until the potential of the company is more than fully captured in its price, and

Each of these four parts is very important. In contemporary stock market literature, a lot of attention is paid to identifying good companies but rarely ever are the other aspect of generating multibagger returns equally highlighted.

Buying at the Right Time

Just because you have identified a potential multibagger company does not mean you should jump in and buy its stock. You need to understand whether you are buying it at the right price. How does one do that? There are few circumstances in which a purchase decision increases the probability of generating a multibagger return. Let’s consider what these are.

Buying a company in a new industry Early in its Lifecycle

You need to identify an industry that is either new or experiencing a positive change that will benefit companies in the industry. Then you need to find suitable investment candidate within the industry and buy its stock before there is widespread recognition of this potential. This would be akin to having bought  Hero Honda or Zee Telefilms in 1993. Both were good companies in nascent industries and in 1993 their potential was not fully recognized. However, this approach is fraught with risk because the new industry may not grow as you envision. It is possible to de-risk this contingency by only buying those companies that are trading at a significant discount to their extrinsic valuation, a concept which is covered later in this book. Buying at Price / Sales (P/S) ratio below 1 or a price / Earnings (P/E) ratio below 10 in a new industry can also significantly protect the downside risk.

Buying a Good Company with Demonstrated Growth in a Market Panic

This involves look for a company with proven capability in a growing industry. For the purposes of this website, a market panic is a situation in which the market falls by more than 30%, and when market indices such as the Sensex or Nifty are trading at Price / Earnings ratios below 12. Typically, these market panics affect all companies, whether they are good or bad.  Therefore, at such times, share prices even of good companies are beaten down to highly attractive basement levels. These market panics usually occur because of a need for liquidity and a fear psychosis among traders and investors rather than due to any fundamental problem’s suitable companies,, can apply the same valuations as in the first case, namely Price / Sales ratio below 1 or Price / Earnings ratio below 10, to purchase shares of those companies during a market panic. Though share prices may fall below your purchase price for a while, buying good companies at attractive price will generate good returns over the long run.

Buying a Company with proven capability experiencing Temporary problems in a Growth sector

Even the best companies in the world cannot deliver outstanding results every quarter. Due to various market  and  execution related problems, good companies sometimes  have bad quarters. Even if the management team of a company has demonstrated consistent ability to generate sales and profits in different market conditions, the market tends to punish the shares of such companies when they are experiencing a temporary problem. However, for the long-term buyer this is a great purchase opportunity. The caveat, However, is that the problems should be of a temporary nature and the share price should fall sufficiently so that it is attractive enough to compensate you for the risk you are taking. Again, we apply the same ratios as earlier. Buy these companies if their shares are trading at Price/Sales ratios below 1 or their Price / Earnings ratios are below 10.

Holding a Multibagger for the Long Haul

The third aspect of generating multibagger returns is less a skill and more of an attitude. Holding for the long term is critical to generating multibagger returns. Markets have several ups and downs. Multibaggers tend to move far more sharply in either direction than the overall market. Several factors affect both the market and individual stocks. It is important to think of Multibaggers as businesses and not as stock. Those who let the price of their investments, or the movements of the index, affect their view of the underlying business will not be able to extract multibagger returns even if they can identify likely multibagger companies. In fact, the time taken to generate multibagger returns is usually at least five years. While holding Multibaggers, investors will experience severe price volatility, self-doubts whether the company’s fundamental performance justifies being invested in it. Being able to answer this question and possessing patience are the only ways to getting multibagger returns.

Exiting a multibagger:

Identifying, buying and holding a multibagger are difficult, but the sell call is the most challenging. Sometimes stocks will look highly overpriced and it may appear worthwhile selling them. Here is a brief introduction:

When the Company’s Shares become Extrinsically Overvalued

A high extrinsic valuation means that a company’s market capitalization either approaches, or overshoots, the size of the external opportunity, i.e. the size of the industry or sector it is in. When the market is willing to be so aggressive about valuing a company, it is worth thinking about exiting. Rarely, if ever, is there a company that has 100% market share. If the stock market wishes to ascribe such a valuation to a company that you have invested in, you should oblige people who have this view and sell your shares to them.

When the Company’s Shares Become Intrinsically Overvalued

If the market is willing to pay a Price /Sales (P/S) ratio of over 15 or Price /Earnings (P/E) ratio of over 50, it is worth thinking about selling the shares of the company. This does not mean that the shares will not go up. However, it does mean that the prices are unrealistic, don’t have too much further upside, and are unlikely to sustain in the long run. There may be other opportunities that can generate better returns with greater safety. So, it is best for one to book profits.

