Multi-bag Holding

The NIFTY 50 is a 11-bagger. Few.

Social media is inundated with claims about “multi-bagger” stocks. Some celebrate owning them while some try to predict the next ones. The obsession is understandable, after all, we are in it for the money, right?

fool.com

But what is missing from the discourse is any mention of how long it took. For example, the NIFTY 50 index is an 11-bagger.

Impressive, right?

Took 18 years but you don’t see that disclosed anywhere, do you? When you convert that to CAGR, it approximates to around 14.5%. Good, but doesn’t make a catchy headline or a viral tweet.

Next time you see someone gloat about multi-baggers, make sure you ask them how long it took.

Markets this Week

Markets puked on Friday. Manic Monday?

Links

Groundhog Day: Indian government bonds may be added to a global index next year, triggering passive inflows of about $30 billion. (bqprime)

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Your momentum is not the same as mine:

Adam Butler @GestaltU

For any class of strategy the distribution of random outcomes given small differences in specification is shockingly large. And luck compounds - in both directions. There is no expectation of mean reversion.This makes choices based on track records absurd over almost any horizon.

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Why most people should just build a globally diversified portfolio and call it a day:

Markku Kurtti @markku_kurtti

”I have long horizon, high tolerance for risk and target high returns. Why should I care about volatility?” Here is why: Square of Sharpe ratio alone determines the maximum attainable compound excess return High risk tolerance won’t help when up against the laws of mathematics

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Turn your inventory fast and turn it efficiently:

John Huber @JohnHuber72

Higher margins aren't ideal if a higher ROIC could be achieved with lower margin. What matters is return on incremental capital. Gross margin isn't most important; it's gross profit dollars earned on each dollar invested. I like this thinking and the example from $HD

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Longer your holding period, longer the track-record required:

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This is a banger:

Jack Skellington’s F.A. @NewRiverInvest

efficient markets doesn’t mean that the prices are “right”, it means that the path of betting against the prices that are “wrong” is likely to kill you.

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Are there any Sinophiles left in India after 2020? Please share these with them:

UN report says treatment of Uyghurs in Xinjiang may be modern form of slavery. (rfa)

Michael Fritzell (Asian Century Stocks) @Fritz844

Beijing does not want war with Washington. It just wants to undermine the pillars of US strategy and foreign policy. It wants to carve out an authoritarian sphere of influence, making Asia repressive and closed.

Memes of the Week

Paul Fairie @paulisci

A Brief History of Kids Today Are Too Soft 🧵