COMPOUNDING

 COMPOUNDING:

💡 The Double Penny Example

• If I give you $1,00,000 today, and your friend gets just 1 penny that doubles every day… who’s richer after 30 days?

• At first, the $1,00,000 looks way better. After 10 days, your friend only has $5.12.

• After 20 days, it’s $5,243 — okay, now it’s catching up.

• But by day 30, that penny has grown into over $5 million!

That’s the magic of compounding — it looks boring and slow at first, then it suddenly explodes.

Doubling Penny Growth

• Day 1 → $0.01

• Day 2 → $0.02

• Day 3 → $0.04

• Day 4 → $0.08

• Day 5 → $0.16

• Day 6 → $0.32

• Day 7 → $0.64

• Day 8 → $1.28

• Day 9 → $2.56

• Day 10 → $5.12

• Day 11 → $10.24

• Day 12 → $20.48

• Day 13 → $40.96

• Day 14 → $81.92

• Day 15 → $163.84

• Day 16 → $327.68

• Day 17 → $655.36

• Day 18 → $1,310.72

• Day 19 → $2,621.44

• Day 20 → $5,242.88

• Day 21 → $10,485.76

• Day 22 → $20,971.52

• Day 23 → $41,943.04

• Day 24 → $83,886.08

• Day 25 → $167,772.16

• Day 26 → $335,544.32

• Day 27 → $671,088.64

• Day 28 → $1,342,177.28

• Day 29 → $2,684,354.56

• Day 30 → $5,368,709.12

 

Something I Say Again and Again…

Mindset

1. $5 Invested has potential to be $5 Million or more in 100 years.

2. Over time, one big winner in the long term portfolio can cover for the losses of 100’s of losers – provided you did not sell any.

3. A bear market is when stocks return to their rightful owners.

4. Prepare for the Worst, Hope for the Best.

5. Fear is Temporary. Greed is Permanent.

6. Use your weekend to build the life you want, instead of escaping the life you have.

7. Let the painful past be a powerful catalyst for a future-focused mindset.

8. There is a big difference between an idea and execution. Orkut and Myspace were an idea – Facebook is an execution.

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Investing Principles

1. There is no other asset class which will give you a return better than stock market can.

2. Over time, one big winner in the long term portfolio can cover for the losses of 100’s of losers – provided you did not sell any.

3. Trading makes money, Investing creates Wealth.

4. Buying a home is an emotional decision and not a financial one.

5. Frugality can beat Inflation.

6. Don’t be an IPO Cheer Leader – They don’t get paid well.

7. My underlying assumption is that all crypto potentially can go to zero one day. Invest carefully and wisely.

8. 401K – Keep it in S&P 500 equivalent (VOO). Try to keep it around 10% of your net worth.

9. Always keep maximum money in the “Investment” account – and less money in the “Trading” account. I prefer 80-20 Ratio.

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Trading Principles

1. Always keep Trading and Investing separately – in separate accounts.

2. 1% Stop loss / 2.5% Profit will allow you to be profitable in trading even by being right only 3 times out of 10.

3. Options are always a TRADE – don’t make them an investment.

4. Kharidne Wale Ki Jeb Khali, Bechne Wale Ki Tijori Khali – for options buying and selling.

5. Trading makes money, Investing creates Wealth.

6. Earnings are less about what the company reported but more about what they are going to report next (Guidance).

7. Winners keep on winning. Losers keep on losing.

8. Nothing good ever happens to any stock which is trading below its 200 Day Moving Average.

9. During the downturn – you want market to open red – as much red as possible.

10. Fundamental analysis will tell you what to buy. Technical analysis will tell you when to buy.

SEP 2025 - NEXT 5 Year Picks

 

I’ve identified 20 stocks that, in my view, are currently fairly valued or undervalued and have the potential to deliver over 100% total returns in the next five years (about 20% CAGR). Of course, there’s always risk—some picks may not play out as expected—but I believe these offer better opportunities than many of the large or mega-cap names like PLTR, NVDA, or AAPL, which I consider overvalued at present.

This is my third such list (following similar ones in July and August). As always, please do your own research before investing. You can approach these either with a lump sum or through dollar-cost averaging—whichever strategy fits you best.

7 Steps to Building and Mastering Wealth

7 Steps to Building and Mastering Wealth

Step 1 – Index Fund Foundation
Start simple. Put all your early money into VOO (S&P 500 index fund) until you reach $10,000. This gives you stability and exposure to the market without overthinking.

Step 2 – Long-Term Stocks
Once you cross $10K, shift focus to individual stocks. Keep buying small amounts consistently until your portfolio reaches $250K. And never stop—keep adding, and most importantly, never sell your long-term holdings. These are your foundation.

