I get a high and a big smile on my face every time I discover a company that is selling much lower than the total worth of assets it has. In the past fellow Happionaires, must have already experienced the type of rewards such companies can give. The past one year has been one of the most rewarding years for any investor, and for anyone who continues to believe in the long term India growth story I am sure there will be many new companies that will create immense wealth.
As an investor, I have learnt never to become emotionally attached with stocks. Once I have made over 300%-500% in a years time, I sell at least partially to recover my capital. A few where I see value, like Bank of India, I bought it at around Rs. 13 and sold it at Rs. 360. There might be others who were able to buy it at Rs. 10 and sell it at over Rs. 400. (Bank of India: The Best Time To Create Wealth Creators)
India is going to be one of the oasis of growth and wealth for years to come, as the American, European, Japanese and even Chinese economies slowdown because of an aging population and wrong financial decisions. The problems America is facing will soon start to show once the propaganda spread by a few on the inside stops. China is another bubble waiting to burst.
As always in the short term, this might lead to corrections in India, but these will be great buying opportunities. Recently I was smiling just looking at the balance sheets of a set of new companies. Their assets are easily worth 2-3 times of their stock prices today. It is like buying a Rs. 2 coin for Rs. 1. Once I book profits, I once again go on a hunt to find new value buys. It is not just a passion, but also an obsession. I have always trained my private wealth management and investment research team to do the same and think the same way for our investors. The amount of money lying on the sidelines of the Indian economy is amazing and this wealth is going to find its way into our markets overtime. According to official figures, barely 3% of our savings are being directly invested into the stock markets. Of course, all of us know how much more ‘unofficial’ wealth is there in our country.
Besides local money, the amount of money foreign money wanting to rush in is constantly growing. Today a large part of the NRI population, isn’t too comfortable keeping their assets in the West and want to invest back home, so do several pension funds.
On the other hand, there is a group of bruised traders who lost on all counts. Luckily for me I reserve only 10% of my portfolio for trading. Even that isn’t handled by me personally. I ended up losing 50% on it. That means overall a loss of 5%. No wonder I am surprised when I hear experienced investors telling me that they want to allot over 50% of their money to trading. At the peak of the crash, I remember a trader telling me how he has put 100% of his money against the Indian markets. He had gone short with 100% of his capital in the hopes of getting rich overnight. Nobody has made money by being pessimistic – especially against India. History has proven over and over again, investors always win over traders. Yet, unfortunately most people want to be traders.
Just one small warning, more money can be made by being stock and assets specific rather than going in simply for the index. There are still a lot of value buys, and I am sure all those willing to put in a little bit of effort and spending time researching will be once against much wealthier a few years down the line. Anyone who reads our blog form a year ago, at the height of pessimism all over the world, will realize how right we were in being optimistic and how badly burnt all those pessimists got!
It pays in every possible way to be opportunistic and optimistic! Also wishing everybody Eid Mubarak and Happy Navratras!
Keep smiling and happy investing!
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Read what fellow Happionaires had to say to some Investment Advice To A Friend