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Diamonds in the Dust – Insights from Saurabh Mukherjea, Salil Desai, Rakshit Ranjan

by Money Puzzle   ·  November 30, 2021   ·  

Q1. It almost feels like this book picks up where Coffee Can Investing left off. What was your thought process behind writing this one? (1:19 min)

Rakshit Rajan discusses the basic objective of writing this book and what they are trying to achieve. One of the objectives is to give individuals the necessary tools for becoming stock pickers in the equity market.

Q2. With such detailing of case studies and nuancing of your analysis process, at any point did you think you are sharing too much of your unique stock selection process? (4:13 min)

Here Saurabh Mukherjea talks about a key ingredient required to become a stock picker. It’s one that can’t be taught.

Q3. The book talks about moats being one of the key contributors to the stock selection decision, what are 2-3 ways to identify the presence or absence of impactful moats in a business? (7:52 min)

Salil Desai elaborates on how they decipher moats and more importantly how to dig deeper to understand moats. He also talks about peeling through the layers to understand which layer is the moat that makes the stock a quality business to hold for the long term.

Q4. Can you talk about some of the thumb rules you mention in the book to analyse the potential success of capital allocation decisions made by companies? (12:52 min)

Rakshit Rajan speaks about the importance of capital allocation decisions and the outcomes to look for in determining what makes these decisions successful.

Q5. In some of the case studies you have presented and also in what happens in stock and bond markets, one realizes the damage from delayed response of credit rating agencies. What are your thoughts on this subject and how do you cater for it in your analysis process? (20:08 min)

Saurabh Mukherjea talks about not just credit rating agencies, but also the failure of auditors and how that impacts investors in stocks. Then he speaks about what you can do to protect against such events.

Q6. Today’s young investors are really chasing short term gains and get rich quick ideas. Can you share examples of how being short sighted in stock selection can be harmful in the long run? (24:35 min)

Salil Desai talks about the importance of foresight in investing. The idea that timing the market is more lucrative than buying and holding good quality is debunked and has been illustrated in the book as well.

Q7. What happens when good quality companies slip up on quarterly earnings expectations? If, thanks to high valuation in case of good quality, the immediate reaction is of sharp price fall, how can one assess the situation? (30:26 min)

Rakhsit Rajan tells us how to analyse results not just for the quarter they are declared, rather to focus on the impact these results can have on future earnings and business prospects.

Q8. One statement in the book stood out for me, ‘… greed is a common human trait …’, do you think that greed manifests more effectively than fear? (37:25 min)

Saurabh Mukherjea takes us through historical anecdotes to determine whether it is greed or fear which drives the markets and which of these should individual investors focus on.

Q9. What is the comfort with cricket analogies? (46:00 min)

Salil Desai explains how cricket has many learnings to offer when it comes to investing and how a nation of cricket fanatics probably relates better to such analogies.

Q 10. Your thoughts on the recent IPO frenzy despite high valuations. (48:32 min)

Saurabh Mukherjea gives his thoughts on the IPO mania and what individual investors should focus on.

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