Today we are going to delve a bit deeper into what makes a multi bagger, what are the signs of a potential multi bagger and how to identify one.
There are two thoughts of trading, one which believes in diversifying your portfolio and then trying to beat the Index over a period of time by adjusting according to the index weightage. There is another school of thought which only believes in focusing on buying the best stocks and staying with them over a period of time to make money. This thought is more so aligned with the single stock philosophy whereby the interest is more of an investor who is looking at the business.
Multi baggers are those stocks which have the business engine and market position of an initial leader or the driver in a market with little or no competition. These have consistent growth of almost doubling after every six months. The growth is stupendous. Something like an initial phase of a dotcom or the initial phase of an IT or Retail revolution.
These are not easy to spot as you would not find them being discussed in any of the market shows or television. They are the ones which are away from the limelight and still if you go out to buy for your household or generally come into acquaintance of, they are visible.
It may so happen that the multibaggers are not spotted initially but once they are , you will find a rapid revaluation in such cases.
Key is to spot the next revolution. It could be biotechnology, could be internet but then acting fast is a must and they give returns which could last for a lifetime.
With this we come to a close of the stock picking strategy for multibaggers.
Pramod Shet is an Expert Investment author and a successful trader.
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HOW TO SPOT A MULTIBAGGER
Copyright 2008 Pramod Shet.
