Katalyst wealth a guide to grow your wealth by 190 times

A free guide to grow your wealth by 190 times – Only for Patient investors

www.katalystwealth.com

A free guide to grow your wealth by 190 times – Only for Patient investors

Content Index

• We will grow our wealth by 190 times. What about you? – Slide #3

• Compounding – Rightly called the 8th wonder – Slide #4

• Patience is the key – Slide #5

• Some common sense – though not so common – Slide #6

• Hamburger and Stocks – What’s the correlation – Slide #7

• Overcome your EGO – It hampers the investment process – Slide #8

• Opportunity cost of EGO – Slide #9

• You too can grow your wealth – Only with a right mind set – Slide #10


We will grow our wealth by 190 times. What about you ?

Dear Readers,

Becoming filthy rich is not a dream anymore…...provided you start looking at stocks as partial ownership ofbusinesses.

At Katalyst Wealth we will grow our wealth by 100 to 400 times over the next 20 years. We are very muchcontented about the same and believe if given a chance all of you reading this too would be very happy onachieving such a feat. If you have already started believing that we are going to work very hard then you gotit wrong because we are going to work our normal self, however its been made sure that our money is goingto work very hard for us.


Compounding – Rightly called the 8th wonder

By now, you may have already started thinking that why 100 times to 400 times, well then that's because weare not very sure if we will b able to grow our wealth at a compounded rate of 25% or 35% over the next 20years. However we would be too happy to settle somewhere around 30% over the longer term.

If you are confused, then please have a look at the below table that shows how our one time investment of 1lakh would grow over a period of 2, 5, 10, 15, and 20 years, assuming annual return of 8%, 25%, 30% and35% p.a.

As mentioned above, we have been recording an average of around 37% since last 3 years by investing instocks (well, the bank FDs give a maximum of 10% and that too taxable so not an option for us over thelonger term), however 50% is not sustainable on a longer term basis of say 8-10 years, so we are prettymuch comfortable settling for somewhere around 30% (SENSEX has been compounding at a rate ofapproximately 17%, so 30% is not an up hill task).


Patience is the key !!

As can be observed from previous slide, over time the effect on your wealth can be staggering.

Consider: If you had invested 1 lakh in large caps in 1991, today you would have 1 crore. Not bad.

But if you had put that same 1 lakh in High quality stocks from Mid-cap space, you would have 2-4 crore!!

Well that’s why we wanted you to be patient. The real power of compounding comes with time. The earlieryou start saving and investing in right stocks, the more your money can work for you. Over a longer termeven a difference of 2% return per annum can make a difference of 1 crore to your wealth.

It is important to understand that a good quality stock with robust fundamentals and strong growthIt is important to understand that a good quality stock with robust fundamentals and strong growthprospects are eventually tomorrow’s large-cap stock. Being Mid-cap in nature, they are not widely trackedand researched, and are therefore not on the radar of most institutional investors.

Being a Small investor adds to your advantage

Thankfully we are not dealing with the problems faced by many fund managers of managing a huge fund andthus limited opportunities of investing only in large cap stocks. We have a whole universe of small and midcap stocks to pick from which makes 30% Compounded annual growth rate quite achievable.


Some common sense – though not so common

Common sense means paying attention to the obvious. This is not as easy as it sounds. We all have vividimaginations, and we tend to get lost in our fantasies. When fantasy replaces common sense, life becomesfarcical and even tragic.

It's very easy to get lost in the fantasies of stock markets created by your broker or advisor and therefore it'sall the more important to apply common sense when taking a plunge into the world of investments andtrading.

Let's learn the lessons of Common Sense w.r.t. stock markets:

1. Did you ever realize when your broker or advisor asked you to trade intraday and guaranteed that you1. Did you ever realize when your broker or advisor asked you to trade intraday and guaranteed that youcan manage a daily return of 0.5-1% or let's say 10% per month by trading in equities then why did hehimself not trade?

2. Did you realize that if he’s so sure about 10% monthly return, why did he himself not get a loan of 5Lakhs from the bank at 1% monthly interest and traded with the same for 9% effective return and thuspocketed 45,000 each month.

3. Did you ever ask yourself that why do 98% of the intraday, short term, momentum seeking, and F&Otraders lose and why does the world’s third richest person advises you against trading?

