De-coding 25 years of trade secrets
Raamdeo Agrawal has, over the span of a vast and illustrious career of 25 years on Dalal Street, mastered several secrets and other tricks of the trade.
This has enabled him to amass a portfolio of multibagger stocks which is presently worth a colossal Rs. 2000 crore.
Anil Singhvi, the charismatic Managing Editor of Zee Business, asked Raamdeo Agrawal several pertinent questions to decode how the latter achieved the incredible feat of growing his portfolio to the mammoth sum of Rs. 2000 crore.
4 साल में ₹1000 करोड़ से ₹2000 करोड़!
कंपनी की वैल्यू कैसे तय करते हैं?
'पावर ऑफ कंपाउंडिंग' कितना पावरफुल?
25 साल के अनुभव का निचोड़
Wealth Creation का परफेक्ट फॉर्मूला
— Zee Business (@ZeeBusiness) June 18, 2021
Buy Right with the QGLP formula, Sit Tight
Raamdeo has been counseling us since time immemorial to buy stocks which match his famous QGLP formula.
The QGLP formula ensure that we steer clear of junkyard stocks and focus only on the top-quality ones.
“I always suggest people buy QGLP stocks. And people ask me how you calculate QGLP (Quality, Growth, Longevity, Reasonable price), especially the young? Make a checklist to get 80-90 per cent of the theoretical aspects of the company,” Raamdeo said.
To further assist novice investors, Raamdeo has authored a book titled ‘The QGLP Checklist 25 questions, 25 frameworks’ where he has formulated all the points that we need to bear in mind to home in on the winning QGLP stocks.
Raamdeo also recollected the timeless wisdom of Warren Buffet.
“Businesses are good, Businesses are very good, and then Businesses are very bad.” If in the Share Market, you have a bad company’s portfolio then you will be Zero. So, beware of this. And don’t lose money, don’t buy the bad company!,” he advised.
Buy aggressively on the worst days of the market
Billionaire John Templeton had once famously advised investors to “buy stocks when there is blood on the street“.
Unfortunately, the advice is difficult to follow because when the markets sink, most investors go into a shell and are scared to invest in stocks.
Raamdeo advised us to gird our loins and muster the courage to aggressively buy stocks at such times.
“If you have Rs 100, then you decide that how much you want to invest in equity. If you want to put complete Rs 100 then put. In a year, there are 5-7 days when you get the best opportunity. And if you are not there in these 5-best days of the market then you are worse than bonds! You will get the worse return from bonds. You need to capture all 5 days. Trade in all 365 days, then the tender that is making an entry you will notice”, he said with his earthy wisdom.
Know the difference between ‘investing’ and ‘speculating’
Most youngsters (and also many oldsters) don’t know the difference between ‘investing‘ and ‘speculating‘. They buy stocks with a speculative mindset and with the hope of making a quick buck.
Raamdeo laboriously explained the seminal difference between the two concepts.
“If in the market, there are 10,000 people, then there are 10,000 ways to earn money. But these 10,000 people will have 2 communities; speculator and investor. For speculator, price is God! But in investing, value is God!“.
“The QGLP framework is of us. This is a style for the value of growth that will work. So, the new people who enter the market don’t know the difference between investing and speculating. Most people think they are investing but in real they are speculating. This should not happen because the rules are different,” he elaborated.
Understand the difference between ‘value’ and ‘price’
Another area where most people get confused is the difference between ‘value’ and ‘price’.
Raamdeo provided a masterful explanation of the two concepts.
“The value is what you get and the price is what you pay. This is the basic fundamental! Value and price are two different things. So, understand that and determine,” the wily investor stated.
Use top-down and bottom-up approach to pick stocks
Raamdeo advised that investors have to be well versed with the concepts of ‘top-down‘ and the ‘bottom-up‘ approach if they want to master the art of finding multibaggers.
He pointed out that in the ‘top-down’ approach, we have to be vigilant about the happenings in the world economy and the Indian economy. We have to be knowledgeable about which industries or sectors will perform well and which are the best companies in that industry or sector.
In the bottoms-up approach, we have to master the fundamentals of a particular company and understand its SWOT (Strength, Weakness, Opportunity and Threat).
Raamdeo made it quite clear that he uses both approaches when he goes on a quest to find winning stocks!