Step 3 – LEAP Options (Long-Term Calls)
When you have a solid long-term base, open a new trading account with $25K. Only trade LEAP options (long-dated, low-risk bets). Keep positions small—no more than $1K each. Think of this as your “advanced but patient” strategy.

Step 4 – Shorter-Term Options
Open another trading account with $50K. Keep 80% in cash at all times. Use only 20% to trade shorter-dated options. This way, you protect yourself while gaining experience with higher-risk trades.

Step 5 – SPY/SPX Trading (Day or Swing)
This is the final stage, meant only for the most advanced traders. Open a dedicated account just for SPY/SPX options, focusing on day trades or next-day swings. This activity is not for wealth building—it’s for fun, discipline, and keeping sharp once your wealth is secure.

Step 6 – Stay Humble
Success in trading can be dangerous if it leads to overconfidence. Always remind yourself of the journey, the losses, and the discipline that got you here.

Step 7 – Give Back
Teach others. Share your lessons, your system, and your mistakes. Helping others not only keeps you grounded but also strengthens your own discipline.

Portfolio Construction

 Let me briefly explain how I constructed my investment portfolio. It is still work in progress as I am half-way-there, but let me share How it begin and what is the logic behind it and some of the advantages and disadvantages of building the portfolio this way.

I began with $5, The first buy order was for SPY. I was giving an advice to a friend about stock market and he suggested what should I do? So I suggested, if you know nothing, first thing you do is invest in “Index Funds”. Then whatever I suggested to him - I wrote it in this blog (https://viralpatel15.blogspot.com/2021/03/stock-market-beginner-advice.html) and then I said to myself, “Why not walk the talk” and I started the same in my Robin Hood account. (I have not yet stopped).

For those who know nothing, this is probably a good advice, but those who know a little and I like to believe, I know slightly more than little by now, and have always been fascinated by those big percentage gains in NVDA, AMZN etc over 5, 10, 15, 20 years returns. So I sort of started reverse engineer the process and created a systematic approach.

I created different buckets. Sort of 7 buckets.

First bucket, I picked 20 best stocks that I know - which has potential to be great winners down the road and I started buying $5 worth of each of that stock.

Second bucket, I picked 30 next best stocks that I know - and started buying $3 worth of each stock daily.

Third bucket, I picked 40 “Value Stocks” which also pays some sort of Dividend, to balance out the portfolio, so that it does not have only growth portfolio. Stable companies such as Starbucks, Disney, Pepsi and so on and started buying $2 worth of each stock daily.

Fourth bucket, I picked 50 left over stocks, which are good names, good companies, but either too high in valuation and may not provide great growth, but add some stability in the portfolio, such as BKNG, GOOGL, MSFT etc.

Fifth bucket, I picked 150 stocks which are just very high risk, many of them may bankrupt in few years, but something that can give 1000% gainers - if it works, and started buying $3 in a week in each of those names.

All this is listed in this blog: (https://viralpatel15.blogspot.com/.../robinhood-portfolio...)

Over the period of time, that ratio has changed a bit. Now I also have Top 10 list (where I buy $10 worth of those stocks daily)..the other buckets remain the same, but I stopped buying the high risk companies. Reason, is I learned over the period of time, that some of them are just pump and dump and not worth putting money. Secondly, you also gain some experience, knowing the market, reading the market, their balance sheet etc, and realize, there are very few businesses worth investing, others are not.

Now, how do I select those companies and where I put them (in which bucket), will have lot more details - but if I have to simplify it, I would just say this, I try to invest in companies which are growing in their revenue. Key is they should be able to double their revenue in 5 years. That means they are growing at least 20% each year. So NVDA’s revenue was 16 billion in 2021, and if it is more than 32 billion in 2026 then it will be in (Its 130 billion now), but AAPL’s revenue was 274 Billion in 2021 and now it is nowhere close to 550 billion (Its 391), so it will not be in my bucket list. This bucket list keeps changing each year, depending upon how companies are doing, so if somehow AAPL turned out to be a company which is again doubling their revenue in 5 years, it will be in some bucket, otherwise it will not.

Apart from selecting those buckets (which I do it at Christmas time, because workload is less and there are holidays), I spend roughly 30 minutes each week, to see if any changes are required. So I created a bucket at the start of the year, and some company is not doing good and down 20% in the value and it is in the top bucket, I drop that and pick the highest winner from the lower bucket. This way, I keep feeding my winners.