Well, if you had asked such basic questions and applied common sense you could have saved many Lakhsthat you may have lost in your greed for quick and easy money. It's time for you to introspect and find out ifyou are one of the above poor investor who is always at the losing side or you are one of the smart ones.


Hamburger and stocks – What’s the correlation?

Here is what Warren Buffett had to ask investors in his 1997 letters to shareholders – [Please read carefullyin order to understand the most basic principle of investing in stocks]

“If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higheror lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an automanufacturer, should you prefer higher or lower car prices?”

These questions, of course, answer themselves.

But now for the final exam: “If you expect to be a net saver during the next five years, should you hope for aBut now for the final exam: “If you expect to be a net saver during the next five years, should you hope for ahigher or lower stock market during that period?”

Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years tocome, they are elated when stock prices rise very fast and depressed when they fall. In effect if we draw acorollary, they rejoice because prices have risen for the ‘Cars’ they will soon be buying. This reaction makesno sense.

Only those who will be sellers of equities in the near future should be happy at seeing stocks rise.Prospective purchasers should much prefer lower prices.


Overcome your EGO – It hampers the investment process

It's no surprise that while making outstanding stock purchases, a certain percentage of errors in purchasingare sure to occur. Fortunately the long range profits from really good stocks should more than balance thelosses from a normal percentage of such mistakes.

This is particularly true if the mistake is recognized quickly.

However here we would like to point out one very important aspect of behavioral finance which most of thepeople suffer from. There is a complicating factor that makes the handling of investment mistakes moredifficult. This is the ego in each of us. None of us likes to admit that we have been wrong. If we have made amistake in buying a stock but can sell the stock at a small profit, we somehow lose any sense of having beenmistake in buying a stock but can sell the stock at a small profit, we somehow lose any sense of having beenwrong. On the other hand, if we sell at a small loss we are quite unhappy about the whole matter.

This reaction, while completely natural and normal, is probably one of the most dangerous in which we canindulge ourselves in the entire investment process. More money has probably been lost by investors holdinga stock they really did not want until they could "at least come out even" than from any other single reason.

Over the time, it's been realized that people are at an extreme discomfort when asked to exit from badinvestments in losses. They wish to first see the same stock reviving to their purchase price (which does nothappen in most of the cases of bad investment decisions) and only then do they want to exit from the stock.


Opportunity cost of EGO

Let’s understand why the approach of not exiting from bad investments in losses is not good for investors.

Say suppose you had invested in Stock A at Rs 100 based on someone’s free advice. Some months later thestock comes down to Rs 80 and you also find out (after carrying out a detailed research) that the companyyou are invested in is not good. Now, in such a case most of the people would pray and wait for the stock torebound back to Rs 100, though it may not happen forever.

However for the above case, We would suggest one to cut the losses by exiting from the counter and investthe same amount in some other good company after carrying out complete due-diligence.

The concept behind the same is very simple. The probability of recovering your losses is higher in case ofThe concept behind the same is very simple. The probability of recovering your losses is higher in case ofgood companies than in bad companies .

Transactions involved -

• Selling bad stock from your portfolio and

• buying a new stock of a good company.

By just paying 1% transaction cost you can save a great deal on opportunity cost of missing out on goodinvestments. Everyone makes bad investment decisions (even the likes of Buffett, Jhunjhunwala did),however it is important to acknowledge them to yourself and thus avoid riding on to your losses.


You too can grow your wealth – Only with a right mind set

We believe even you can manage to grow your wealth if you don't fall victim to the following problemsfaced by most of the investors:

• Activity syndrome. [We come across many people (let's call them Mr. X) who tell us that they canmanage a daily return of 0.5-1% or let's say 10% per month by trading in equities. So, beware Mr.Buffett, Mr. Gates, Ambani brothers and the new breed of billionaires because if Mr. X starts with atrading capital of 1 lakh as on today, he will surpass you all in next 25 years with his 36 lakh crore wealth.I think by now we should have had many such billionaires, but somehow not a single person comes tomind. You probably know, what we mean !!]

Phobia of watching your investments go down by 10-15% over the short term.• Phobia of watching your investments go down by 10-15% over the short term.

• Impatient enough to hold a good undervalued stock for a period of 1 year and more.

• Check the returns on your investments on a daily basis.

As you must have already observed, becoming filthy rich is not a dream anymore, provided you use the"Power of compounding“, “Common Sense” and “Patience” smartly enough. Most importantly thesePowers are at a disposal of everyone, while some use it smartly by saving and investing early while most ofthe people fritter it away in their greed for quick and easy money.


