Photo: Reuters
Photo: Reuters

Reading this can multiply your money

Whether you know nothing about investing or are a veteran, this tried-and-tested technique is guaranteed to work. Else you get your money back

Stay with me for the 1,000-odd words that follow. Be assured, you are in safe hands. These words come from a veteran who has witnessed from close quarters the savviest of bulls and bears operate on the stock markets for over two decades. I have seen them multiply their money exponentially. In deploying all of what I learnt from them, I have multiplied mine exponentially. I really don’t need to work for a living any more. I work out of passion, when I feel like it, at a time and place of my choosing.

I guess in some part this has to do with the fact that I was born and spent my early years in the relative quiet of Shillong. It lasted until my dad, who was then in the Indian Air Force, was posted to Mumbai.

The sounds and fury of a big city intrigued me. Once here, I always wondered why people are so busy. I had to understand what were they up to; I needed to speak to them. But I didn’t matter to them. I persisted. Persistence and patience pays.

First they fob you off, then they ignore you, then they listen to you and finally they talk. Turned out, much like me, most of them come from small towns and middle-class families. Once convinced that your intent is to learn from them and you want nothing but their knowledge, they share. Some take you under their wings. Willingly. Turns out, everybody is on a mission—to maximize returns on their investments. Maintain copious notes of all they say. Try out all of what they say.

The stock markets got my attention when I was in college. I would inevitably end up spending a few hours each week trying to seek the best traders out and build model portfolios on the basis of the learnings from the ones who agreed to talk to me. That done, and while my batchmates spent their pocket money, on fun activities, I started deploying these small amounts in trading on the back of these models. I made some money. I lost even more. But I learnt lessons. Which is why I can now write this note with confidence.

As things are, Mint on Sunday, an Internet-only title, is a recent launch. What most people are familiar with is Mint, a daily newspaper published Monday to Saturday, and one that appears both in print and online. These are early days. But I believe this is a good time to convince the management to part with stock in Mint on Sunday.

I don’t say this because I write here—but I think this view is one that will resonate with Warren Buffet, the greatest investor of our times. These are not hollow words. As recently as 2012, when everybody was writing epitaphs to print, he wrote in his annual letter to shareholders of Berkshire Hathaway:

“Charlie (Munger) and I believe that papers delivering comprehensive and reliable information to tightly bound communities and having a sensible Internet strategy will remain viable for a long time... Our goal is to keep our papers loaded with content of interest to our readers... whether the product in their hands or on the Internet.

“... Charlie and I acquired The News in April 1977. It was an evening paper, dominant on weekdays but lacking a Sunday edition. Throughout the country, the circulation trend was toward morning papers. Moreover, Sunday was becoming ever more critical to the profitability of metropolitan dailies. Without a Sunday paper, The News was destined to lose out to its morning competitor, which had a fat and entrenched Sunday product.

“...So when I was in big trouble at The News, I asked Stan to leave his comfortable way of life in Omaha to take over in Buffalo. He never hesitated. Along with Murray Light, our editor, Stan persevered through four years of very dark days until The News won the competitive struggle in 1982. Ever since, despite a difficult Buffalo economy, the performance of The News has been exceptional."

So, why should you invest?

From a purely technological and financial perspective, Mint on Sunday has revamped the theory of a e-business, wireless, client-focused experiences. The power to actualize efficiently leads to the capacity to upgrade dynamically. Think plug-and-play. But don’t think all at the same time. I apply the proverb, “He who hesitates is lost", not only to our resizing, but our power to enhance. Most short-term splash pages use far too much FOAF, and not enough rails. Your budget for leveraging should be at least one-tenth of your budget for innovating. Without plug-and-play content, you will lack development. The metrics for networks are more well understood if they are not frictionless. The convergence factor is extensible, e-business. The viral C2C2C, transparent, killer models factor is reality-based. Is it more important for something to be vertical or to be reconfigurable? Mint on Sunday has all of this.

If Buffet were to decode all of this simply, he would read this as: “Long ago, Ben Graham taught me that ‘price is what you pay; value is what you get.’ Whether we are talking about socks or stocks, I like buying quality merchandise when it is marked down." 

More simply put:

1. Mint on Sunday has the power of the flagship Mint brand name to carry it along.

2. Because it is an Internet-only title, the costs of production are low.

3. But most importantly, research and deep conversations with people in the newsroom indicate the quality of people editing and marketing it are top-notch.

This is not to suggest I have not been wrong in the past. But to seek refuge in Buffet once again on why is this a great time to buy Mint on Sunday if the management agrees to part with stock in it, it is because the stock markets are at a peak and everyone else is enjoying the stock market party elsewhere: The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs.

Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behaviour akin to that of Cinderella at the ball. They know that overstaying the festivities—that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future—will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.

