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DEMYSTIFYING STOCK SELECTION

New Delhi, August 2024

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WHY WAS THIS STOCK SELECTED?�ILLUSTRATION A

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WHY WAS THIS STOCK SELECTED?�ILLUSTRATION B

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WHY WAS THIS STOCK SELECTED?�ILLUSTRATION C

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WHAT DETERMINES PRICE OF A STOCK?

P/E Multiple

Earnings

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SOME WRONG Q’S THAT WE END UP ASKING

Kahan tak jaayega?

Yeh bhaav pe lenaa chahiye?

Bhaav niche aayaa hai, average karu?

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WHAT ARE THE CHALLENGES?

  1. Where to start?
  2. How do I know it is the right stock?
  3. Course correction

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DIFFERENT APPROACHES TO STOCK SELECTION

  • Can come with a long term orientation
  • Small caps, Micro caps, SMEs, etc.
  • Biz dynamics can keep changing dramatically
  • Strong familiarity with the biz, promoters, etc required
  • Continuous monitoring even after deployment
  • Benefits are of a binary nature – HERO or ZERO types
  • Long term orientation
  • Stocks are usually large, blue chip companies
  • High level of diligence before deploying
  • Strong familiarity with the biz, promoters, etc
  • Continuous monitoring even after deployment
  • Benefits accrue over a long period of time
  • Impulsive
  • Stocks universe is largely comprised of flavor-of-the-season sectors
  • Spontaneous decision to buy into the stock
  • Superficial understanding of biz
  • Expectation of quicker results
  • Risk & uncertainty overhang

Arranged Marriage

Love Marriage

Child Marriage

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PROBABILITY OF MAKING MONEY

  • Tips & HoS
  • Listening to experts
  • Reading recommendations from brokerages, analysts, etc
  • Self reading of company’s biz
  • Listening to concalls of the co
  • Meeting the management
  • Annual Reports, AGM, Vendors, customers, etc.

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DIFFERENT APPROACHES TO STOCK SELECTION

  • Screening of PAST numbers
  • Bottom Up analysis
  • Top Down analysis
  • Corelation
  • Sector trends & Cyclicality
  • Side car riding
  • Spray and Pray

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Presentation Title

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20XX

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Presentation Title

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20XX

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WHERE DO I START?

  • Keep looking out and observing!
  • Make notes…..lots of notes!
  • Journaling is a big advantage
  • Read up on businesses – understand them as if you were to start one
  • Ask more Q’s than seek A’s
  • Keep going back to basics
  • Cut the noise out