Does Buying Expensive Quality Stocks Work?

This post first appeared on capitalmind.in It’s the 1960s. New investors join the markets in droves. The number of shareholders crosses a landmark number for the first time in history.  Most of these new investors flock to mutual funds.  Assets under Management, having grown 7x in the last decade, are on track to grow more than 3x. A star fund manager breaks away from the firm that he helped make the face of the mutual fund industry to start his own. His NFO seeks to raise $25M, an ambitious amount for the time. He plans to charge as much as

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The Best Health Advice that’s worked for me

No Net Worth number compensates for needing a neck, back, knee brace to get through the day. The good thing, unlike time, being in the best physical / mental state you can be is not a perishable commodity. It takes more work depending on how much you’ve let it slide, and yes, the raw material, your genes. Anyone, irrespective of age or gender, can improve, whatever their current state. This post summarizes the best health advice I have received and implemented to see benefits. I have been moderately physically active in some shape or form since my late teens. It

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Making sense of sector valuation multiples

This post was also published on capitalmind.in In Short Valuation multiples (EV/EBIT: Enterprise Value / Earnings before Interest & Taxes) are indicators of investor willingness-to-pay for future earnings growth Some sectors currently see a narrow range of multiples while others see broad ranges Analysis of what drives multiples suggests three key metrics: Sales growth, Return on Capital Employed (ROCE), and Cash-Flow from Operations as % of Net Profit are the key factors driving valuation multiples Current multiples might be overly optimistic for some sectors and overly pessimistic for others A chart first to set context. Range of enterprise value (EV/EBIT)

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The smelting of Indian stocks

This post was first published on capitalmind.in Markets have been getting smashed over the last 12-18 months, dramatic corporate tax reform notwithstanding. But because our benchmark index views are market-cap weighted, they don’t do justice to the phenomenal destruction in value across the board. Overall, the 1,900 companies we analysed, went from a market cap of Rs 1,46,19,230 Crores ($ 2.1 Trillion) in the middle of 2018, to currently about Rs 1,37,95,850 Crores ($ 1.97 Trillion).  Wait. That’s a 6% decline in a little over 12 months. What’s all the hand-wringing pessimism about then? Maybe we’ve just been spoilt by

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The most profitable industries in India in 2019

“Why so glum? It’s friday afternoon for crying out loud” (A senior executive to his subordinate) Subordinate: “See this pile of resumes? All applicants for that open role on our team. I’ll spend the best part of the weekend shortlisting this lot.” Senior Exec: (picks up pile, splits into two. Tosses one half into the trash can) Shocked Subordinate: “What about finding the best person for the role?!” Senior Exec: “Who needs unlucky people on the team. Enjoy your weekend.” Think of the pile as companies you could invest in. Sure you could comb through each one to find the

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Fundamental Analysis Tools for Investors in India

In the course of finding the most time-efficient way of analyzing companies shortlisted for investment, I’ve come across various tools available to Indian investors. This post compiles a list of some of the tools that I’ve tried either briefly or extensively along with some of their key strengths and weaknesses. Note that this list is far from comprehensive and also that digested analysis from any source is typically only a starting point and not a substitute for diving into past annual reports to gain context of the fundamentals. Overall note of caution on using any tool that aggregates data is to assume

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Mercedes or Honda?

Two recent first-hand incidents got me to post this eccentric poll on twitter yesterday. You’re buying a spanking new car. You only have two options. Both involve cars dressed up to look different (only on the outside.) Option 1. Mercedes S-Class. Looks like Honda Civic Option 2. Honda Civic. Looks like Mercedes S-Class Which do you choose? — Calm Investor (@CalmInvestor) July 19, 2019 The two incidents: One. I and my wife had taken our 1-year old for his first haircut. My son, sitting in his mother’s lap, looks around happily, smiling at the strangers trying to distract him, as

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Introducing Calm Investor smallcases

Introducing Calm Investor smallcases allowing for one-click implementations and rebalancing. In August last year, I wrote about my strategy of building a portfolio constructed on price momentum principles as a satellite to my core value portfolio. Almost out of academic curiosity, I offered a paid subscription to the portfolio. The concept was simple, and the plan was to set up a google sheet with the current constituents and weights of the portfolio. Subscribers to the momentum portfolio would have access to the sheet and receive an email every time I rebalanced or made changes to the portfolio. Expecting no more

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