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Multibagger formula: Consensus cannot make big money

Multibagger formula: Consensus cannot make big money, sticking the neck out can

Herd mentality is to human behavior what sand is to desert. On Dalal Street, it means going with the tide, the consensus.

But the market pays only when you use brains; that is, when you go stock picking with conviction, based on proper research.

If you are not doing this, you might just be sending some hard-earned money down the drain. This is what gives birth to scams like Speak Asia and Social Trade.

However, the stock market is neither Speak Asia nor Social Trade; it is a place where you can use smartness to beat inflation and compound your wealth. And how!

The headline ‘Multibagger formula’ must have forced you to click on this article. But before going ahead, you must be aware that making money is never ‘easy’.

History suggests money can be made only with proper research and hard work. Only then, can one find multibaggers like SymphonyBSE 1.62 %, Ajanta PharmaBSE -0.25 %, Escorts, MRF and NilkamalBSE -0.86 %.

Consider this: equity benchmark BSE Sensex has given 127 per cent return in last 10 years, even as the broader market produced stocks like Symphony, Ajanta Pharma, Caplin Point LabBSE 0.18 %, Vinati OrganicsBSE 2.22 % and RelaxoBSE 1.40 % Footwear, which gave over 10,000 per cent return to investors in the same period.

Still, one should not get lured by these figures. Ace investors such as Rakesh Jhunjhunwala and RK Damani were not made in a day. They picked stocks after due diligence.

In an interview with ETNow, Sanjay Dutt, Director, Quantum Securities, said, “Consensus never makes money. At the most, consensus makes a 12-14 per cent kind of return. But if you stick your neck out and do homework, it gets you to the multibagger. You will never make money by listening to television channels or reading newspapers. You need to really get down to doing hard work to find those multibaggers and do not get swayed by consensus.”

On spotting multibaggers in the present market scenario, Gautam Trivedi, CEO, Religare Capital Markets, told ETNow: “We see a lot of opportunities in the midcap space and the universe still has very attractive stocks to choose and pick from.”

Arun Thukral, Managing Director and Chief Executive Officer, Axis Securities, in a column wrote, “Multibaggers are stocks that evolve gradually; they will not give returns immediately, when you invest in them. A structurally strong company with good management and future strategy can potentially evolve into a multibagger over time.”

The list of top 25 stocks that surged over 3,500 per cent in 10 years:


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