Summary of Popular Book “100 to 1 in Stock Market”
This book has been written by Thomas Phelps ( 1902 – 1992 ) a renowned and successful investor, Columnist, Analyst and Financial Advisor. In this book, he helps the investors to increase their wealth through Buy and Hold Strategy. Buying stocks and holding it for more than 10 years as investments.
He emphasizes these 2 Golden Rules with lots of case studies in his book.
Successful Investor’s pattern
He insists that the investor should have the “vision to see quality company stocks, courage to buy them and patience to hold them” and Patience is the rarest of the three.
Successful investors hold stock for more than 10 years ( Average of 20 Years ) to get the stock as 100 Baggers. They identify great company stocks and hold it for more than 10 years ( Typically 20 – 30 years )
Now, the popular question is how to identify these companies – He provides a case study where most of the investors buys great company stocks and they knew about the company can be a Multi Bagger Stock, but they sell them when it gives 20% – 30% profit. ( 90% of people exit with meagre 20 – 30% or profit )
Investors don’t have the tenacity to hold the stocks like the way the owner of the company holds it. ( Mr.Buffet also advocates the same principle )
Most Important Rule in Stock Market
Bear Market smoke gets into the eyes of the investor and make them blind on the buying opportunities. When he is successful in timing the market, the greater temptation to rely on spotting the best timing to enter and thus he misses the biggest buying opportunities in buying right and holding on.
He concludes the book with a story of Arabs – An Angel woke up 4 Arabs in the middle of the night and grant them a wish – 1st Arab asks for a donkey and he gets it. 2nd Arab wishes for 10 donkeys and he also gets it. 3rd Arab asks for a kingdom and he becomes a King. 4th Arab wishes to become Allah himself, but he gets nothing.
He mentions that those who ask too little of life gets little. Those who as much gets much. Those who are greedy and wishes for too much, they get nothing.
This book is a reiteration of beautiful concept called – Buy Right and Sit Tight. Buy quality company for reasonable price and hold on for a longer term. Also it is the investor responsibility to check whether the company makes good progress or not in every 3 Months. Without regular reviewing of your stock portfolio, you will never realise full growth potential of stocks and portfolio.
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