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Rahul Shah's Top Five Secrets to Beat the Sensex

Sep 9, 2019

Ankit Shah, Research analyst

Last week, there was a massive downpour in Mumbai.

It interrupted the daily lives and routines of millions of Mumbaikars.

Some of you may have personally waded through knee-length waters.

The deluge brought the whole city to a standstill.

When the sky is all dark and the downpour continues unabated day and night, it feels like the rains will just not stop.

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But nothing is permanent. Slowly and certainly, as the rains recede and sunlight pierces through the clouds, the city jumps back to life and movement.

This makes me wonder about the current state of the economy and the stock markets.

Just like the rains in Mumbai, the economy seems to be under a dark spell. There's been a flood of bad news about the severe slowdown in the economy. The stock markets have been dominated by the bears.

I have been talking to many people about the "mandi" (slowdown). Across various fields and geographies, everyone has unequivocally confirmed that the slowdown is real and worrisome. And nobody knows when things will get better.

It almost feels like the gloom and doom is never-ending.

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But amid this bearishness, there is one man who is not at all perplexed about the economy or the markets. He calls himself an 'eternal optimist' and answers to the name of Rahul Shah.

Sometimes I get anxious and wonder why nothing ever worries him. Because frankly, when the market and the economy are in doldrums, it makes me uneasy.

Though I believe stock valuations are getting attractive and there's a strong case for buying stocks in this bearish market, I would be lying if I said I am not worried about the economic slowdown. That's me.

But Rahul Shah is unmoved. He looks at it from a different prism.

He questions: Has it ever been that the markets are stable and certain?


Indeed, the stock market is a mysterious beast.

Every single day, there's some new action... stock prices move up or down.

Investors, traders and market commentators try to make sense of all the news and information pouring in every day.

But Rahul Shah doesn't get entangled in this kind of micro analysis of facts and information. He believes it's a futile exercise to make sense of every detail.

To some, this attitude may sound arrogant and indifferent. But he lets his track record do the talking.

He has not only beaten the Sensex and several other benchmark indices, but has also outperformed most approaches and strategies.

As the editor of Microcap Millionaires, a service he has overseen since launch in February 2014, Rahul has delivered a strong 161% return on the total corpus.

That's a wide outperformance over the Sensex.

The most baffling fact is that he has managed this massive outperformance without:

  • deep-diving into the economy,
  • building financial models,
  • and meeting company managements.

What is his secret recipe?

I spent some time decoding the key factors that have made Rahul Shah's investing approach so successful. Here's a list of the top five...

  1. Read, read, read...

    Rahul is undoubtedly the savviest reader in our research team. Every time I ask him about what he's reading these days, he'll name an interesting book. There's hardly any must-read book on value investing and investing psychology that he hasn't laid his hands on.
  2. Right framework rather than details

    Rahul is not the guy who goes into nitty-gritties. According to him, if you have the right investing framework, then the details are secondary. He spends a lot of time studying and testing different investment frameworks before zeroing down on the one that is the most optimal.
  3. Keep it simple

    Once he identifies an investing framework that works, he does his best to keep it simple. In his view, good investing tends to be simple, and not unnecessarily complicated.
  4. Be willing to go against the crowd

    Another factor that differentiates Rahul is his ability to go against the crowd when his investing strategies suggest him to do so. Obviously, this requires guts. But the real reason he is able to take risks and bet on "hated" stocks is that he invests a lot of time and thought behind build rock-solid investing strategies.
  5. Patience

    I hear a lot of people talking about the importance of patience and investing for the long-term. But honestly, most people are willing to be patient only as long as they see their portfolios bulging. The moment the markets turn adverse, all patience goes out of the window.

    But ask anyone in our research team, everyone will agree that Rahul Shah is patience personified. He understands the wild swings of the human mind well enough to not get trapped into its primal reactions.

    Rahul strongly believes that investors don't make money by overthinking and being hyperactive in the market. The best investors spend extended periods doing very little, or nothing... simply sitting patiently on sound investments and letting the market forces do their bidding.

Recently, when Rahul Shah told me about his new project - Automatic Income, I was very intrigued.

What is most compelling about it is that it involves three of my favorite investing legends.

He's eager to teach his new strategy to anyone who desires to increase his monthly income.

Register yourself for Rahul Shah's Automatic Income videos.

Warm regards,

Ankit Shah
Ankit Shah
Editor and Research Analyst, Equitymaster Insider

PS: Register today for Rahul Shah's free classes on how to double your income.

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