Here are some advantages of constructing portfolio this way:

You can buy when you have just $5. and then you can keep adding as and when you have money.
You are adding a very small amount to each stock, so you will not have urge to Sell it. This will prevent you from “Trading” and really keep you focus on “Investing”.
You are “Diversifying” the portfolio to have bunch of stocks.
You are “Dollar Cost Averaging” so, you do not need to monitor what is the attractive price to buy, as the buying price will average it out (in their lows and highs)
You are not picking the winners, but you are letting the market pick the winner for you.
So over the period of time, Lets say, you put $10,000 in one stock (it will literally take you more than 10 years), but lets just assume, one of that stock did not work (maximum you will lose is 10K), but the winner has no limit, it can grow that 10K to 100K. In fact, so far - even though we saw two bear markets recently, 2022 and 2025, Top 26 losers combined value is less than just one winner’s gain.
sometimes, from the risky buckets, you will find some hidden gems such as “CVNA” which will give 500% gainers.
sometimes, some stocks, which you probably did not rated very highly initially such as PLTR, keep climbing the different buckets and turn out to be big winner.
Over the period of time, you will have your own version of ETF, the difference is, in this ETF, the stocks such as AAPL and MSFT are not 13% but other growth leaders such as NFLX and CRWD are. When AAPL and MSFT were first introduced to the S&P 500, their weightage was not 6 or 7%, they proved themselves and are at that level, similar way, you are getting a jump start and investing in other mid-cap or large-cap companies from the beginning which in 20 years down the road will become next AAPL and MSFT.
Method can have various variations such as if I can afford only $100 per week to buy - I can choose to just do it in 20 companies $5 in each of them every week and so on. Similarly, if you have more money to invest, you can also increase dollar amount.

Also some disadvantages:

It will take years, for it to be grown to signficant amount such as 1 million dollars, it will probably take 5-10 years, depending upon how much you add monthly.
Even if you identify a company - lets say FROG (just a random name), you will start at the lower bucket, and after one year completes, it has only $200. (it may double from there, but that would be just $400) and it will frustrate you, that even if you were right, you did not added more money in it. (because you are not trading, you are investing for the long run and you have a system, Let the system work for you, Dont try to oversmart the system).
When indexes are down 20%, Your portfolio could be down 35%. (It works the other way too, when indexes are still red, you are up 10%), because you have your own index and % allocation.

NEXT 5 YEAR PICKS - AUGUST 2025

 ✅ Completed & Uploaded: Next 5-Year Picks

I’ve shared the latest set of stock picks in Viral’s Long-Term Investing WhatsApp group. These are based on my research and understanding, focusing on companies that are either fairly valued or currently trading at a discount.

📈 Return Expectation: If bought at current prices and held for 5 years, I expect them to deliver ~50–100% returns.

📅 Background:

• On July 26, I uploaded the first batch of 20 picks, which are already up ~4% overall in just one month.

• This month’s list adds another 20 unique names.

• 3 stocks (SOFI, OKTA, FOUR) overlapped between July and August picks — I replaced them with new names so that both months together give you 40 different picks.

💡 How to Approach:

• You can either DCA (Dollar Cost Average) gradually into these,

• Or invest a lump sum upfront — depending on your preference and style.

📑 I’ll also be uploading a blog combining July and August picks for easy reference.

AUGUST 2025 PICKS (FOR NEXT 5 YEARS): 

JULY 2025 PICKS (FOR NEXT 5 YEARS): 

Changes to Long Term Portfolio Daily Buying

Portfolio Daily Buy Update

Making some adjustments to the long-term daily recurring buy pattern:

• CROX & ROOT: Moving from $3 → $2 daily.

• RUN & COIN: Added at $3 daily (replacing CROX & ROOT at the $3 slot).

• VRTX & CFLT: Moving from $2 → $1 daily.

• PRCH & GCT: Moving from $1 → $2 daily.

• Stopping $1 daily buys in TGTX, FTNT, PSEC, MIDD, CHKP
  (all are down more than 20% from initial buy in this bucket).

• Replacing them with $1 daily buys in OTEX, RKLB, SN, RKT, APP.

20 Picks for next 5 years

These are the 20 picks, which has potential to give overall 100% return in next 5 years. Will monitor their performance through Finviz Portfolio.

 

Double Your Money

DOUBLE YOUR MONEY !!!

If you look at last 50 years of data - in USA - US Bonds has CAGR of 5.8%, Real Estate has CAGR of 7.5% and S&P 500 has CAGR of 10.5%. This means, You can double your money in every 12-13 years - if you kept it in US Bonds. You can double your money in every 9-10 years through Real Estate. You can double your money in S&P500 every 7 years. 

