Curated By: Business Desk
Last Updated: September 07, 2023, 11:39 IST
Pabrai is an Indian American businessman and investor.
The 26% formula will help you to achieve a 10-bagger stock after a decade and an impressive 100-bagger stock after two.
Investing money in the share market usually results in either big returns or huge losses. It entirely depends on the planning, research and patience of the investor. The stock of the companies is the direct reflection of their success and failure. Hence, it becomes highly important for the investors to conduct proper research before buying and selling the stocks.
The best situation in the stock market is when the return is many times larger than your investment. This is called a multibagger stock. Mohnish Pabrai, an Indian American businessman and investor, has shared his expertise and a new formula which if followed can help you identify multi-bagger stocks.
Inspired by Warren Buffet and Charlie Munger, Mohnish Pabrai asks people to follow a formula called 26 per cent. Under this, you need to find the stock which has an Annual Compound Growth Rate (CAGR) of 26 per cent. With the help of this, you can achieve a 10-bagger stock after a decade and an impressive 100-bagger stock after two.
During a lecture by Mohnish Pabrai at Google, he said that if this 26 per cent compound rate of the stock is kept in mind while doing research on the share prices then your investment return will become double in a mere three years.
“If you can compound your money at 26 per cent annually, you double your money every three or four years and can become a very rich man very fast,” said Mohnish Pabrai during the lecture.
The share market does require patience and so does this formula too. At the lecture, Pabrai also shared some of the insights for a better investment. He advised investors to always prefer uncertainty over risk. There is a clear difference between them. You should choose a stock which has high uncertainty and low risk. Vive-versa is not a good choice for the investors, he added.
Mohnish Pabrai is an Indian American businessman who also holds expertise in the share market. He himself followed the same formula and in the period of 1995 to 2014, his portfolio soared with an enigmatic 26 per cent rate.
