The market boom time is attracting more & more IPOs to fetch the Liquidity of Short-Term Investors. Few of the Good Businesses in our Screening are Kalyan Jewellers (Gold Merchant), IRFC (Indian Railway Finance Corporation), Indigo Paints which we Think hold good rating & thus earn good investor support.
Kerala based Jewellery Showroom Chain Kalyan Jewellers is expected to raise 1750 crore from the IPO. More clarity on this will be provided further examining the companies & future strategies.
ESAF (Small Finance Bank) is raising 800 Crores through IPO. This will be a high growth business in our view.
Grofers is another Innovating Grocery company in our observations.
WARNING
IPOs seldom make Investor Rich as they are very much over-priced. Gone are the days where Fair IPO Prices were used – today the company have smart listing agents who analyze the investor sentiments & keeps the prices higher. Thus the Promoters with FV 10 share gets listed at higher prices gaining 10-50X increase in their wealth quickly. That is the power of having credible business & availability of short-term investors to make them rich.
The underwriter sets the offering price based on the amount of capital the company wants to raise and the level of demand from investors. The opening price is set by supply and demand
FREE INVESTOR EDUCATION
PURPOSE OF INVESTING
WHY INVESTING IS REQUIRED?
Your Savings is undergoing 5% Inflation every year.. So Investing is required to Protect your Money!
LACK OF MONEY IS THE PROBLEM OF WORLD!
As some genius said, Lack of Money is the Problem of World.. We are living in a Money Controlled World!
Let us see how “Lack of Money” is your problem too..
Most of Our Life Aspects are Controlled by Money
- We went for college education yesterday to earn money
- We are doing job today to earn money
But there is a problem in this System. All these money making is depending on the Uncertainity on Economy, Skill to perform etc. The current corona times would have iterated this that even the Wealthiest person would have Money problem to meet their expenses.
So the Primary problem an Investor should Address is INCOME!
So we need to make Income Passively!
PURPOSE OF INVESTING
The PURPOSE OF INVESTING is to Make Money passively. This is to solve your current Or future “lack of money” problems.
There are mainly 2 Types for Investing:
- Wealth Creation
- Income Generation
Let us see what each one of these are..
WEALTH CREATION
Here you will be focusing on Amassing Wealth for Rich Outlook in the form of Money, Properties, Luxury Cars, Yachts etc.
Stock Market is Apt for Wealth Creation!
Stock Market helps Wealth Creation through Capital Appreciation.
Stock Market provides 50% ROI per year on average – compared with 8% of Fixed Deposits
Example: Infosys Investor gained 50000% returns in 20 years making ROI of 50% above per year.
Note: In Stock Market investments you will not be controlling the performance of your stocks. The stocks will perform based on their Management & Promoter decisions.
INCOME GENERATION
Here you will be focusing on Generating Income for Financial Freedom so that you can quit your monotonous job, have more family time, can go for world trip etc.
Stock Market is NOT for Income Generation!
Even though Stock Market provides dividend incomes it will take really long years to generate necessary income for financial freedom.
The best Investment Vehicles for Income Generation are:
- Real Estate Rentals
- Fixed Deposit Interests
- Loan Money Interests
Note: In these investment vehicles you can control some of the performance of your assets. In this way you can Increase the ROI on it.
HYBRID APPROACH FOR FINANCIAL FREEDOM!
So how to solve the INCOME problem if Stock Market is for Wealth Creation?
The solution is HYBRID Approach!
How our Client achieved Financial Freedom in 5 Years!
Many of you will be surprised to hear that Financial Freedom is possible in 5 Years!!
Advisor says: Years back I was dropping my Friend to Airport as he was leaving for Job Abroad. His kids were crying as he has to leave them behind & only visit back after 1 year. So I understood the middleclass chaos caused my “lack of money”. Hence devised this 5 year Financial Freedom strategy.
During 2012 one of our Client started investing in stocks with a Capital of Rs. 30 Lakhs. He was buying, holding, re-buying & shuffling the Multibaggers for around 5 years to gain 300% Returns!! (remember the Fixed Deposit ROI will be only 50% for the period)
Now he got his Wealth zoomed to around 1 Crore! As you know, putting the money on Bank will generate only 10% Interest. As you know he cannot be Financially Free with Rs. 1 Lakh. This is because there is No Growth in the FD Income to tackle Inflation.
