Which is the best Indian stock to invest?

Amit Jeswani, Founder of India's 5th Largest Equity Advisory Company

Answered Jan 16

Hi i am going to give you a Portfolio of Stocks rather than one stock.

Today i am going to share Top 10 Stocks with you according to a strategy which is endorsed by Warren Buffet, written in “the little book that beats the Market” by Joel Greenblatt. Joel Greenblatt runs a hedge fund named Gotham Capital and has compounded capital at 40% for 20 years from 1985 to 2006.

In the Book, Joel Greenblatt gives out his Magic Formula. The Result’s of the Magic Formula in the US Markets have been Amazing and has delivered 30.8% between 1988 and 2004 with delivering negative returns only once.

SO WHAT EXACTLY IS THE MAGIC FORMULA?

The Magic Formula is Easy – Buy Good Companies for Cheap Valuation.

We Ranked all companies listed in Indian Stock market According to 2 main Factor’s of the Magic Formula

1. Good Companies that have High Return on Capital Employed (ROCE)
2. Cheap Companies that trade at a Low Enterprise Value to EBITDA Ratio (EV/EBITDA).

** Please note we have Excluded Holding Companies, Utilities and Financials.

Here is the list of top 10 stocks according to the Magic Formula.

Not all of these will be Multibagger, but these are good companies at below reasonable valuation. I haven’t Back tested this strategy in the Indian Stock Market, but in the US market this strategy has worked really well.

This is definitely not a Stock Recommendation but this strategy has worked really well. We will Review this strategy at the end of 2017. Incase your looking for the full Excel of This feel Free to Mail us at info@stallionasset.com and we will provide you for free.

Feel Free to Contact us on 02240033944

Stallionasset.com

What advice would you give to a beginner quantitative trader?

Timothy Gouskov, I write trade orders on paper, then throw them at an exchange really fast

Answered Dec 27 · Upvoted by Anirudh Joshi and Terrence Yang

Here are a few things I learnt when I was starting out.

• Understand that price can only behave in these two ways: Mean Reversion and Trending.
• You don’t need to know exactly what your strategy is at the start. One of the best things you have in the beginning is an open and un-biased learning about all the types of trading.
• Don’t be afraid of mathematics. This is a huge one I realised. Go and jump right into reading research papers and textbooks that are both directly to do with trading (statistics, algorithms etc), and also ones that aren’t (game theory, agent-based modelling, machine learning etc). Even if your mathematics is not that strong, you will still capture so many interesting ideas.
• Understand the difference/relation between simplicity and complexity. Your strategy/algorithm should follow this type of process: Simple question at the start (should I buy/sell now)…then onto complexity used in your model (to determine an answer)…then back onto a simple answer (buy now). Simplicity should always surround the complexity.
• Understand that a lot of people talk about a lot things. It doesn’t mean they’re correct. Trading is such a unique field and profession. You can succeed and fail through so many paths.
• Be cautious about “successful” traders, who give advice/resources at a price. Think about why they would rationally/pragmatically/morally and you’ll probably find some contradiction in the reasoning.
• Understand that the market is these two things at the same time: A social interaction between beliefs about a fundamental value, and, a complex system.
• Learn risk management in your portfolio.
• You will take losses. Think of them as an expensive lesson you just paid tuition for.
• In the beginning, backtesting is useless for you. It will only be useful, when you start to properly study about data sets. You’ll then appreciate why people have professions specialised in data.

DMart currently is at 160 stores, the total potential for such stores in India is 8,000

Ashok Maheshwari, one of the co-founders of DMart. 


Retail Business

Retail business is a high-volume, low margin business.

It is about constantly keeping what customers want on the shelf. What is seen on the shelf sells, and what sells has to be seen on the shelf.

To plan a store of 15,000 sft, one has to target a neighborhood potential of 20,000 families, each family spending a minimum of Rs. 2,500 in a store that offers basic day-to-day needs.

There can be atleast 8,000 such stores in India. DMart currently has about 160 stores.

Capital 

The way DMart was planned is that:

- the first 10 stores will fund the next 10 stores after 4 years of operation
- the 20 stores together will fund the next 20 stores after 8 years of operation
- the 40 stores will fund the next 40 stores in 12 years of operation
- the 80 stores will fund the next 80 stores in 16 years of operation

- Dmart will be have over 150 stores after 16 years of operation. This is what we predicted in 2002 and that is where Dmart is currently.

This strategy brings down the capital requirement and cost drastically.

Model

From day one, we wanted to open 'discount format' stores.

It is all about value proposition.

Before we opened the first store, we visited value stores like IKEA, Costco & Walmart.

***

Start-up / Partnership

(This is especially applicable when the other partner is more powerful. Ashok Maheshwari had moved out of the partnership after 5 years without any stake).

- Life and time are two great teachers

- You should always protect your rights

- You should document everything - even if it is your family. Keep it simple, yet don't take anything for granted.

- Choose a good partner. The business should not be sabotaged or hijacked.

- If a partner is involved in management, have a clear delegation of responsibilities and capital infusion dynamics.

