1. Look for negative momentum in stocks, which is much easier to identity. I am not taking about months, but years. We are interested in loss-making or near-loss making companies. We are not interested in profitable companies.
What goes up must come down.
2. The opposite is also true - what goes down, must come up. A company with clean management with potential to come out of trouble, the stock of the company could offer higher returns.
3. Stocks which are under-weight within a sector tend to do better.
4. One should not fancy the crowded space. In an overweight stock, when the chances of big institutional investors putting in additional money go down, the stock tends to languish
4. The fourth criteria is to look for 'just one' spark. iPod was the trigger for Apple. For Tata Motors, it was new JLR launch.
"I have spoken about it many-many times that was the spark that when I saw the JLR cars, I thought that these cars are enough for the company to get X market share from a very low base. Hopefully then if they get that market share, the number that I came up with was $500 million of profit. It was a big swing from a billion dollar loss to a $500 million profit. So, you just need that one spark"
http://economictimes.indiatimes.com/markets/stocks/news/4-tips-from-shankar-sharma-to-make-vc-type-returns-in-stocks/articleshow/54930971.cms?curator=alphaideas&utm_source=alphaideas
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