Key Investing Lessons
1. Never borrow money to invest in stock markets.
2. You cannot just buy cheap and do well. You have to buy quality stocks with growth at cheap valuations.
3. Don’t even look at companies with RoCE less than 15-20%.
4.If earnings growth is 20%, you will only make that much. Over the long term, re-rating or de-rating won’t matter much – the compounded returns will be 19% or 21%.
5.QGLP starts with quality of business and management, growth, longevity of growth and a reasonable valuation.
6. If any part in the QGLP equation is zero, result will be zero.
7. You have to bother about your 20 stocks, leave the other 2,000 stocks alone.
8. Look for predictable, secular growth, good quality businesses, run by good quality managements, which are a 10-15 year story.
9. A good business has high return on tangible assets.
10. A great business has high return & is able to deploy additional capital at high rates of return.
11. A gruesome business earns less than cost of capital & grows, making it a bottomless pit of capital destruction.
12. When you find a top class business run by a top class management, you get a top quality company.
13. Dividend yield is structural. When a company doubles the payout ratio, the dividend yield will not double, so the P/E ratio might double over time.
14. You get great opportunities when the macroeconomic situation is bad.
15. If the research is good, one should average up.
16. One has to understand where the tailwind is. All entrepreneurs are tailwind tigers. Without tailwind, it is very difficult to become big.
17. One should not get carried away by the market. The focus on overall market is wasteful.
18. Who makes the most money – the one who has vision, courage and patience.
19. Don’t be short-term oriented. People are in a hurry to make money. One has to slog for 10-15 years.
20. Most people fail due to behaviour. In most cases, they think that they are too smart.