Contents

Introduction: Decoding the Secret World of Multibaggers

▪ Multibagger investing is different in Asia
▪ Why reading US books and authors on investing does not work in Asia

1. Multibagger Axioms

▪ The timing of your buying and selling is critical
▪ Re-rating of the market reduces investing risk
▪ Anticipate the flow of money
▪ You must limit your losses
▪ Multibagger fundamentals are not what you think they are
▪ Stock prices may drop, rise, or rise exponentially on the same fundamentals
▪ Time of least interest in the market is the best time to buy
▪ Defy consensus at the extremes
▪ Expertise in fundamentals plus psychology plus technicals is a pre-requisite for picking multibaggers
▪ Big money comes in short bursts
▪ Uncertainty takes over if you think too far ahead
▪ Dont rely on past data
▪ If you feel comfortable, you are not trying hard enough
▪ Value is what the market attaches to a stock
▪ Dont diversify
▪ Stock prices are based on expectations
▪ Invest because there is a reason that stock will be a multibagger

2. Build Your Multibagger Edge

▪ What is an edge?
▪ Keep a record of your investment decisions
▪ Understand who you are up against
▪ Foster independent thinking
▪ Find an investment theme which the market believes will change the world
▪ Avoid narrative investment
▪ Lose to win, or make mistakes and learn from them
▪ Keep your multibagger portfolio separated from regular investing
▪ Focus on re-rating candidates
▪ Skip Warren Buffett style investing for multibaggers
▪ Keep your strategies and stock picks to yourself
▪ Read financial history that is your trump card in the markets
▪ Disregard the noise
▪ Buy the stock before the price setters do
▪ Dont be emotional about losses
▪ Dont make decisions based on your most recent memory
▪ No single multibagger should exceed 20% of your portfolio
▪ First test your theory
▪ Dont let media do the stock picking for you
▪ Continuously test your multibagger investment process
▪ Unlearning everything you know about investing
▪ Focus on the methodology
▪ Find out why stocks didnt turn multibaggers
▪ Dry run for at least one year
▪ Develop second level thinking
▪ Develop a process for identifying multibaggers
▪ Deconstruct ideology, construct discipline
▪ You have an edge only till a few investors are investing in the stock
▪ Work on developing a multibagger attitude
▪ Theres no substitute for experience
▪ Figuring out the odds
▪ Choosing a style

3. Multibagger Investing Myths

▪ Myth: Long holding period is beneficial
▪ Myth: Multibaggers will be found by following market gurus
▪ Myth: Diversified portfolio is the way to go
▪ Myth: Technology and 24-hour financial news give a competitive edge
▪ Myth: Investors know when to buy and sell stocks
▪ Myth: Buy and hold strategy leads to multibaggers
▪ Myth: Risk and reward have an absolute correlation
▪ Myth: A strong economy is good for stocks
▪ Myth: Markets are efficient
▪ Myth: Investing in low PE stocks is the way to find multibaggers
▪ Myth: Buy low and sell higher
▪ Myth: Knowledge of nuances of sectors and stocks may lead you to multibaggers
▪ Myth: Markets change and so does human behaviour
▪ Myth: It is easy to make money in the markets
▪ Myth: Invest over the long term for multibaggers
▪ Myth: Buy stocks for the long term
▪ Myth: Fundamental analysis is essential for multibagger investing
▪ Myth: Markets are rational
▪ Myth: Anyone can have a lucky streak and make money

4. Beware these Traps

▪ Buying stocks as products on discounts during a sale
▪ Trying to find multibaggers all the time
▪ Listening to business founders and managements
▪ Buying a stock because its intrinsic value is low
▪ Looking for confirmation of your beliefs instead of dissent
▪ Selling winners and holding losers
▪ Wasting time in meaningless financial calculations
▪ Basing decisions on recent rather than relevant information
▪ Preconceived notions of overvaluation based on the past
▪ Falling for the sales pitch
▪ Expecting a multibagger to pay for other things
▪ Investment errors caused by two dimensional information
▪ Dont be trapped by storytelling
▪ Be careful about correlated multibaggers

