Investing Lessons from MOSL 23rd wealth creation study
MY LEARNINGS FROM MOSL 23rd Wealth Creation Study Based on the Video (See link at the end) LESSON 1 Buy only when the RoE is greater than the cost of capital. MOSL Assumes cost of capital to be 13% My notes : The cost of capital for most companies can be assumed to be 12 to 15% based on their credit rating. The cost of capital for NBFCs could be 8 to 10% The cost of capital for Banks could be 6 to 8% Check the latest investor presentation or annual report to get this data. But a 13% filter on ROE will help to weed out most of the companies and provide you with a list of companies that is worth spending more time on. Some sectors like Infra have a RoE of less than 10%. So the big question is whether it is even worth looking at these for investment portfolio. Lesson 2 Assuming the RoE test is passed and we have companies which we feel has a reasonable growth prospects (i.e. RoE > 13% or cost of capital) ...