Finding Multibagger Without Timing the Market

From its low of US$64 this April, the stock price of Arista Networks (NYSE:ANET) has more than doubled to trade around US$150 recently.

And as a testament to my long-term investing approach, Arista has become the first 10-bagger since the inception of my current portfolio in 2020.

I can almost hear what some of you are thinking, “Aiyah, you just have to go all-in during a market crash to get the bags!”

That has some truth to it, but investing during a market crash is only simple from a rear-view mirror.

Let’s be honest, how many of you added aggressively to your positions during this April’s crash?

I’ll be the first to admit that I didn’t. While I made some moves, I was cautious and advised caution because no one knew how the uncertainties would unfold.

And even if you manage to perfectly time every crash, the reality is that such opportunities are rare. Bear markets are also typically shorter than bull markets, so you don’t want to miss out on returns by waiting on the sidelines.

So how do you find those multibaggers without timing the market?

The answer is hidden in those first two sentences. In them are four key principles that you can use to find your own multibaggers.

• Invest in quality businesses you like.
• Start with small positions and buy in tranches
• Purchase businesses at a cheap price.
• Be patient and wait.

Let me elaborate.

Invest in Quality Businesses You Like

There’s no running away from putting in the necessary effort to find and assess businesses that have the growth potential.

For a start, you may begin with brands that you are familiar with.

For instance, these are some services and products that I used in my daily life: Alphabet (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and McDonald’s (NYSE: MCD).

You might be surprised how you could have ignored them for so long. I remembered that despite being a Mac user since 2014, I only bought my first share in Apple in late 2018!

To widen the exploration, you can simply do a search on the internet or YouTube, and there are tons of material out there. You can now even ask any AI model for a suggestion.

The following is what Gemini shared with me with this prompt: “List ten potential stocks to invest in that will double in return in five years.”

Of course, this is just the first step. You will then need to spend time understand the businesses and assess their potential.

Are you feeling overwhelmed already?

If so, you can outsource the research by subscribing to stock advisory services from either The Motely Fool or Alpha Picks by Seeking Alpha.

And for those of you who prefer a subscription service that is based in Singapore, you can check these out: All Stars Portfolio by The Smart Investor and InvestingNote Portfolio by The Joyful Investors.

Some of you probably have this question in mind, “Is it worth the money?”

I can’t speak for you, but I have no regrets subscribing to both The Motley Fool US and The Motley Fool SG (now The Smart Investor) when I started to dabble in US markets.

Already exhausted from work, these services freed up my time for other priorities, including spending time with my family.

Their recommendations did the initial heavy lifting in sifting through thousands of stocks and analysing the corresponding financial statements.

As a result, I just needed to focus on evaluating potential candidates for my portfolio.

Reading these reports and asking questions to the community also deepened my understanding of company analysis. This skillset now allows me to more comprehensively analyse other stocks I come across.

For the record, some of my top performers such as Arista, Intuitive Surgical (NASDAQ: ISRG) and Shopify (NASDAQ: SHOP) came from these services. Their return could probably fund my subscriptions for decades if I had chosen to continue.

It’s important to point out at this juncture that not all their picks worked out, and I also didn’t invest in all recommendations.

It’s not that I had better insights than them, but I simply wasn’t interested in some of the businesses.

This is crucial.

Ultimately, your portfolio should only be composed of companies you truly believe in — those whose business or leadership vision resonates with you.

This will distinguish your portfolio from the others, even if the starting point is the same.

More importantly, your ownership increases your conviction.

This way, you’re less likely to be swayed by market noise or waste time lamenting the outperformance of other stocks.

The stock selection process is the key part. What follows is how you build up your positions.

Stay tuned for the next post where I will elaborate further on it.