Friday, September 30, 2016

What is the Better Investment Instrument Between Stock and Bond?

There is not a shred of doubt that only shares can give excellent results and create real wealth over a long period of time.
Bonds and Debentures just fixed income securities that offer no scope of capital appreciation, at least in India as of now. In advanced financial markets bond markets are highly mature allowing scope for a bit of capital appreciation and enhancing interest yield. Therefore they are merely like fixed deposits in banks with higher risks.
Investing in stocks directly however requires investing knowledge and there are two options before the investor:
Option 1: Making Investments Directly in Shares
Devote a couple of hours every day and learn and practice value investing. The best and only book I will recommend is “The Intelligent Investor” by Benjamin Graham.

You may also visit this blog “Wealth Vidya” and a few other value investing sites.


Please beware of a number of books and websites that encourage people to engage in day-tradingmargin-trading and trading in futures and options, commodities and currencies. All these are not investing activities but purely speculative acts that have the potential to destroy the capital and even lives of people.

Option 2: Investments in Index Mutual Funds:
Those who cannot afford to learn investing have this easy and wonderful option of investing in Index Funds and Exchange Traded Funds (ETFs).

Long term Investing:
Whether you choose option one or two, please always remember that the secret behind investment success is the law of “Miracle of Compounding”, which requires you to keep investing and be invested for 20 to 50 years.

There is not an iota of doubt that only shares or stocks are the investment vehicles that can yield investment success and real wealth creation.

What is a Multibagger Stock?


A multibagger  stock is the share that gives returns in multiples of the original investment (multiple bags) or 200% or 300% or more. There is a handful of multibagger stocks out there, which can be easily bought through the online share market. But please pay attention that the multiple bags of returns can only be made through prudent and long-term investments in excellent companies at reasonable valuations (value investing) and not through online trading platforms like the Kotak stock trader or calling the stock broker and placing telephonic bets.

Dangerous Multibaggers:

Generally investors use the word also to imply earning such returns in short to medium term, say within one to three years. They also imply the meaning of return to be entirely from price increase. Chasing such multibagger stocks is not only like chasing mirages but also a dangerous pursuit and not practiced in value investing.

Multibagger Stock - Concept

What then are real and safe multibagger stock?

There are plenty of such stocks around. For example Warren Buffett has specialized in identifying and investing in them, especially during great global crises when their prices are unjustifiably depressed. They yield returns many times the original investment both in the form of dividends and capital appreciation or price increase over a long period of time. Let us see a few examples:
  • Gillette
  • Coca Cola
  • NMDC 
  • SJVN

What is the most important characteristic of a multibegger?
  1. They are a single product businesses
  2. They have an intense focus on and excel in what they do
  3. They do not look for diversification
  4. Their products and services will always have a demand irrespective of technological advances
  5. They have been existing for a very, very long time
  6. They have significant free cash flows even after paying handsome dividends, which is invested in safe short term investments earning large amounts of non-operating income

Examples of Multibaggers

Related Articles:


Multibagger  stocks give returns in multiples of the original investment (multiple bags). Multibagger  stocks can be bought through the online share market, but please note that high returns can only be made through prudent and long-term investments and not through online trading platforms like the Kotak stock trader or calling the stock broker and placing telephonic bets.

Wednesday, September 28, 2016

Enchanting Encounter With Rustic Beauty - Investing Poem

Enchanting Encounter With Rustic Beauty on an Early Morning Stroll

Along the beautiful tree lined avenues and residences I strode, ruminating spirituality and poetry, amidst peace and bird chirping background.

Upon a sharp turn, afar stood a woman in an Indian suit of black and pink – adjusting her hair standing in a side pose revealing all her attractive angles.

Brief, distant glances exchanged, Sharply she retired homewards, perhaps for a better view from the safety of the curtains?

I passed the house with intent sideways glance to check whether she stood in shade - but continued my stroll back to reflections and bird talk, finding her not to be there.

It was a mere passing scene on a early morning walk – one among many we see that make our lives bright, I thought. I strode on without any expectations – wearing a grateful smile - for the brief colorful sight.

But it was not to be.

On my routine next round, I again find her. This time standing in leisurely conversation with a timeworn woman I had seen trolling before.

A couple of long glances ensued. My heartbeat quickened. The old woman was serious in her advice; perhaps unaware of the real purpose of the discussion. The younger gave two, long, satisfying, glances.

Passing her close by, I aver she is not a conventional beauty, yet rustic and healthy, early in her middles. I am more advanced in time, though endowed with a firm thin frame and a fast gait. Fair in color she was and firm in flesh. Attractive she was in her own native way.

Further reflections focused neither on poetry nor spirituality but on exciting prospects that may lie ahead. I usually make only three, because of the paining knee. Now I extend it to four, expecting to find her in receiving extended guidance.

But I find her not there. Disappointed, I trudge along. Perhaps she has made her assessment. What it is, I can only know tomorrow during the early morning amble.

Alas it will not be. For I have to leave. I don’t live there. I am only on a visit and my next one is due only after a month.

But once, revealed, she cannot escape my pursuit.

For, I am a value investor and she is a stock.

She is strong. She is attractive. She is the share of NMDC Ltd., and I will surely find her and invest in her.

A rustic beauty I discovered, one day - a chance encounter during my early morning walk.