Skip to main content

What went wrong with Aztec?

Well, about 6months back, I was really bullish on Aztec Software. It was a company that was really growing fast and had 2 consecutive years of 100% growth. I looked at the numbers and made forward projections based on past record. I also had at that point in time made reasonable trading profits from Aztec (bought at 75 and sold at 95, bought again at 90 and sold at 120). So, I guess I was biased in my point of view. And I made two fundamental errors.
1. I projected 100% growth based on only 2 years record. The problem with that is it becomes increasingly more difficult to grow as the growth increases because of the increasingly larger base effect.
2. I had assumed a PE expansion based on increased growth.
The learning from this transaction is 2 years data is too less to make future projections on. Also, if growth is not as expected PE instead of expanding actually shrinks and creates a double whammy!! So, its better to be much much more conservative in projections and look for a margin of safety to insulate against losses.

Comments

Popular posts from this blog

Review: My new ebook reader - Infibeam PI

I bought a new ebook reader. It is the Infibeam PI (www.infibeam.com/PI) . I have seen and used both the Amazon Kindle and Sony ebook reader. The main reason I selected the PI is because it was available in India. I did not have to wait for weeks to get my hands on it.

I will not go into detailed comparisons between the three readers I have used. The reason I bought the ebook is to read books. Although that sounds rather a stupid thing to say, I found some features on Kindle quite superfluous to book reading. Like the space consuming keyboard. I dont know of any book which comes with a keyboard, so why should an ebook come with one. If I have to surf the net, I will use my laptop to do it.

The whole buying process was easy and seamless. Delivery happened within 3 working days. The only regret I had was my father was not there to see this. He was pretty excited with the concept of an ebook reader and I had entrusted him with the duty of checking the condition of the parcel when it arrive…

Book Review: Let's Do Lunch by Roger Wilson

I read this book sometime back as part of my journey of understanding food and how it affects the body and mind. In the last two years I have managed to lose about 10kgs of weight and in the process have learnt a fair deal about food, although not enough to talk authoritatively with a nutritionist.

Roger Wilson's book deals mainly about how the author lost a significant amount of weight himself after trying his own diet plan. The diet he followed was eating fruits and proteins. His lack of fundamental knowledge of nutrition makes his commentary a suspect from the very beginning. This book is more a chronicle of the authors weight loss journey than a guide to healthy eating.


Conclusion: Better to avoid.