Over the years, I have realized that the best way to create wealth and invest smartly is to not listen to what people around you are saying. It goes all the way back to even before I started investing. I was told not to invest in the stock markets because it is gambling and almost everybody loses money. It is gambling only for those who invest without knowledge, guidance and based on hot tips and such people do end up losing money. For me it has been one of the best blessings in life.
When I started investing, I was told by brokers and other players to indulge in day trading and futures and options trading. I did try it and ended up losing money. Thankfully, I could afford the losses I made. It taught me a lesson never to listen and follow random people. Following Dhirubhai Ambani, Sunil Mittal or Laxmi Mittal make sense – but following your orthodontist when it comes to investing or business is a bit silly.
Later, when I started picking up value based assets a lot of people, including relatives ridiculed me. I remember long back I picked up Bank of India and how an uncle of mine made fun of me and told me I was too young to understand anything. He told me Bank of India would not be able to survive when big International banks came in India. He was working with an international bank which recently went bankrupt. Bank of India went up all the way from Rs. 10 to Rs. 410. An investment of Rs. 10 lakhs would be worth Rs. 4.10 crores. My uncle instead had spent that Rs. 10 lakhs in buying some Japanese car. I luckily have always believed that we Indians can do anything we want to and we have the power to form the world’s best companies
At the peak of the recent stock market crash, I bought while some of the largest Mutual Fund Managers and TV analysts were selling and talking about doom. We all know what happened. It was the same story with Gold. Of course gold has rewarded investors more in dollar terms than rupee terms, but the main spurt in gold is yet to come. Everybody will be surprised by it.
Throughout life, I have realized that whenever I asked someone for advice they usually told me not to do it. It is too risky. Steel, cement, autos, power all were sectors which I invested in even though people told me not to invest in them. I have realized that the best way to invest most of the times is when everybody else discourages you from investing.
This means that most others have still not realized the potential and the opportunity available. How many people were buying companies like LIC Housing Finance or Jindal Steel and Power barely ten months ago? Today Jindal Steel and Power has rewarded investors over 700% while LIC Housing Finance has rewarded investors over 370%.
Now does it make sense to run behind power IPOs today or run after Jindal Steel and Power at these levels? I would go after new investments which have been ignored by the masses, because once again there is a possibility of extra ordinary returns.
Today a stock like Infosys can not make you several crores, if you were to invest only a couple of lakhs. Two decades ago it would have.
Yesterday I was looking at the balance sheet of a company that can easily reward investors 500%-600% in the coming 2-3 years simply based on fundamentals. Still almost no Mutual Fund, Hedge Fund or Private Investors have noticed it. In fact most of them have discarded it, because they find it more exciting to run behind what is considered ‘hot’.
Anyone who is investing below Rs. 15 – 20 crores can easily benefit from such opportunities. I do understand that for a Mutual Fund having Rs. 20,000 crores it becomes extremely hard to give the type of returns I am talking about.
If the entire company is worth only Rs. 200 crores, how on earth will they invest anything that makes a sizeable difference?
At this moment stay away from the Sensex – only look at hidden gems. There still are a few. Life always gives us opportunities; it is up to us to make the most of them. Over the years I have seen the financial state of people change simply because they made the right investment decisions.
Financial Technologies, Pantaloons, Bharti (Airtel) , Sesa Goa and so many others are all examples of companies that have created immense wealth for investors at one point or the other. Some of them have multiplied investor wealth by over 50 times. If we go back in time, I can guarantee you that people who bought them right in the beginning must surely have been discouraged and de-motivated by everybody around them.
The next time someone de-motivates you about doing something and tells you not to do something. Think once again. It might just be the thing that will change your life forever!