Raamdeo Agrawal's 10 commandments to mint money in stocks
Successful value investor Raamdeo Agrawal asked retail investors to not waste their energy in trying to figure out the market but use it to figure out which stocks to buy next.
Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services, said if you have been compounding for 20-30 years, even one or two stocks can make you very rich.
If you are looking for a multibagger stock, here's a simple tip from Dalal Street veteran Raamdeo Agrawal – hunt for stocks where the growth is high, but the valuation is low.
“If the valuation is high and growth is also high, it is a speculative thing. When growth is high and the valuation is low, that’s when you get a multibagger. This will work in an equity market anywhere in the world and at any point of time,” says the Chairman and co-founder of Motilal Oswal Financial Services.
But picking the right stock and sticking to it for long enough till it matures into a multibagger is not easy, unless you follow a sound investment philosophy.
“There is no one particular way of making money in the stock market. There are a million guys out there, and there are a million ways of making money. Everybody will have a different way. And that's the fun of the market," says Agrawal, himself a successful value investor.
At a retail investors’ conference organised by online investment platform Groww on Saturday, Raamdeo Agrawal listed out 10 commandments, which he said have helped him mint money in stocks over the years.
Invest in equities, don't speculate
"If you want to have fun, you can go and speculate in equities. But if you want to seriously accumulate a lot of wealth, investing is very important,” Agrawal said, adding that it is a bad way to start your investing journey with speculation. He said he has not come across anyone who is a 100 per cent speculator and yet has managed to amass huge wealth. Investors are those looking for a change in value, while speculators and those who look for a change in price.
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Don't time the market
There are 100 million investors who are trying to time the market and outsmart everyone else, but it is impossible for somebody to have the foresight as to how a stock will react for the next few years, says Agrawal. “Don't waste your energy in trying to figure out the market, use all the energy to figure out which stocks to buy next."
Master the power of compounding
In investing, the power of compounding is as powerful as an atomic bomb. “The whole market is only about compounding, but nobody gets it in practice,” he said, while giving the example of how if the money doubles in five years, it goes up four times in 10 years, 16 times in 15 years and 32 times in 20 years. “Once you have got the right stock, sit through and don’t try to time the buying and selling.”
10 stocks that analysts recommend for handsome returns in the near term
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Amid uncertainties on Dalal Street triggered by rising bond yields and increasing Covid-19 cases, the focus will remain on stock-specific action. Here are a few stocks that analysts say can help investors earn significant returns in the next few weeks:
Amid uncertainties on Dalal Street triggered by rising bond yields and increasing Covid-19 cases, the focus will remain on stock-specific action. Here are a few stocks that analysts say can help inve..
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The stock has corrected more than 8 per cent from its all-time high registered last week. Currently, it is trading near its 20-day simple moving average, trading near an important retracement level on the weekly chart, indicating high chances of a trend reversal in the short term. In addition, on the weekly and monthly charts, the stock has maintained a higher bottom series pattern, which has helped positional traders take a positive stance near the crucial support zone.
(Analyst: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities)
The stock has corrected more than 8 per cent from its all-time high registered last week. Currently, it is trading near its 20-day simple moving average, trading near an important retracement level o..
Read More
The stock is hovering in the range of Rs 320-360 after a sharp correction. However, the medium-term wave structure of Bandhan Bank is still on the positive side. Hence, an ideal strategy should be to add this stock near its support levels. Moreover, it has taken strong support near a 200-day simple moving average along with modest volume activity. A strong bullish candle on the daily chart indicates high chances of a fresh uptrend from current levels.
(Analyst: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities)
The stock is hovering in the range of Rs 320-360 after a sharp correction. However, the medium-term wave structure of Bandhan Bank is still on the positive side. Hence, an ideal strategy should be to..
Read More
The stock has registered a sharp surge in the recent past, but it has failed to sustain higher levels after the Rs 955 breakout and corrected nearly 10 per cent due to consistent selling pressure. However, the medium-term structure of the stock is still on the positive side, and likely to continue in the near term. In addition, on the weekly charts, the stock is still maintaining a higher bottom series formation, which is broadly positive. Currently, the stock is trading near an important retracement support level, and the structure of the charts suggests high chances of a fresh uptrend wave from current levels.
(Analyst: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities)
The stock has registered a sharp surge in the recent past, but it has failed to sustain higher levels after the Rs 955 breakout and corrected nearly 10 per cent due to consistent selling pressure. Ho..
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The stock has broken out on the daily chart with higher volumes, where it closed at an all-time high. Oscillators like RSI and MFI are showing strength, and the directional indicator is placed above the minus side while ADX is placed above 20, indicating momentum in the current uptrend. Technology as a sector is looking good on the chart from the short- to medium-term perspective. Buying is recommended at the CMP of Rs 1,942 for a target of Rs 2,100 with a stop loss at Rs 1,860.
(Analyst: Nandish Shah, Technical Research Analyst, HDFC Securities)
The stock has broken out on the daily chart with higher volumes, where it closed at an all-time high. Oscillators like RSI and MFI are showing strength, and the directional indicator is placed above ..
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The stock has broken out on the daily chart to close at its highest level since April 2019. The short-term trend is positive where it is trading above its five- and 20-day exponendial moving averages. Also, the directional indicator is placed above the minus side while ADX is placed above 20, indicating momentum in the current uptrend. Volumes have been higher on the up days in comparison to down days in the last few weeks, indicating accumulation in the stock. The stock is forming a higher top-higher bottom formation on the daily chart. Buying Godrej Ind is recommended at the CMP of Rs 517 for a target of Rs 570 with a stop loss at Rs 485.
