Diamonds In The Dust
About the book:
The book begins with an analogy between test cricket and investing.
Peak performance in Test cricket requires technical proficiency and intelligence, and immense powers of concentration. In that regard, Test cricket and investing in Indian equities have interesting parallels, an appreciation of which can help newcomers understand the process of investing and the toolkits required to build a durably successful investment portfolio.
Why Equity Investing In India Parallels Test Cricket?
As a group of cricket lovers, the author and his team are not just crazy followers of the sport, but they also find inspiration from it from time to time. And, given that ours is an entire nation of cricket lovers, they have also found cricketing analogies to be the most effective in communicating our investing approach.
Many people perceive investing as something involving constant action, including monitoring the share prices and reacting quickly to news flow and market movements. The general belief is that such 'active investing yields results in the immediate future. However, it seldom works like that. Investing is not like a T20 match where you attempt to hit every ball out of the park. It is more like Test cricket, where you do not even attempt to play every ball, let alone try to hit it to the boundary. Therefore, the key to successful investing is to leave the risky stocks alone, then identify the ones that can grow earnings and cash flows steadily, and once you find such stocks, bet big on them. Also, as in Test cricket, investing requires the player to possess the relevant skills and training and the mental conditioning and discipline to apply those skills and training consistently. More crucially, investing requires the patience to play long innings, which, as in Test cricket, is the assured way to victory. The difference between successful and unsuccessful investing is, in many ways, the difference between Test cricket and T20.
The skill-building process for an investor starts ten years later compared to that of a budding batter. Most investors are in their early twenties when they first learn the analysis of financial statements and valuation techniques. While these are the foundational concepts of investing, the young investor tends to understand only the superficial aspects of these concepts. And, if investing is akin to Test cricket, who better to emulate than Rahul Dravid, the most excellent Test batsman to play for India and one of the greats of the game across all eras and all countries. Unfortunately, his skill-set, which looks simple on its face, is very hard to acquire.
Similarly, acquiring the right skills for investing is not an easy task. It requires a lot of effort to identify the right companies to invest in, which are expected to become multi-baggers. This book will help you identify such companies and answer the two most difficult questions that arise in every investor's mind. They are:
- What to buy?
- When to buy?
About the author:
Saurabh Mukherjea is a bestselling author and the founder and CIO of Marcellus Investment Managers. Previously, he was the CEO of Ambit Capital, an Indian investment bank. He was rated the leading equity strategist in India in polls conducted by Asiamoney in 2014, 2015 and 2016. A London School of Economics alumnus, Mukherjea, is also a CFA charter holder. He has authored five books now.
But the book:
The book teaches you how to identify a few good stocks for investments that can provide multi-bagger returns consistently over a long period. We highly recommend you read the entire book.