5. Principles of Multibagger Investing

▪ Understanding boom and bust cycles
▪ Understanding cycles and trends
▪ Investing in cycles and trends requires different techniques and produces multibaggers of different magnitude
▪ The point of reversal is when IPOs flood the market
▪ Investing with asymmetrical information
▪ A stocks price rests on consensus
▪ Learning to take losses
▪ Why we pick wrong stocks
▪ Dont sell out too soon
▪ Market behaviour is cyclical
▪ Exit if the crowd does not follow you in
▪ A few stocks allow the focus you need
▪ Correlation is not what we think it is
▪ Multibagger stocks have fat tails
▪ Superior returns are temporary
▪ You are in the business of absolute returns
▪ No single investment defines your success
▪ You must have a significant position size
▪ The rules of engagement
▪ Dont confuse winning streaks with good decision making
▪ How to value a stock
▪ IPOs will rarely be multibaggers
▪ All buyers and sellers of stocks are not value investors
▪ You dont have to wait for years for stock to turn into a multibagger
▪ Dont confuse economic growth with stock price rise
▪ Dont confuse revenue growth with operating cash flows
▪ Avoid anchor effect investing
▪ Invest in tandem with institutional investors
▪ The opportunity must be overwhelming
▪ Pick stocks in which institutional investors may get interested
▪ Pick stocks where supply takes time to adjust to demand
▪ Buy at points of extreme pessimism
▪ Look for new sectors where there are fewer listed stocks
▪ Selling principles
▪ ETF inflows portend multibaggers
▪ Stocks that will not turn into multibaggers
▪ Investment manias are your chance to make big money
▪ Sailing against the wind
▪ Look out for the unexpected
▪ Its the cycle which produces the opportunity
▪ Anticipate the anticipations of others
▪ You are your own best investment guru
▪ Managements make companies
▪ Leveraging irrationality
▪ Multibagger opportunities disappear when others catch on
▪ Risk and return are not completely correlated
▪ Multibagger opportunities comes up more frequently than we think

6. Psychology of Multibagger Investing

▪ Why we are unable to participate in bull markets
▪ Opinions, beliefs and ideologies
▪ Your market psychology has to be similar to that of a Samurais
▪ Human behaviour is the single biggest driver of prices
▪ Accept that you are fallible
▪ Human behaviour doesnt change, whatever else might
▪ Guard against overconfidence in your investing decisions
▪ Take a break if you have a losing streak
▪ The importance of feedback loops on stock prices
▪ Logical reasoning does not work in multibagger investing
▪ Mistakes multibagger investors make
▪ Understanding the behaviour of crowds
▪ If you cannot lose, you will not win
▪ Dont let your mood decide your stocks
▪ Losses have serious psychological consequences
▪ Dont stick to ideology
▪ Rejoice in failure but only if it improves your stock picking abilities
▪ The courage to act on your beliefs
▪ Being the lone ranger
▪ Acceptance of fallibility / paranoia

7. Multibagger Secrets Market Insiders Wont Tell You

▪ Getting rich is easy it is the road less travelled
▪ Define your style
▪ High level of speculative activity is good for multibaggers
▪ Take advantage of the markets limited memory
▪ Put concentrated diversification to work
▪ Follow Warren Buffetts investment philosophy only if you have his money or clout
▪ A broker is a salesman of stock. And a salesman never says, Dont buy what I have
▪ A great economy or sector does not mean the stock is great
▪ In multibagger investing, individual investors have a distinct advantage over institutional investors
▪ Buy when investors are on their pain thresholds
▪ Take advantage of the human thinking process
▪ Picking multibaggers when price discovery is yet to happen
▪ If everyone is making money, it may not last for long
▪ Focus on the flow of money
▪ Multibagger opportunities
▪ Multibaggers in options
▪ Multibaggers need the appropriate environment
▪ Be prepared for clustered multibagger opportunities
▪ You cannot buy stocks that will be multibaggers in the long term
▪ A multibagger will start to stagnate at some point
▪ Invest when the market is not able to put a price on a stock
▪ Small changes create big multibaggers
▪ Trial and error investing
▪ The market must eventually agree with your assessment
▪ Historical data is little guide to a stocks future price
▪ Change your views to fit the markets dynamics
▪ Look for loss of investor diversity
▪ Why future projections of earnings dont translate into multibaggers
▪ You can rely only on yourself to find a multibagger
▪ Identify an illogical price and why it may correct
▪ How to protect your multibaggers
▪ The normal can change forever
▪ Multibaggers are like diamonds what is the real value of a diamond?
▪ You dont invest in stocks, you invest in risk
▪ There is no right price in a discontinuous market
▪ Look for multibaggers when rational investors have exhausted their patience
▪ Multibagger opportunities do not depend on the quality of a stock
▪ Multibagger stocks are like rockets
▪ Even if you have to pay a higher price, wait for the move to begin
▪ Averaging never works
▪ After a bubble, interest will shift to another investment class or group of stocks
▪ Look for the mispriced bet
▪ How long has a bull or bear market been around?
▪ Multibagger buying secrets
▪ Watch for deception in the information you are relying on
▪ Advantages of being a multibagger trader
▪ Watch the flow of money to mutual funds
▪ Keep an eye on low float and low capitalization stocks
▪ IPO stocks will rarely turn into multibaggers
▪ Blue chip and index stocks are rarely multibaggers
▪ Multibagger investing is context based
▪ The markets cycles
▪ The listed stock fallacy
▪ There are times when you should not think rationally
▪ Wait for everyone to turn a believer before you sell or buy
▪ If you feel the excitement, it may not be time for multibaggers
▪ Multibagger investing is akin to a leopard hunting
▪ Dont stop listening to divergent views
▪ Dont be influenced by your current investments in picking the next multibagger
▪ Multibagger opportunities abound at the start of a bull cycle
▪ A cheap stock may fall even further
▪ Why do stocks continue to rise when they seem expensive?
▪ Low priced stocks turn into multibaggers in mid- and small-cap rallies
▪ The bull market cycle
▪ Blue chip, safe and popular stocks rarely make multibaggers
▪ A frenzied bull market turns into a Ponzi scheme towards its end
▪ There is no cheap and expensive stock because there is no mean or bell curve in a stocks price
▪ Correlation between a business and its stock price
▪ How multibagger stocks emerge and sustain themselves
▪ Why options work for finding multibaggers
▪ The dawn of a new era or new asset class is ideal breeding ground for multibaggers
▪ Small in size does not mean small in returns
▪ The easiest time to find multibaggers
▪ Stocks can fall way lower than you think