Katalyst Wealth – YOUR CATALYSTS IN WEALTH CREATION


Our Philosophy

In Depth Analysis

At Katalyst Wealth we are passionate about sharing our philosophy of value investing, and enabling everyindividual to become successful investor.

We invest and suggest opportunities arising out of inefficiencies in the Indian stock markets based onGraham style bargains and high-quality businesses available below their conservatively estimated intrinsicvalue.

Our background is in fundamental research and we leave no stone unturned when we research a company.We strongly believe in the golden rule of investing: fundamentals and results come first, hope later. We askthe tough questions that others can’t or won’t.

We don’t use simple point estimates or rely on management’s “pro-forma” presentations. We know thataccounting is not standardized and easily manipulated, and we do not hesitate to point out when a companyis managing earnings or trying to hide something.


Our Philosophy

Objective and Independent

We aim to level the playing field between investors and public companies. Our research is completelyobjective and Katalyst Wealth is not affiliated with any long or short funds, nor do we accept research feesfrom the companies that we cover.

With no in-house trading department, sales quotas to meet, or underwriting operations, our analystsprovide completely independent research. The success of our company is a function of the investmentreturns earned by our clients. Our independence ensures that our clients’ interests are first.returns earned by our clients. Our independence ensures that our clients’ interests are first.

Delivering on Customer’s trust

At Katalyst Wealth, we believe the most valuable asset of a business organization is the trust and credibility itenjoys among its customers. Built consciously over years, trust has to be maintained continually throughunstinted commitment to quantity and quality of deliverables, and proactive responsiveness to customerneeds.


Our Team

Ekansh enjoys digging up obscure, small and mid-cap gems (high quality businesses withmoats) which almost no one in the analyst community is tracking. Ekansh’s first love hasalways been the financial markets and he has followed them both as an investor and acommentator. An avid reader, Ekansh spends most of his time sifting through annual

Suresh has had a wide ranging and rich career spanning more than 40 years in technologyand capital markets. He holds a B. Tech in Electrical Engineering from IIT Kanpur and PGDMfrom IIM Calcutta. His holistic guidance has benefited Katalyst Wealth in entering an arenahitherto occupied by conventional players.

Suresh Agarwal


commentator. An avid reader, Ekansh spends most of his time sifting through annualreports, books, periodicals, trade magazines, and websites studying great businesses andlooking for his next market-beating stock.

Apurva has had a distinguished career with Price Waterhouse, KPMG & Ernst & Young. Hisareas of expertise are buy side and sell side financial due diligence services as part oftransaction advisory engagements. He has worked for Private Equity and strategic investorsas part of execution team in 15+ transactions. His penchant lies for understanding thebusiness drivers of the company by analyzing operational parameters and discussion withmanagement on strategic and business issues.

Apurva Garg

Ekansh Mittal

Research Process

We are not momentum players. We are not interested in point estimates. In our view, there are no shortcuts or rules of thumb. Each company requires a unique research approach and it begins with a carefulreview of its financial disclosures. We believe a detailed analysis of the disclosure and accounting choicesmade by management can often provide insight into risks that maybe unknown or underappreciated by theStreet.

It looks simple in theory. But in practice, it takes good old-fashioned discipline and hard work. We don’tchase hot stock tips, nor do we rely on supercomputers or fancy algorithms. We don’t have a surefire systemfor timing the market (all good ways to lose money).

We seek out well-managed companies with unbeatable products or services whose stocks are undervaluedWe seek out well-managed companies with unbeatable products or services whose stocks are undervaluedor unknown by most investors — and offer the very best to you. For the same we log countless hoursresearching and crunching numbers before recommending a company.

We look for the following traits in the stocks of companies we invest and recommend:

• Companies that have the ability to generate high returns on capital employed because of the presence ofa sustainable moat

• Can grow earnings at a rapid pace without requiring access to outside capital markets• Are run by able, honest, and owner-oriented managers.• Can be purchased at valuations where the growth component of value equation comes free.


Research Process

Our stock recommendations incorporate four key analytical categories:

Business Operations: Often the market loses sight of fundamentals and gets caught up in the “story”. Ouranalytical techniques ensure that the “story” is supported by the fundamentals.

Corporate Governance: Understanding how an executive team is compensated provides insight into itsbusiness objectives and accounting choices. We have learned that nothing in accounting happens without areason and understanding that reason allows us to gauge shareholder value creation and the overall qualityof management.of management.

