A new Feb 2025 study, The Alchemy of Multi-bagger Stocks, challenges conventional investing wisdom. Analyzing 464 companies with 10x-plus returns, the research found that factors like revenue and earnings growth were irrelevant. Instead, the strongest predictor was free cash flow yield, proving that a company’s ability to generate cash is more important than its reported profits. The study also highlighted the importance of small size, cheap valuations, and contrarian timing—buying stocks near their lows rather than joining the crowd. This research offers a powerful new framework for finding truly exceptional investment opportunities
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A Very Complacent Market…
Recent developments in Trump’s draconian trade policies — marked by steep tariffs, fluctuating commodity markets and geopolitical maneuvers — present a highly complex and uncertain landscape. Despite dramatic announcements and headline-grabbing tariff threats, markets have remained oddly resilient, while underlying forces quietly shift. For e.g., Trump’s imposition of steep tariffs—such as 200% on pharmaceuticals and 50% on copper—has less to do with traditional economic rationale and more with political leverage
Patience Alone Doesn’t Get it Done
Over the past ~40+ years – the S&P 500 Index has returned an average of ~9.3% annually exc. dividends (i.e., 171.6 Jan 1985 to 5,979.5 Jan 2025). If we limit that to the past decade (from 2015) – that avg annual return increases to 11.4% (excluding dividends). But what matters most is (a) the price you pay; and (b) when you get out. Sitting tight for 10 years does not guarantee a 10% return…