8. Multibagger Investing Rules

▪ Stay invested in a winning stock
▪ Opportunities arise when investors are focused elsewhere
▪ Limit your losses
▪ Mastery of technical charts is a must
▪ You must be liquid when you expect multibagger opportunities
▪ If you are convinced, your investment must be of a significant size
▪ Wait for the easy kills
▪ How to invest at the lowest risk
▪ Exit when everyone notices a problem with a stocks price
▪ There is safety when the entire market moves
▪ Dont confuse multibagger investing with value investing
▪ Pick stocks that turn into multibaggers in the shortest time
▪ Dealing with the wealth created by multibaggers
▪ Stocks near their lows dont become multibaggers
▪ Dont look for reasons when a stock begins to stall
▪ How do you make money being right only 10% to 20% of the time
▪ Staying in the proper frame of mind
▪ There are no multibaggers to be found in stagnant markets
▪ Multibagger investing rules

9. Types of Multibaggers

▪ Multibagger types
▪ Supply lag time multibaggers
▪ Multibaggers from a structural shift in demand caused by regulations, lowering of price points, etc.
▪ A company with a brand that has pricing power
▪ Risk free multibaggers
▪ Foreign buying into a local market
▪ Multibaggers based on the mass psychology of a large number of ignorant individuals
▪ Forced selling opportunity
▪ Dodo multibaggers
▪ Wave or bubble multibaggers
▪ Scarcity premium multibaggers
▪ Trading multibaggers
▪ Conventional multibaggers
▪ Valuation multibaggers
▪ Commodity multibaggers
▪ Penny stock multibaggers
▪ The mania multibaggers
▪ New era or new asset class multibaggers
▪ The crash multibagger
▪ The liquidity squeeze multibagger
▪ Can trading give multibaggers?
▪ Asset class multibaggers
▪ The low float multibagger
▪ Low volume / low float stocks in a changing economic trend
▪ The boys club multibagger
▪ Multibaggers in down and out stocks in a consolidating industry / M&A
▪ Stocks that will never become multibaggers

10. Strategies for Multibagger Investing

▪ Puts for M&As
▪ Check the level of pledging
▪ Multibaggers in long term commodity cycles
▪ Multibaggers are found in the extremes
▪ Sell as the plane takes off
▪ The greatest returns lie in the worst markets
▪ Multibaggers in a liquidity squeeze and a bubble
▪ Excessive leverage is the real cause of market falls
▪ Multibaggers for a living
▪ If you cannot comprehend it, skip it
▪ Why you should not buy in a falling market
▪ In a bear market, buy penny stocks
▪ Supply Squeeze
▪ Multibagger investment styles
▪ Trade money, not markets
▪ Special situation investing strategy
▪ Dont buy falling stocks
▪ Stocks waiting to become multibaggers
▪ Multibaggers through options
▪ Cheap is not what you think it is
▪ When multibaggers are available
▪ What not to do
▪ Managing risk
▪ Penny stock multibagger strategy
▪ Bull market momentum buying
▪ A few good stocks is all you need
▪ Opportunities in crappy stocks
▪ Who will buy from you?
▪ Be sceptical of management claims
▪ Multibagger vs multibagger
▪ Playing the increase in capitalization
▪ Cause and effect dont work for multibaggers
▪ Dont overrate your ability to comprehend the markets
▪ Making a living with multibaggers
▪ The market phase determines your multibagger investing strategy
▪ When to exit a multibagger
▪ Dont count forever on a winning strategy
▪ Multibaggers in manipulated stocks
▪ How to pick a multibagger
▪ Scarcity premium provides one of the best multibagger opportunities
▪ Speculative markets are required to turn stocks into multibaggers
▪ Look for sectors that investors are treating like a step child

11. The Multibagger Quiz: Test Your Multibagger Expertise

▪ Answers to the Multibagger Quiz