Balance Sheet: Time and time again, accounting scandals and unexpected losses prove that what is “off” thebalance sheet is often more important that what is “on” the balance sheet. It is only through a detailedreview of financial disclosures that such exposures can be uncovered.

Cash Flow: Companies go bankrupt because they run out of cash, not earnings. Our reports focus on thesustainability of cash flows, not just earnings.


FAQs

Ans: Katalyst Wealth is an independent equity/stock research and fund management company dedicated to buildingthe world's greatest investment community. At Katalyst Wealth we are passionate about sharing our philosophy ofvalue investing, and enabling every individual to become successful investor.

Our research is completely objective and Katalyst Wealth is not affiliated with any long or short funds, nor do weaccept research fees from the companies that we cover.

With no in-house trading department, sales quotas to meet, or underwriting operations, our analysts providecompletely independent research. The success of our company is a function of the investment returns earned byour clients. Our independence ensures that our clients’ interests are first.

What is Katalyst Wealth

completely independent research. The success of our company is a function of the investment returns earned byour clients. Our independence ensures that our clients’ interests are first.

Ans: We offer investment advisory services and wealth management services through our various offerings like:

1. Alpha Portfolio2. Alpha Plus Portfolio and3. Katalyst Wealth Portfolio Advisory Service.


What kind of services we offer?

FAQs

Ans: Did you ever realize when your broker/trading calls service provider asked you to trade intraday andguaranteed that you can manage a daily return of 0.5-1% or let's say 10% per month by trading in equities for 15-20days, then why did he himself not trade? Did you realize that if he’s so sure about 10-15% monthly return, why didhe himself not get a loan of 5 Lakhs from the bank at 1% monthly interest and traded with the same for 9-14%effective return and thus pocketed 45,000-70,000 each month.

Did you ever ask yourself that why do 98% of the intraday, short term, momentum seeking, and F&O traders loseand why does the world’s third richest person advises you against trading?

How are we different from other equity research houses, trading calls service providers and brokerage houses?

and why does the world’s third richest person advises you against trading?

You probably know what we mean.

At Katalyst Wealth we believe in guiding and helping people through wealth creation from one of the best butignored asset class i.e. Equities/Stocks. At Katalyst Wealth we “Put our money where our mouth is”. Wecover/suggest only those stocks where we would personally like to invest our money or that of our clients.

Ans: No, we are not a brokerage house. We are an independent equity research and wealth management firm. Youare encouraged to choose a broker you are comfortable with.


Does Katalyst Wealth have brokerage facilities? Do you recommend any brokerages?

FAQs

Ans: Our services are suitable for investors with the following profile:

1. If you look at ownership of stocks as part ownership of businesses.2. If you are patient and serious about sustainable and long term wealth creation.3. If you understand the fact that stock prices are the slave of earnings and sooner than later they start reflecting

the same.

Ans: Our Services are not suitable for the investors with the following profile:

For whom all are the services suitable?

For whom all are the services not suitable?

Ans: Our Services are not suitable for the investors with the following profile:

1. If you suffer from Activity syndrome and need constant activity (buying/selling) in the market.2. If you consider 1 year as a very long period for investment.3. If you consider stock investing as gambling.4. If you want entertainment and time pass from stock market rather than wealth creation.5. If you believe, you can make money on intraday and weekly basis consistently by trading in equities.

Ans: Risk arbitrage opportunities arise out of announced corporate transactions such as takeovers, mergers, de-mergers, special dividends, share buybacks, and bankruptcy restructurings. Special situations are temporary parkingplaces for cash waiting to be invested in high-quality businesses or statistical bargains.


What are arbitrage/special opportunity calls?

FAQs

Ans: All the members are provided 24X7 support through our dedicated research analyst assigned to each member. Our assigned analysts are available 24X7 on both mail and phone for any query resolving.

Ans: For any other queries besides the ones listed, please drop a mail at [email protected]

What kind of support is provided to clients?

If I have any other queries besides the ones listed here, where should I contact?


Katalyst WealthRegistered & Corporate office:

B-47, 1st Floor, Dayanand Colony,Lajpat Nagar – IV, New Delhi – 110024Lajpat Nagar – IV, New Delhi – 110024

Ph.: 011-41730606Mob: +91-9818866676Email: [email protected]
