Summarized "Can you make big money in micro-cap stocks? Learn from Ashish Chugh" talk between @hiddengemsindia and @varinder_bansal

Ashish Chugh's journey:

Engineer by education but never had interest in software and started career with DSP Merrill Lynch.

He was working from 1993 to 2003, and in 2003, he decided to start full time investing.

First understand your capacity:

Would you be able to hold the stock when it falls 40%?

Understand yourself and know your temperament

When there is panic in market, these stocks become illiquid and even small selling damages the stock price.

One must have a contingency fund with themselves.

If you don't need money till 3 years from stocks then micro cap is fine.

He avoids leverage as if a situation like Mar 2020 comes you would be forced to sell your quality stocks to cover the margin.

Advises not to get into margin trading funding.

You would need some years to understand which style suits your temperament.

He himself realized that micro-cap world suits him after 8-10 years.

A thread: How to value? 🏦💰❓

Sharing my learnings from my journey so far.

Initially when I started out I used to ignore what anybody would have to say about their style of valuing a business and I would blindly copy what Benjamin Graham’s book, The Intelligent Investor had to say.

Later came a stage where I realized Benjamin style was not working.

Before we get into the learning, here is the background to it:

If you have been following me for the past 1 year you would have noticed how my valuation method has changed.

I used to struggle a lot with valuation and it would be at the back of my mind the whole day thinking what are these investors doing to value. I tried DCF but that didn’t work for me. (Don’t hate me for that, its my personal choice)

I used to attend Bloomberg Quint’s talk on Zoom, message investors, read books, etc. to figure out: How to value? (The frustration had got to a level that I took break from investing for 3-4 weeks)