Here we advised him to switch to Real Estate Commercial Properties. This was to gain Rental ROI of 20%. (remember the Rental Yield ROI on India residential properties is only 3%)
After doing the Construction Activities for 2 Years, he was able to Generate a Rental Income of Rs. 2 Lakh per month!!
Thus Financially Freedom was achieved in 5 Years!
Now he is free from the Income Problem of Money. As you can see Stock Market was used to Create Wealth & then Income problem was resolved.
What is your Goal?
Before proceeding further please decide yourselves what is your goal in stock market!
LONG TERM INVESTING
In Futurecaps we focus only on LONG TERM INVESTING along with WARREN BUFFET Strategies!
Following are the Justifications on LONG TERM INVESTING.
- Stock Market is a place where Entrepreneur can raise money from Investors. The Investor will gain back Profits through Capital Appreciation & Dividend Income
- Long Term Investing is the only method to gain that level of Returns like 30X, 100X, 300X etc.
- Infosys provided 500X returns for 20 year investing period
- V-Guard provided 30X returns for 10 year investing period
- Cera provided 10X returns for 7 year investing period
- Long Term Investing is really passive which requires Little actions & attention whereas:
- Day Trading & Short-term Investing requires more thinking, analyzing & actions making it an Active Job
Long Term Investing have the following Theories:
- NO stop loss in long term investing
- BUY more stocks on price crash
- Focusing on growth stocks ensures NO loss in long term
Following are the Justifications on WARREN BUFFET Strategies:
- Warren Buffett is the Living Legend of Value Investing
- Warren Buffett invests only in Clean & Growth companies (Growth Investing)
- Warren Buffett ensures he is not paying high for the stock (Value Investing)
Why not Day Trading?
If you go with Day Trading & other stuffs you are not using Stock Market for the right purpose & more chances of losing money too. Day Trading is encourage because Tip Providers, YouTube advisors, Brokers & Government earn income through you.
Why not Mutual Funds?
You have NO Control on how your money is managed, how efficient your fund manager is. Also, mutual funds have restrictions on certain capitalization of stocks so the returns will not be par with Smallcap, Midcap returns we invest here.
Summary
All these makes your Direction right with Stock Market Investment and that too Long Term with Warren Buffett strategies. This will yield you to Success!
SECRETS OF RICHES
If you would like to be Wealthy & Financially Free, then you should Follow the Secrets of Riches!
Here are few secrets of riches after observing & interviewing many of the Celebrity Investors.
MONEY WORKS FOR THEM
Riches are just Money Managers. They make sure Money works for them. Then they focus on their Passionate Job aligned with Money Growth.
APPR. ASSETS
Riches are always in look for Appreciation Assets so that they can Grow & Stay Rich!
Riches always keep the Spirit of Living by buying Luxury Cars & Mansions, but ensure their remaining Appreciation Assets covers the Depreciation caused by the luxury toys.
THINK IN PERCENT
Riches makes the Evaluation & Investment Decisions on Percent.
Most average investors over there talks in rupees.
ROI 20%
ROI 20% is the Path to Riches. They ensure the money allocated to work for them are gaining 20% or more returns annually.
HOME & CARS %
Riches love Luxury but keeps their Home & Cars under 10% of their Total Assets. In this way they ensure the 90% of Money is put to work for them & earn more wealth & prosperity.
INSURANCE
Riches chooses Appropriate Insurance Protection. They minimize the impact of losses in health, money & business through Insurance. Term Insurance are better than Endowment plan for life insurance.
TAX OPTIMISTIC
Riches handle Taxes carefully. They in-turn master Tax Returns and generate High ROI on Investment through Taxes.
LOAN SHARKS
Riches play shark with Loans. Riches only take Loans if the ROI is higher than the Interest Rate. In this way they leverage loans to grow richer faster.
You can Refer more about Riches here.
IDENTIFY A MULTIBAGGER
Now you have the Purpose of Investing & Protection from Wrong Ways of Loosing money, you are positioned to do the next action. IDENTIFY A MULTIBAGGER!
GROWTH CHECK
Growth Check ensures the company & underlying sector is positioned for growth in the next 5 years to 20 years period of time.
As said before, Information Technology during 2000 was a Growth area. It created 1000 & 10000 X multibaggers during the last 20 years. We need to find out such growth sectors.
As part of the Growth aspects in Multibagger Checklist we use the following Ratios:
Sales Growth
Check the company is having 15% Sales growth for the past 3 years & more.