(Analyst: Nandish Shah, Technical Research Analyst, HDFC Securities)
The stock has broken out on the daily chart to close at its highest level since April 2019. The short-term trend is positive where it is trading above its five- and 20-day exponendial moving averages..
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The stock started its recent upmove from the Rs 881.5 mark, and made a high of Rs 1,460 in January 2021. Since then, profit-booking has followed, with the stock making a series of higher bottoms starting at Rs 1,065. The stock recently gave a pattern breakout backed by supportive volumes, and made a high of Rs 1,318, and is trading above all averages that are in a rising trend. Observing the trend, the stock has a potential to test the levels of Rs 1,800, and then Rs 2,000 and Rs 2,200 in the coming days. Any corrections during this period can be used to add the stock, with a stop loss at Rs 1,060.
The stock started its recent upmove from the Rs 881.5 mark, and made a high of Rs 1,460 in January 2021. Since then, profit-booking has followed, with the stock making a series of higher bottoms star..
Read More
The stock started its upmove from the Rs 862 level, which was followed by steady buying to take it to a high of Rs 1,259 in February. A couple of up-gaps were formed in the upmove, suggesting good buying strength, with the 200-day moving average continuously rising since December. The super trend indicator is continuously in a positive mode. Recently, the stock gave a weekly breakout from a range to make a high of Rs 1,415, and is trading above all averages which are are in a rising trend mode. The stock appears to have the potential to test the Rs 1,700 level, followed by Rs 1,900 and then Rs 2,100, in the coming days. Any corrections can be used to add the stock during this period, with a stop loss at Rs 1,100.
The stock started its upmove from the Rs 862 level, which was followed by steady buying to take it to a high of Rs 1,259 in February. A couple of up-gaps were formed in the upmove, suggesting good bu..
Read More
Overall, the entire PSU space has been buzzing for the past three months, within which, the marquee OMC counter has been in a limelight every now and then. On the price front, the stock seems to have a sturdy structure on the weekly chart, and the recent correction appears to have completed on the lower degree chart. The stock managed to find support at the previous multiple resistance zone around Rs 424, which coincides with the 89-day exponential moving average, which indicates that the stock can resume its upward trend. Going long on dips is recommended for a target of Rs 448 in the coming days, with a strict stop loss at Rs 418.
(Analyst: Sameet Chavan-Chief Analyst-Technical and Derivatives, Angel Broking)
Overall, the entire PSU space has been buzzing for the past three months, within which, the marquee OMC counter has been in a limelight every now and then. On the price front, the stock seems to have..
Read More
The pharmaceuticals universe has been quiet for the last couple of months, with many stocks having undergone decent price- and time-wise corrections. The stock saw a correction of nearly 20 per cent from its recent highs, and is seen rebounding precisely after sliding a tad below its 200-day simple moving average on the daily chart. The stock has closed above this key moving average. The candle resembles a bullish hammer pattern, with the possibility of some relief. Going long on the stock is recommended on declines around Rs 418 for a target of Rs 445 in the coming days, with a strict stop loss at Rs 407.
(Analyst: Sameet Chavan-Chief Analyst-Technical and Derivatives, Angel Broking)
The pharmaceuticals universe has been quiet for the last couple of months, with many stocks having undergone decent price- and time-wise corrections. The stock saw a correction of nearly 20 per cent ..
Everybody knows the price of everything, but the value of nothing. “That is the biggest opportunity in the market. Even in today's digital age, if you dedicate yourself to understanding the value of stocks within your circle of competence, you will start winning,” says Agrawal.
Buy only those businesses which you understand
Before investing in a stock, try to understand the company first. “If you understand the company better than or as good as the owner, then you can predict the future of the business in an easy way. You cannot understand the future value of the company unless you understand the business today,” Agrawal said. Summarising Warren Buffett's investment process, he said investors should look for a business she understands, which has favourable long-term economics, has an able and trustworthy management and wears a sensible price tag.
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Assess the management thoroughly
Figure out not only a competent and passionate management, but also the one with high levels of integrity. You can find out more about the management by talking to the company's competitors, former employees or even the auditors. “If you have a terrific management competence and solid management integrity, it will lead to a fantastic investment universe. And if you don’t have any one of them, you are into some kind of trap,” says he.
Look for sustained quality and growth
When you get high quality and high growth, true wealth creation happens. “Quality alone is fully priced in this marketplace. Growth alone is also more or less prized, but if something doesn't have quality, it won't sustain,” says he.
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Don't overpay
You may not always be able to buy stocks cheap, you have to pay a reasonable price. "But make sure you are not overpaying. If the fair price is Rs 20, you might pay Rs 20 or Rs 25. But if you pay Rs 50 or Rs 100, you're locking yourself into trouble and underperformance for many years,” the market guru said. “Always look for a margin of safety, which is the gap between value and price.”
Have a vision, courage and patience
You need to have a vision to buy into the future of a company and the courage to be in the market. “Patience is a must to make a lot of money because compounding will work only for those who have patience. If you have compounding for 20-30 years, even one or two stocks can make you very rich,” says he.
Read, read and read!
Giving the example of Tesla, Agrawal said the way the stock is being valued today, it won’t have been the case 20-30 years ago. “There are new opportunities, new businesses, new managements, new ways of looking at things, and you have to keep reading. I don't think there is any alternative to that to keep making money in the stock market.”