So, the simple discipline for a start-up is have everything well-documented. 


http://economictimes.indiatimes.com/opinion/interviews/exiting-a-business-one-has-nurtured-is-always-painful-ashok-maheshwari-entrepreneur/articleshow/58583839.cms

Apple market cap is bigger than BSE, Brazil, Russia, Singapore, Malaysia, Mexico

The recent rally in the share price of Apple Inc has taken the market capitalisation of the technology giant to more than $797 billion at 10 PM IST, making it bigger than the combined market cap of all the 30 Sensex companies put together.

India’s bluechip index closed at a market cap of $784 billion, based on Monday's share prices. Apple, the most valuable company in the world, is the only company to have a higher market cap than that of the Sensex companies together. The Sensex accounts for 40 per cent of India’s total market cap.

Apple is also larger than the market cap of countries like Brazil, Singapore, Spain, and Malaysia.

In the league of companies with the top market cap, Apple is followed by Alphabet Inc and Microsoft, which have a market cap of $651 billion and $530 billion, respectively.

Despite reporting lower than expected earnings, shares of Apple went up by 3.7 per cent last week, pushing its market cap to record highs.

The rally in Apple was triggered by ace investor Warren Buffett’s statement that he had more than doubled his firm Berkshire Hathaway’s stake in Apple. His firm currently owns a 2.5 per cent stake in the technology giant. Expressing his confidence in the company despite softer sales in the recent past, Buffett said consumer loyalty for Apple was huge and hence there was nothing to worry.

Apple has gained 32 per cent year to date.

During the previous quarter, Apple added another $10 billion to its cash reserves, taking them to $256.8 billion, larger than the market capitalisation of General Electric (GE). This is roughly the size of the Indian mid-cap index in terms of market value.

http://www.business-standard.com/article/markets/apple-s-m-cap-exceeds-that-of-sensex-117050801417_1.html

Charlie Munger On One Of His Biggest Mistakes

By Rupert Hargreaves on May 7, 2017 12:00 pm in Value Investing

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Reading through the histories of Warren Buffett and Charlie Munger, it would be easy to conclude that these two billionaires have never lost money on an investment. It seems everything they touch turns to gold.

However, Buffett and Munger have made mistakes in the past, but these mistakes have been relatively small compared to the profits they’ve booked over the years.

Charlie Munger — Part Two: Quality Over Value

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By Nick (Charlie Munger) [CC BY 2.0], via Wikimedia Commons

Charlie Munger On One Of His Biggest Mistakes Bell rich oil

One of these mistakes was described by Charlie Munger at the Daily Journal Corp annual meeting. Munger was answering a shareholder who asked him for an example of an investment decision he’d made during his career that had worked out in his favor, instead of answering directly, Munger provided the story of an investment failure because “I believe in rubbing my nose in failure”.

This is the story not of a failed investment but of a missed opportunity, the opportunity of Bell Rich Oil. As Munger describes:

“A guy called me offering 300 shares of Bell Rich Oil and I had the cash and I said, “sure, I’ll take the listing.”

“It was selling there maybe a fifth of what the oil companies were. They owned the oil field. So I brought it. Then he called me back and said, “I’ve got 1,500 more.” I didn’t have the money on hand. I had to sell something. I thought about it and said, “hold it for 10 minutes and I’ll call you back.” I thought about it for 10 minutes and called him back and didn’t buy it.”

As it turns out, this was the wrong decision:

“Well, Bell Rich Oil sold about 35 times the price I was going to pay within a year and a half.”

“It was a really dumb decision.”

So, what was Munger’s take away from this one disastrous event:

“You don’t get that many great opportunities in a lifetime. When life finally gave me one, I blew it. So I tell you that story to say you are no different from me. You’re not going to get that many really good ones -- don’t blow your opportunities. They are not that common, the ones that are clearly recognizable with virtually no downside and big upsides.”

“Don’t be too timid, when you really have a cinch. Go at life with a little courage. There’s an old word commonly used in the south that I’d never hear anybody use now, except myself and that’s gumption. I would say what you need is intelligence plus gumption.”

What’s it like to lose £350m? A rogue trader confesses

https://www.theguardian.com/business/2017/may/07/whats-it-like-to-lose-350m-pounds-rogue-trader-barometer-of-fear?cmpid=BBD050817_MKT&utm_medium=email&utm_source=newsletter&utm_term=170508&utm_campaign=markets

Students loans default - 11%

A generation of rising interest rates - (is this possible in India too as growth picks up?)

Nilesh Shah‏ @NileshShah68  Apr 16

A mega shift or a damp squib pic.twitter.com/dsPtguhyYp

Net worth of Warren Buffet by age

Nilesh Shah‏ @NileshShah68  Apr 20

Why he is God of investment:) pic.twitter.com/G12ELz7cwi

GLOBAL MARKET CAP CROSSES USD 50 TRILLION FOR THE FIRST TIME.

GLOBAL MARKET CAP CROSSES USD 50 TRILLION FOR THE FIRST TIME. pic.twitter.com/94CBGdEsqP

 Nilesh Shah Retweeted

Pankaj Tibrewal‏ @pankajtibre  Apr 17

As per IMF, total debt is now USD 152 trln. There are 7bn ppl living on the planet. USD 21714 debt for every man, woman& child in the world