Consistent Sales Growth ensures that the Company is good in their business, there is a growing customer base & probably returning customers also.
Note: Returning Customers is one of the Key aspect of all Growth business.
Example: Infosys had returning customers through Long-term Account contracts.
Page Industries had returning customers through Brand addicted customers.
EPS Growth
Once the Sales Growth is ensured, we need to check the EPS Growth too.
EPS says the Earnings per Share – that is how the Company is converting the Sales to Profits & Allocating to Per Share.
EPS Growth of 15% above is Good.
Note: You can use Screener Tool for viewing the Company Ratios. Example Screener
VALUE CHECK
Growth Factor alone cannot yield you to Success. You need to check the Price also. Here comes the Value Check!
Value Check ensures you are NOT buying a Maruti at the cost of a BMW!
Here you calculate the Intrinsic Value of the company using Growth parameters. Then you put a Discount of 30% on the Intrinsic Value to determine the Fair Value.
If the Fair Value is Greater than Market Price of the company, it is a Good to Buy stock!
For example let us take HDFC bank example which is a bluechip darling of lot of investors. HDFC at Rs. 900 is having EPS Growth of 20% in 2020.
The Intrinsic Value of HDFC Bank is Rs. 1200
The Fair Value is at Rs. 850 with 30% Margin of Safety!
Thus the Current Market Price is Over-valued to Buy the Stock to give Multibagger Returns.
At the same time, If the Price crashes to Rs. 500 levels then the Valuation will be good to Invest in.
You can play with our Intrinsic Value Calculator here.
DEBT CHECK
Debt can give you good leverage. But it can kill you too during tough times. This is the reason Successful Investors like Warren Buffett stay away from High Debt companies.
Companies with High Debt will face difficulty during Economic downturns to pay back the Interest & thus leads to defaults.
You actually need to hold the Multibagger for 5 or 10 or 20 or More years!
As you know in Stock Market, a growth company will get 10X valuations & a defaulting company can be thrown to ashes in no-times. So it is Important for a Multibagger Investor to ensure the Debt is low or zero.
The Ratios to look over here are:
Debt Equity Ratio
Shows how much Debt is allocated on Shareholder’s equity. Lower the better. Maximum 0.4 is advised.
Example: A debt of 1 means there is 100% Debt = Rs. 1 Debt on every Rs. 1 share.
Note: Banking & Finance companies have Higher Debts as their core business is of borrowing money at low interest & selling out for more interest.
Interest Coverage Ratio
Shows how many times the Company can pay the Interest on Debt based on it’s debt.
Higher the better!
Example: If the debt is 100 Crore and the Profit is 200 Crore, the Interest Coverage Ratio will be 2!
Note: Wonderla Holidays is a Zero debt company. After the Corona troubles if you can enter the company at a lower price, It could be a Multibagger!
INTEGRITY CHECK
Integrity of the Management is important to really give you a Multibagger returns.
Often times, the Management will be Crooked enough to Think Selfishly & Fraud on Accounts to Channel Profits to the Promoter accounts thus cheating Shareholders.
If you enter such a company, your chances are less to get successful as an Investor.
You can do a Fraud Check on Google on the Promoter, Past News, Glassdoor on how they Treat their employees, P&L on proof of dividends & taxes etc.
As an example, we can see Narayana Murthy is a Top Admired CEO of all times – he was careful enough to reduce the costs, optimize profits & give back Superbagger returns to the stock investors.
We need such kind of Promoters!
More on Multibagger Checklist here.
WARREN BUFFET WAY
Here we can provide you the Key Ratios & Parameters which Warren Buffett uses which Futurecaps inherited to Identify Multibaggers like Cera, Wim Plast, Manappuram etc. in the past.
UNDERSTAND THE BUSINESS
Never invest in a company if you do not understand the business very well. Warren Buffett says you should buy the stock like you are buying the company. Feel it!
SALES GROWTH
The company should be having 20% above growth every year. This proves the company is in a growth sector, increasing demand for the products, returning customers exists & probably a good brand too.
PROFIT GROWTH
The profit growth should also reflect the 20% as sales growth.
PROFIT PERCENT
The profit percent should be 20% above to ensure an efficient company.
PE RATIO
The PE Ratio for the company should be moderate as per the sector. For higher PE companies there should be additional check for PEG Ratio below.
PEG RATIO
PEG Ratio ensures the High PE is justified for a high growth company.
