How to Overcome Overvalued Stocks

I do not sell a stock just on high valuations because high quality businesses are very rare to come by and they undergo long periods of time correction. I've got this mental exit criteria that, you know, if a business crosses more than a hundred E-multiple, I'll get out of the stock. Even though it may go up even further from there during a period of market euphoria, that is the internal hurdle which I've kept for myself. And in India, it's not uncommon to find the stocks of high quality businesses trading at 40 50 or 60 P multiples.

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Robert Leonard & Gautam Baid discuss Gautam's investment evolution, Buffett's influence, behavioral edge, simpler businesses, value traps, negative info, disqualifying features, Indian stock market & more!

Gautam Baid is the Managing Partner of Stellar Wealth Partners India Fund and Equity Advisor of Stellar Wealth PMS. He has a long-term, value-oriented approach and has worked in portfolio management and investment banking. Gautam is also the author of The Joys of Compounding.

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro

02:30 - How Gautam’s investment philosophy has evolved over the years after discovering the art of intelligent investing through teachings of Warren Buffett and value investing.

11:22 - Why he believes the biggest edge investors can have in markets today is behavioral rather than informational?

22:45 - What are “disqualifying features” and how investors can apply these into their own investment checklists?

25:52 - Why Gautam focuses on investing in simpler businesses that require fewer assumptions.

32:27 - Why great companies may not always be great stocks.

35:06 - How to distinguish between a company that is undervalued and out of favor vs a value trap?

47:52 - Why incorporating “negative information” into your investment process may be useful.

53:56 - His thoughts on the potential opportunities in the Indian stock market within the scope of a value oriented, fundamental lens.

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Check out Gautam’s book: The Joys of Compounding.
Check out: Stellar Wealth Partners.

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