Charles Assisi

Founder & Chief Strategist, Functional Value Equity Research

Note: What you just read is a is a complimentary, condensed version of a report made available as an exclusive preview to readers of Mint on Sunday. The unabridged version of this report is available at an introductory price of Rs50,000 until 7 October. Post that, it will revert to its original price of Rs1.5 lakh for an unabridged version or to begin work on a personalized portfolio, DM on my Twitter handle with coupon code MINTONSUNDAY.

That out of the way, allow me to tell you what this spiel was all about.

I cottoned on after browsing over multiple stock market reports available for purchase online at obscene prices on various online marketplaces. All of these claim to have spotted stocks the others haven’t. What is both amusing and confounding is that all them quote legendary investors Munger and Buffet as their idols.

Some sample reports and much amusement later, I figured out that all of them follow a standard template and recommend the same stocks. Incidentally, each of these firms call their analysts “contrarian" stock pickers.

By way of example, right now, every report has a “buy" recommendation on a company called VST Tillers. I don’t hold the stock; I have nothing against it. In fact, I can see it has appreciated significantly. Five years ago, it used to trade at Rs450-odd. As I prepare to send this dispatch out, the stock is trading above Rs1,850. To be fair to all of these reports, a year ago, the stock was trading in the region of Rs1,300. So, it has appreciated and whoever may have invested in it, would have gained. I wonder, though, where were these blokes when this company was trading at much lower prices?

But that is beside the point. My point here is the template all of these entities use to write reports. It is brilliantly done, can tempt a seasoned investor and the lay person is a sitting duck. If deployed just right, I suspect these entities must be earning serious monies.

I digress again. On the basis of lessons learnt on the back of these reports, I attempted to write one on why you ought to buy stock in Mint on Sunday.

The template is a simple one and deployed by pretty much every new-age online stock equity research firm.

1. Create a story and an illusion of comfort of the kind that I deployed at the start. Follow it up with a cock-and-bull story often times in as many reports about how the analyst is a boy (or girl) from a small town catapulted to big city with a burning desire to learn, or some such yarn. Ensure you drive home the point how you were entrepreneurial from your early days. Make the story as long as possible. If possible, infuse drama into it like how poor you were. Alternatively, speak of your rich family, but how you spurned the wealth because you wanted to be your own man. You get the general drift.

2. Create a social media presence like a Twitter handle to begin with and a website—both of which describes yourself as a “contrarian", a “value investor" and somebody who subscribes to the world views as articulated by Munger and Buffet. Whether or not you have read their books, the Internet is full of Munger-isms and quotes by Buffet. Post them every place and pepper every report you write with their lines.

To cite a few of the more popular Buffet lines:

• Read everything you can—the earlier the better

• Credit cards aren’t your friend

• Invest in yourself

• Most people would be better off not trading stocks

• Know what you don’t know

• Don’t follow the pack

As for Munger-isms, consider these:

• Virtually every investment expert’s public assessment is that he is above average, no matter what is the evidence to the contrary

• Investing is where you find a few great companies and then sit on your ass

• People calculate too much and think too little

• There are always people who will be better at some things than you are. You have to learn to be a follower before you become a leader

• A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc.

Add to this repertoire the annual report of Berkshire Hathaway, the holding company through which Buffet and Munger make their investments. It contains a letter to shareholders, a much-awaited document and publicly available. Read it to sound contemporary and relevant. I used just the right one to justify why Mint on Sunday is a good buy.

3. And finally, keep screaming mainstream media reports are all crock. That you do not read any business newspapers or watch business television.

Why? Because there is too much noise and everybody says and reports on the same companies. So, as an investor, if you were to go by the news and follow stock indices, you would be following the pack. Don’t forget, you are a contrarian and “don’t follow the pack". You go “value-hunting" instead.

This is an easy process—but not for the laity. Because you trained to be entrepreneurial from your early years, you know how to hunt for “multi-baggers" that others haven’t spotted yet. These reports follow a template.

a. Identify a stock.

b. Justify it using Buffet and Munger as a cover.

c. Generate gibberish around it that most people won’t get. Even the most erudite may have to nod their heads and move on. There are a lot of fun places on the Internet that generate gibberish for you. So, all those lines you read above that included words like e-business, frictionless, viral C2C2C et al was automated gibberish.

d. Use Buffet and Munger again to explain gibberish away.

e. Finally, quote huge premium and sell report. Use it to cross-sell other reports. Get 10-15,000 such suckers, and life is good for a year with a few crores in the bank on your side.

DM me on my Twitter handle and we can brainstorm.

Charles Assisi is co-founder of Founding Fuel Publishing.

His Twitter handle is @c_assisi

Comments are welcome at feedback@livemint.com

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