BUY if PEG < 1
HOLD if PE > 1 & < 2
SELL if PEG > 2
EPS
EPS is Earnings per Share. It equates the Profits to outstanding number of shares.
EPS Growth
Ensure the EPS is having 20% above growth.
BOOK VALUE RATIO
Book Value is the Value of company as per the Financial Records. Ensure the Book Value Ratio is < 5 for a growth company. Else it is a high-priced one.
DEBT EQUITY RATIO
It show the Debt the company have. Ensure it is below 0.2 for most companies. However Finance companies will have high DEBT EQUITY RATIO where one should look for INTEREST COVERAGE RATIO mentioned below.
INTEREST COVERAGE RATIO
This is the Capacity of company to cover the Interest expenses. Higher than 2 is recommended.
ROE
Return on Equity should be higher than 20.
PROMOTER HOLDINGS
Promoters Holdings shows the Promoters Confidence int he company. Ensure it is above 40% & also Increasing in recent years.
INTRINSIC VALUE
It is the Core Formula which identifies the True Value of the company. Then compare it with Current Market Price of the company to make Buy/Hold/Sell decisions.
You can play without Futurecaps Intrinsic Value Calculator here.
MORE FORMULAS
Also there are More Formulas we Internally use to come to a Multibagger Decision. Totally we have a 100 Point Checklist. You can Subscribe our Multibagger Plan use to learn more.
SCREENER
You can use Screener the Best Tool for Indian Stock Market for your Research purposes.
PORTFOLIO THEORY
Now that you Identified one Multibagger Stock & Wanted to Invest in them. There we come with the next warning: You should not invest in just one or two companies.. You should have a Portfolio!
Why Portfolio?
Fund Managers uses Portfolio to manage the investments. Portfolio ensures your Investments are diversified enough so that any problem to a paritcula sector will not cause all your eggs to be broken.
Example: Airline sector during Corona impacted very badly.
All Celebrity Investors like Dolly Khanna, Ramesh Damani uses Portfolio Theory which ensures.
10-20 Stocks
Keep around 10-20 stocks in your Portfolio. Rotate the stocks – add new, remove few every year after ensuring the Intrinsic Value.
MONTHLY SIP
Ensure you buy stocks continuously in a Monthly SIP manner so that multiple highs & lows are absorbed.
70:30 RATIO
Warren Buffett keeps 70% in stocks and 30% in bonds. This provides him Emergency Fund & also capital to invest during bear market.
AUDIT
Portfolio Managers ensures they Audit their holdings, buy-sell-hold decisions every Quarterly & so forth.
BEAR MARKET HANDLING
This is another important skill you should be having to be really successful in stock market!
BULL MARKET anybody can win!
BEAR MARKET victory really matters!
BEAR MARKET is an essential part of economy & thus part of stock market too.
ECONOMY
Economy goes through cycles of boom, bust & recovery phases. Periodically it resets itself to remove the weak ones out of business & reward the good ones.
Bear Market usually last for 1-2 years in Stock Market. Bear Market usually appears every 8-10 years. As you can see from history – there were Bear Market during 2000, 2008, 2018 & 2020.
WHAT YOU SHOULD DO IN BEAR MARKET?
You should BUY new multibagger stocks which are growth sector positioned & having low in debts. In this way you can enter at lower price & exit them at higher price during a Bull Market.
Note: You can use Intrinsic Value calculation to perform the Enter/Exit decisions on the QR/Annual results.
You should be Investing continuously in Bear Market based on Intrinsic Value Calculation & Portfolio Limit per stock. After 2 years there will be No Loss in Bear Market Portfolio.
WHAT YOU SHOULD DO IN BULL MARKET?
You should do the Opposite during Bull Market. In Bull Market the prices will be irrationally high compared with their Intrinsic Value. In this case you should sell the stocks & park money in debt funds.
Note: During 2018 period we Alerted all our Paid Subscribers to Sell their stocks & Exit at peak. We have Economic Barometers to measure the Bull/Bear Market period & make decisions.
More on Bear Market Handling here.
INVESTOR TOOLS
Introducing few Investor Tools.
Tool#1 Screener
Screener is the Best Value Investor Tool for Indian Stock Market. We use it almost daily for Screening, Evaluation, Notification etc. Following are Important ratios we use:
- PE Ratio
- PB Ratio
- EPS Growth
- PEG Ratio
- Intrinsic Value, Fair Value, Discount
- Debt, Interest Coverage Ratio
Be sure to add enough Ratios & Alerts for your research. Contact us if you need custom ratios we use.