If you buy and hold quality individual stocks, you can double your money in every 5 years.

If you gained sufficient knowledge about Trading Stocks, you can double your money in every 3 years. 

Above paths are sustainable for the long term, may be things slow down a bit - and it may take slightly longer time frame but rough estimate and order would remain the same. With some basic knowledge and couple of years of effort - above is doable. 

However, the problem comes, when you try to double your money in shorter duration than 3 years. Crypto has slightly ruined people’s mindset in that way. People want to double their money in less than 3 years, some even promises to do it within 12 months. I like to believe, I am a good stock picker, I have been picking stocks since 2018 (Top 50, Top 20, Top 10 etc), and found that only 2 out of 10 stocks picked managed to double within 12 months period. Its a good exercise that everyone should participate - and pick 10 stocks or 20 at the start of the year, and see how many picks make it to be successful - just to find out How we did. You may find that - the task is not as easy as it seems. There is another short cut - which is to buy Call Option Leaps (which can double your money within 12 months), if done correctly. 

However, the problem comes, when people want to double their money in even shorter duration, like 3 months , 1 months, and try short term options or risky stocks or unknown crypto. Dear Friends - You are in the wrong path, if you are trying that. It may work once a while, but it is not sustainable. You will end up blowing your accounts and more. Also, it will put you in the wrong mindset alltogether - where you would be always looking for that quick money and when you dont get it, you will “Gamble” more and lose more. Be Careful. 

Forget one month, some people want to double their money every day (including myself). You can search hashtag #BadaBingBadaBang, in this whatsapp group or in my Twitter timeline and you will find more than 100 occassions, when I have done that, but it is not recommended. Think of it like - Ciggarette addiction - I am trying to quit - but those who smoke would know - it is difficult thing to achieve - so I am cutting it down as much as possible. Least, I am doing it with the money which is not even 0.01% of the portfolio, so the win or loss, does not matter or impact me to a huge amount. 

Summary: 

✅ “Doubling your money every 5-10 years is realistic and sustainable.”

✅ “Trying to double your money too fast will ruin your mindset and your portfolio.”

✅ “Focus on learning, patience, and process—not gambling for quick money.”

New to stock Market - Follow the following path

 

If someone is very new to stock market, following are the steps to follow: 

1. Day 1 onwards, whatever money that you can save - invest in VOO or SPY, at least your first 10,000$. (Read this: https://viralpatel15.blogspot.com/2021/03/stock-market-beginner-advice.html) 
2. Save 20% of your paycheck then onwards and invest in individual stocks. (Read this: https://viralpatel15.blogspot.com/2024/08/building-stock-portfolio.html)
3. Focus on Learning about stock market. Where? How? What? - Read the following blogs: 
1. https://viralpatel15.blogspot.com/2025/07/time-spend-to-learn-about-stock-market.html
2. https://viralpatel15.blogspot.com/2024/12/where-can-we-learn-about-stock-market.html
3. https://viralpatel15.blogspot.com/2025/05/book-chapters-or-youtube-sessions.html
4. It will take you 1 year to complete step 1, and 3 more years or 10,000 hours to complete step 3. 
5. First 2 steps, will take care of your “Investing” Journey. Third step is your stepping stone for “Trading” journey. 
6. When you start “Trading” - focus on establishing the “Process” or “Method” and not “Profit”. 
7. Once you have established the method - focus on “Consistency” and improvement on areas needed to make it better method. 
8. Spend your first 4 years on 
1. Not Losing Money
2. Learning and Improving the Process 
3. Creating a pool of money to Trade with (prefer 6 digit account). 
9. 5th year onwards, focus is to make 5 digit profit in a year. Think of it, like you get an extra Bonus check through trading gains. 
10. Year 6 onwards, focus needs to be Can I make 3 month of my salary through Trading. 
11. Year 7 onwards, focus needs to be can I make 6 month of my salary through trading. 
12. Year 8-9 onwards, focus needs to be can I make my job as optional. 
13. Year 10 onwards, its about setting a Goal - how much money I need to make in a year - once done, take the rest of the year off - hence the term - “Sell in May, Go Away”. 
14. Can I try Options Trading, as everything else has become too monotonous and boring, I want some excitement and play around fun. 

Method that most people seems to follow early on is 

1. How do I get rich through options trading (something that should be the last step, people want to try it as first step). Eventually they fail - Many dont come back to market - those who do, again start from Step 1. 
2. How do I get rich, buying Penny stocks, or How can I buy something very cheap, so I can become rich quickly. (again fails eventually). 
3. Stock Market is just a casino, I am here to gamble my money. If it works, its ok- If not - I have other means to make money.