When Indices Become Overvalued

Sometimes market bubbles are created because the consensus opinion in the market becomes very optimistic. The overvaluation of indices become obvious through the index P/E. If the Sensex or Nifty begins to trade at P/E ratios of over 25, as it did in 1992, in 2000, and again in 2008, then it is time to sell all your holdings to the optimists and wait for some pessimism to set in for making purchases.

When Alternate Opportunities Look Like Multibaggers

The question of whether to hold or sell should also be guided by alternate opportunities which can generate a superior return. If the rate better returns, it is worth doing so.

When a company or Industry Fails to Deliver

Sometimes, what looked like a good opportunity may not turn out to be so, in such a case, there is no point in hanging on to a company that has consistently failed to increase sales. It is best to sell such companies and move on to others.

Multibaggers are not for everybody. While some exposure to potential Multibaggers can add return to the average portfolio, investors also need to understand their own personal cash flows and their tolerance of volatility to chapter these returns. Multibagger opportunities are ideally suited for those people who do not have to worry about using the cash that they have invested in such companies for a considerable length of time. Those who need this cash will be prone to worrying about volatility and will have a very difficult time generating multibagger returns.

Also, at this point it is worth talking little bit about leverage. For most investors, borrowing money to invest in stocks is a bad idea. The Indian market is especially volatile than others. Borrowing money makes it impossible to hold stocks of such companies for the long term and adds an element of unnecessary risk. Remember, Leverage is typically not for investors, it is for traders.

  In our experience, Multibaggers are generated through a combination of alertness, diligence, patience and willingness to think independently. These are soft issues that we have identified which an investor will only learn over a period. We have attempted to provide a framework for the harder skills required but it is up to you to develop these soft skills and attitudes in order to succeed in your quest for Multibaggers.

APART FROM ALL THE RULES AND RESEARCH I USE, TO ACHIEVE MY INVESTMENTS I CAN’T DENY THAT CERTAIN POINT COMMENTED BY Mr. WARREN BUFFETT BACK DURING 1956 STILL PLAYS A VITAL ROLE EVEN NOW WHILE I INVEST. WHY DON’T YOU GUYS JUST GO THROUGH IT:

1. Partners who withdraw one-half of 1% monthly are doing just that – withdrawing. If we earn more than 6% per annum over a period of years, the withdrawals will be covered by earnings and the principal will increase. If we don’t earn 6%, the monthly payments are partially or wholly a return of capital.
2. Whenever we talk of yearly gains or losses, we are talking about market values; that is, how we stand with assets valued at market at yearend against how we stood on the same basis at the beginning of the year. This may bear very little relationship to the realized results for tax purposes in a given year.
3. Whether we do a good job, or a poor job is not to be measured by whether we are plus or minus for the year. It is instead to be measured against the general experience in securities as measured by the Dow-Jones Industrial Average, Leading Investment companies, etc. If our record is better than that of these yardsticks, we consider it a good year whether we are plus or minus. If we do poorer, we deserve the tomatoes.
4. While I much prefer a five-year test, I feel three years is an absolute minimum for judging performance. It is certainty that we will have years when the partnership performance is poorer, perhaps substantially so, than the Dow. If any three year or longer period produces poor results, we all should start looking around for other places to have our money. An exception to the letter statement would be three years covering a speculative explosion in a bull market.
5. I am not in the business of predicting general stock market or business fluctuations. If you think I can do this, or think it is essential to an investment program, you should not be in the partnership.
6. I cannot promise results to partners. What I can and do promise is that:
7. Our investments will be chosen on the basis of value, not popularity;
8. That we will attempt to bring risks of permanent capital loss (not short- term quotational loss) to an absolute minimum by obtaining a wide margin of safety in each commitment and a diversity of commitments.

It amazes me how few investors- and sometimes, funds man agrees- can articulate their investment philosophy. Without an investment framework, a work of thinking about the world, you’re going to have a very tough time doing well in the market. I realized this some years ago while I came across this saying of Mr. Warren Buffett “to me, that’s the whole point of having an investment philosophy and sticking to it. If you do your homework stay patient, and insulate yourself from popular opinion, you’re likely to do well. It’s when you get frustrated, move outside your circle of competence, and start deviating from your personal investment philosophy that you’re likely to get into trouble.”

Here are the five rules recommended:

1)   Do your homework

2)   Find economic moats

3)   Have a margin of safety

4)   Hold for the long haul

5)   Know when to sell.

At first glance, this website might make it seem that there is some formula to generating high returns. In fact, the central message of the website is that there is no formula. I am only generalizing from specific examples of Multibaggers that I have already seen. So, while you go through this website, keep in mind that investing is not formulaic. In fact, it is an art that takes a lifetime to get good at. Every investment rule has at least two exceptions, which is why experience and a multi-disciplinary approach are absolutely essential for multibagger investment success. We are attempting to provide a few concepts that can form the basis of multi-disciplinary approach towards generating multibagger returns. Good luck and happy investing.