Tool#2 Intrinsic Value
Intrinsic Value is Important Investor Tool to find whether your Stock is undervalued Or not.
Intrinsic Value is an Ongoing decision maker Tool used for:
- Making BUY Decisions
- Making HOLD Decisions
- Making SELL Decisions
All Professional Investors out there including Billion Dollar Investment Guru Warren Buffett uses Intrinsic Value.
You can use our custom made Intrinsic Value tool for India. LINK
Tool#3 ROI
ROI is KING OF CALCULATIONS!
The purpose of ROI is to ensure you are not loosing money!
All the Top Investors & Business Owners like Warren Buffett, Mukesh Ambani, Bill Gates, Ramesh Damani are ROI Masters. They make all the business decisions considering the ROI!
To be a successful Investor you should become a Master in ROI calculations in all aspects – stock market, real estate, career, hiring, other investments etc. Here is one article & calculator we have created for same.
As part of the ROI Parade – You should:
- Reduce Depreciation Assets
- Remove Investments less than 15% ROI (except EmF)
- Decide Rent vs Buy based on ROI Calculator
- Ensure Net Worth ROI is around 20% for Fast Rich Path
Tool#4 Audit Excel
As a Professional Investor, you are NO Lesser than a Mutual Fund Manager. So you need to perform Audit every Year & get it Signed from Stakeholder! Audit Excel is the Investor Tool!
- Assets | Appreciation % | Depreciation %
- Real Estate
- Paper Assets | Stocks | Fixed Deposits
- Liabilities
- Car Loan
- Advances Received
- Goals
- Wealth Goal | 1 Year | 5 Year | 10 Year
- Income Goal | 1 Year | 5 Year | 10 Year
- Emergency Fund | 1 Year
- Investments
- Stocks
- Company 1 | Reason to Buy | Buying Period
- Company 2 | Reason to Buy | Buying Period
- Stocks
- Will | Bank Information | ROI | Stake Holder Signature
Tool#5 Auto Reminders
As I said before, Stock Market Investing is a Passive business! You will get results without Actively managing it. You will be only working few hours over weekend Or decision times like bull peak / bear bottom period.
So the major challenge all investors facing are:
- How to remember Monthly SIPs?
- How to remember Buying Reason for a Stock?
- How to automatically get Price Alerts for buying/selling?
- How to remember the Stock Market Strategies every year?
You can use the following tools to achieve the same:
- MemotoMe.com for automatic reminder setting up – monthly, quarterly, yearly etc & on stock & strategy notes
- Viewstocks.in for setting price alerts
Without these auto-reminders a newbie investor may forget the core principles & fallback to the average amateur crowd.
Tool#6 Mind Power Programming
This is mostly an unknown Investor Tool & most of you would be hearing it for first time.
Mind Power Programming is the Core Factor for Success in any fields. The human mind is the connection to universal mind aka god. You have to fill your mind with Thoughts & Desieres – so then the universal mind will provide energies & situations for you to achieve the same. So this is a Full Time Thought!
Example: If you wanted to be a Successful Actor – You have to Program your Subconscious Mind on Becoming like Celebrity Actors, Practicing Acting, Controlling Emotions etc.
Similarly, If you wanted to be a Successful Investor – You have to Program your Subconscious Mind with Investment Thoughts, ROI on all aspects, Long Term Vision etc.
We are providing a Sample Mind Programming MP3 file which you can request here.
INVESTOR ACTIONS
LESS STOCK ACTIONS
You should perform less stock buy/sell actions. Preferably monthly 1 or 2 actions.
It should be Passive Investing for Long Term.
MORE KNOWLEDGE ACTIONS
You should learn more books, attend sessions on Value, Growth Investing as well as upcoming sectors.
WATCH RESULTS
You should keep focus on the Quarterly results of the company. Plus, you should completely read the Annual Reports too.
Note: Keeping stocks minimal will enable you to reduce the number of annual reports.
MASTER MIND GROUP
You should join a Master Mind Group to hydrate yourself with valuable updates on stocks & overall markets.
Note: Futurecaps provide a Free Master Mind group for Paid subscribers.
AUDIT EXCEL
You should use an Audit Excel sheet to manage your portfolio, note down the buy/sell/hold decisions.
You should share this with your life partner to continue the investment decisions.
TEST YOUR KNOWLEDGE
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