Today, we’re discussing the book *How to Find 100-Baggers* — a specialized study on stocks that turn every $1 invested into $100. That means a $10,000 investment would eventually grow to $1 million.

While this might sound nearly impossible, like drawing a royal flush in poker, the author initially thought so too — until he conducted in-depth research. In this book, he analyzes 365 hundred-baggers from 1962 to 2014 and concludes that such stocks are not as rare as some investors believe. More importantly, they share certain identifiable traits and patterns. The author distills these into a set of principles to help readers spot potential hundred-baggers in today’s market.

The book consists of 15 chapters, with the final chapter summarizing 10 essential rules for identifying hundred-baggers. Below are the key takeaways:

10 Principles for Finding 100-Baggers

1. You Must Go Looking for Them
The first rule is to intentionally search for hundred-baggers. Don’t waste limited time and energy on stocks that might only deliver decent returns — focus on the biggest opportunities.

2. Growth, Growth, and More Growth
Look for strong growth — but it must be high-quality growth that enhances per-share value, not just top-line sales expansion diluted by increased shares.

3. Prefer Low Valuation Multiples
While not an absolute rule, lower P/E ratios are generally preferable. That said, sometimes even a 50x P/E can be cheap for an exceptional business. Always weigh price against other factors.

4. A Moat Is Essential
Sustainable high returns on capital require a durable competitive advantage — a moat. Always ask whether the company has a real economic moat.

5. Prefer Small Companies
It’s easier for a small company to become a hundred-bagger than for a large one. Generally, focus on companies with market caps below $1 billion. Start with acorns, not oak trees.

6. Prefer Owner-Operators
Many of the most successful companies have been led by visionary founders with significant skin in the game — think Sam Walton, Steve Jobs, Jeff Bezos, or Warren Buffett. Owner-operators help investors stay confident during tough times.

7. Give It Time — The Coffee Can Approach
Even the fastest hundred-baggers take at least 5 years; most take 20–25. To combat impatience and the urge to “do something,” try the Coffee Can method:

• Allocate part of your portfolio to a selection of stocks and leave them untouched for 10 years.
• You’ll likely be surprised by the results — often better than active trading.

8. Use a Strong Filter
Avoid overreacting to price movements or market noise. Focus on finding great ideas — good companies are always out there.

9. A Little Luck Helps
Let’s be honest — all investing involves some degree of luck.

10. Be a Reluctant Seller
If you want hundred-baggers, learn to buy right and hold on. Avoid the temptation to sell too soon.