Coffee Can Investing

 Name of the Book: - Coffee Can Investing

Author: - Saurabh Mukherjea, Rakshit Ranjan, Pranab Uniyal

No of Chapters: -08

Number of Pages: - 288

Single sentence description of Book: - Book with detailed explanation on why Buy and Hold Strategy works best in equity investment.  

What this book is about: - Book starts with stories of Mr. Talwar and Mr. Sanghvi explaining why proper financial planning is necessary to achieve good life towards the fag end of working life. Book explains with ample examples why equity has significantly beaten assets like fixed deposits, real estate and gold when held for a longer duration of time. Coffee can portfolio consists of good companies which an investor is willing to keep for a longer duration of time. Book provides the details of 17 portfolios starting from year 2000 each held for a period of 10 years and shown that each portfolio has beaten index by a good amount. Out of these 17 portfolios, 08 portfolios which have completed tenure of 10 years have given nearly 20% or more absolute returns per annum. In the given portfolios, it is mentioned that even if one or two companies underperform; rest companies take care of their underperformance and provides great returns on overall basis. Longer the period of holding in equity increased the chances of better wealth creation for an investor. Book covers various expenses involved in mutual fund and how they affect the final returns for investors. Book has devoted one complete chapter on real estate and explained why it has given lowest returns when compared with equity. Author has explained why some good small caps have always outperformed the large caps when held for a suitable period of time.

  Few Special thoughts by the Author: -

1.     Author has explained their criteria in brief that they are following at Ambit capital for selection of good stocks. Some of which are mentioned below

a) Minimum market capitalization of Rs 100 Crore

b) Return of capital employed minimum 15 per cent

c) Revenue growth of 10 per cent every year

2.   Price to Earnings ratios can be misleading for companies growing at great pace.

3.   Regular churning of portfolio does not increase the chances of return over long period of time

4.  Patience is the key factor for creating wealth through equity.

5.  Time of entry in good quality stocks does not matter, if the time horizon of investment is long enough.

6.  Good portfolio should be combination of large cap, mid-cap and small-cap.

7.  Great companies are great because they can endure difficult economic conditions.

Overall Review: - Book is a good read for financial planning and starters in equity. Book breaks myth of high risk high approach, which is normally adopted by new investors. Overall a good book for starters.

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