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How to spot a multi-bagger?

Dhirendra Kumar shares his views on finding multi-baggers, a popular pursuit among equity investors, and alternatives for a small investor

How can I know that an investment will become a multi-bagger or turn out to be utterly worthless?

It is very difficult to do. It is easier to ensure that your investment does not become worthless. You can do this by investing in mutual funds. Here, you are diversifying and investing regularly. Finding multi-baggers is nearly impossible. You don't typically find multi-baggers until they have become multi-baggers. But nonetheless, develop curiosity about businesses. There will be businesses which will turn multi-baggers. Apple is a very old story. It came, prospered, briefly went down the tube and then with the advent of the iPod and the return of Steve Jobs, the company revived. What has happened to Apple over the last 10 years with the launch of the iPhone would have been very hard for anyone to guess. I wonder if Steve Jobs himself would've guessed what Apple would go on to become. Keep your eyes and ears open. Consider investing in stocks. However, the next best thing is to choose a good fund, invest regularly and increase your investments as your income rises. It will not create the opportunity that buying Apple would have done but will be reasonably satisfying and can match your temperament too.

This article was originally published on July 18, 2017.

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