Knowledge Compounding: Wow! I found my next multi-bagger stock.

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Reading about a company, I was thrilled to discover its immense potential for growth. The business boasted a strategic position, a vast pool of opportunity, a reputable promoter, significant capital injection, and a doubling of production capacity – all the makings of a winner. Wow! I found my next multi-bagger.

                                             

But hold on! Examining the share price and valuation quickly deflated my enthusiasm. Isn't this a common occurrence these days? There's an overemphasis on the "top-down" approach, with little regard for the actual price.

 

This relentless pursuit of the next big idea, sector, or company has eroded the valuable investing principles we learned from Benjamin Graham and Warren Buffett.

 

It's a growth frenzy, but where's the margin of safety? Everything is validated in the name of growth and the current political and economic climate, as if there's no possibility of things going wrong.

 

However, a critical question remains: Are we solely focused on the big picture, neglecting the price tag itself? The promise of distant growth inherently carries risk (assuming no setbacks). More importantly, is it already reflected in the price? If these growth prospects are far-off and already factored into the price, which is quite common these days, you're essentially taking on significant risk.

 

When the music stops in this musical chair game – I mean, when justifying everything through the lens of growth loses validity – it could cost you dearly.

 

 

Happy Compounding

Jitendra

 

Caution: These are my personal views and shared only for the education and knowledge purpose.

 

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