Author: Christopher Mayer
Genre: Equity Investment
Details:
This book is relatively a short read but there is so much I can write about it, I advise you to pause your reading and grab a coffee before you can consume this information.
I know the title of the book is apparently a clickbait, but it isn’t. This book can really help you to find stocks that return 100 to 1 return. The author would teach you how to find great multi-bagger stocks using his hindsight approach to finding past stock, analyzing why they became what they are today and provide a framework for picking up good bets for the future. The only thing that would be out of the author’s hand is your self-discipline and the idea of staying invested for many years. While Peter Lynch talks about 10 baggers, here is a person who talks about 100 baggers.
The fastest 100-bagger in the US history was Franklin Resources Inc. which achieved the feat in just 4.2 years. But we are talking about the fastest here not the slowest or median. The median time that it took for a 100-bagger realization was 26 years. Yes, you heard that right! Staying invested with good companies is the only self-discipline the book cannot teach the investor. Having said that let’s find out what interesting insights the author has for its readers
Despite being an American investor, the author has done a good job of researching the world markets on 100-baggers. In one such research, he talks about Motilal Oswal Financial Services Ltd (founded by Raamdeo Agrawal another value investor you should know about) and its research on 100 baggers. A study from Oswal found 47 enduring 100-baggers in India over the past 20 years. It excluded fleeting bubble-like stocks. What’s shocking is that the Indian stock market as a whole is a 100-bagger relative to 1979. The BSE Sensex has a base of 100 for the year 1979,” the Oswal report noted. “The Sensex first touched 10,000 in February 2006.” That’s a 100-bagger in 27 years, or 19 percent annually.
What’s concerning is that investors bite on what’s moving and can’t sit on a stock that isn’t going anywhere. They also lose patience with one that is moving against them. This causes them to make a lot of trades and never enjoy truly mammoth returns. The media feeds it all, making it seem as if important things happen every day
Two stock examples given in the book are:
The Boeing Company
One would have never thought of Boeing being a Multi-bagger. Think of all the reasons to sell Boeing since 1970: Inflation. Wars. Interest-rate worries, economic fears. The list of reasons to sell is always long. But if you’ve done the job of picking right, you’re better off holding on. In a time span of just 10 years or so Boeing was a 100+ bagger with all of the stock dividends and splits over the years. Key here is the idea that you must sit still.
Pfizer
Another memorable example is Pfizer, whose stock lost ground from 1946 to 1949 and again from 1951 to 1956. “Performance-minded clients would have chewed the ears off an investment adviser who let them get caught with such a dog,” Thomas Phelps wrote. But investors who held on from 1942 to 1972 made 141 times their money.
The author, therefore, encourages ‘Coffee Can’ style of investing. The idea is simple: you find the best stocks you can and let them sit for 10 years at least. You incur practically no costs with such a portfolio. And it is certainly, easy to manage. This investing approach really pays off in the long run.
Some other topics of interest in the book are but not limited to:
- Multi-bagger Analysis of Monster Beverage, Amazon, Pepsi, Electronic Arts, etc.
- Coffee Can Investing Approach
- The quality and key to 100 baggers
- How stock buybacks accelerate returns
- Secrets of an 1800-bagger
Pre-requisites before reading the book: None
Is the content relevant even today? Yes
Vocabulary and Understandability: Easy
Level of investment expertise required: Any
How can it benefit you?
One must have the Vision to see, Courage to Buy & Patience to Hold. One must not blindly hold onto stocks. Buy right and hold on is intended to counter unproductive activity. A 100-bagger doesn’t blossom in a year, it takes years for its realization. Grab this book if you are a newbie in value investing. Traders must stay away.
Disclaimer
No stock that is being talked about in this review should be taken as an investment advice. All research images are excerpts from the book. This site doesn’t own any of the research material mentioned above.
