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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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100 to 1

Posted by Muthu on January 10, 2015

I came to know about the book ‘100 to 1 in the stock market’ written by Thomas Phelps through Prof.Sanjay Bakshi. Prof.Bakshi is a great teacher and a brilliant investor. I consider him as one of my mentors in investing. This book was published in 1972 and a copy including shipping cost around 10K in Amazon. I purchased and read this book in July 2014. I would rate this as the best book I’ve read in 2014. It reinforced and provided excellent insights on the need for long term orientation and the role of time and patience in equity investing.

The 10K paid for the book was one of my best investments.

Throughout the book, Phelps emphasise the need to buy right and sit tight for a long time. This way, any ordinary investor can create extra ordinary wealth.

I want a share a small passage from this great book.

“An elderly client sought my advice on whether he should sell or give to his family a valuable piece of property. This involved estate planning, including calculations of alternative tax consequences. To do this properly I needed to know the old gentleman’s net worth. When I asked him for this information, he insisted on giving me only an admittedly arbitrary figure to work with. This I used.

“Having been pleased with the help he received in the first matter, this same client later sought my help in planning his will and possible lifetime gifts to his children. I told him I would be glad to do this, but I emphasized the vital importance of my having accurate information as to his net worth. Still reluctant to disclose that information, he wanted time to think it over.

“A few weeks later, he came to my office with his middle aged son. After the usual greetings, I waited to hear what the old gentleman’s decision would be. There was a long pause. Then he turned to his son and said ‘Shall I do it?’ ‘Yes, father,’ replied the son. ‘I think you should.’ Whereupon the old gentleman reached into his side pocket, pulled out a slip of paper and handed it to me.

“I had suspected that the figure he had given me to work with in the earlier matter had been unduly low. But, when I saw the very large figure on the slip he gave me, representing primarily the value of his security portfolio, I whistled and exclaimed: ‘Mr.Blank, how did you do it?’

“To which he replied, ‘I never sell anything.’”

5 Responses to “100 to 1”

  1. rajivahuja said

    Dear Muthu,

    Since the blog powered by word press does not take my comments. I have chosen to write here

    Nice article.

    With best regards,

    Rajiv Ahuja.

  2. virat said

    sir i read your articles regularly. You have made me repose my confidence again in markets. i have 50 lakhs to invest in MF but undecided which fund to choose. i already have started sip for 2 lakhs per month in MF. pl suggest some funds for lump sum investment now. Thank you

    • Muthu said

      If you are a DIY (Do it yourself) investor, make use of websites like valuereserch, morning star and the tools they offer.

      If you feel, you need an advisor, choose someone with whom you can discuss your personal finance situation and who can be a mentor and guide for you in the long run.

  3. bvmallikarjunrao said

    great piece of information. i am doing SIP from last 5 years and i know the power of compounding. i request u to suggest some diversified equity funds to invest in your blog as i know lot of information in valueresearchonline, mint50 etc. but it is difficult to analyze and select funds since the financial literacy in India is too low and it is difficult for people specially in tier-III cities to get financial adviser too.

    • Muthu said

      I would suggest meeting an advisor. Funds cannot be selected in isolation. Financial & life situation of the client, risk profile, risk covers, goals etc. needs to be understood before narrowing down on advice of funds mapping to goals.

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