Firstly let us all congratulate the RBI for buying 200 tons of Gold from the IMF. This is a clear sign that even the RBI has got to know what we have been talking about for quite sometime now. It is high time we move our Forex away from dollars into gold and also spend it on developing infrastructure.
If you are an NRI – this is the best time to exit your Pound/USD/Euro holdings and invest in into INR assets - equities being much safer than property, which is still an inflated bubble waiting to burst or even just keeping it in a Rupee FD. We can see the rupee becoming stronger and more secure as our gold holdings keep going up. Now whenever there is a major sale of Gold in the world, the first thing they will do is come and knock on our door and ask us if we want to buy.
It is also an excellent time to get ready with funds to benefit from the coming crash.
After our last post, I got lots of e-mails and phone calls from people asking me about which company I was talking about. I rarely share such companies in a public forum, because it leads the stock rallying too much. This doesn’t allow me accumulate the stock for my personal portfolio as well as a private fund which I manage. As the company isn’t too big, even an infusion of only Rs. 25-30 crores would cause major movements in the stock price.
I want to stress on the fact, that the coming crash will provide an even bigger opportunity than the last crash we had and as an individual investor you can benefit much more than a big Mutual Fund or Pension Fund. Any individual with less than Rs. 5 – 10 crores in investable money can easily get 50% returns on an annualized basis in the long term. This isn’t something just what I am saying, but is something even the world’s richest man, Mr. Warren Buffet agrees with.
“It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.” – Warren Buffett
This is a fact which is mostly not known to the masses. The fact that smaller sums of money can give more returns than larger sums of money is rarely something that is taught. Neither students of finance – nor potential investors in Mutual Funds are made to be aware of this fact.
I had talked about this phenomenon even in Invest The Happionaire™ Way. It becomes very difficult to give extra ordinary returns, when you are a large Mutual Fund and have Rs. 50,000 crores under management. You can in no way benefit from say a mid-cap company having a market value of Rs. 2000 crores no matter how undervalued it is. On the other hand if you manage a small private fund of only Rs. 100 crore you can easily make the most of the opportunity by even putting 10% of your capital – i.e. Rs. 10 crores.
If you have anything less than Rs. 5 crores in investable capital, ask yourself if you have made at least 50% on an annualized basis in the past years? If you haven’t, try thinking about what steps you take to make it happen. Over a period of ten years – imagine the immense change those type of returns can bring to your financial position when compounded. Our future wealth depends on the decisions we take today.
I want each one of you to believe in yourself and make sure that this time you make the most of the opportunity coming our way. The crash (globally) will be massive and will be talked about for years to come. In the midst of this, it is our job to discover hidden opportunities in India.
“Your universe expands – there are thousands of times as many options if you're investing $10,000 rather than $100 billion, other than buying entire businesses. You can earn very high returns with very small amounts of money. Everyone can't do it, but if you know what you're doing, you can do it. We cannot earn phenomenal returns putting $3, $4 or $ 5 billion in a stock.” – Warren Buffett
Never feel that the money you have is too little – the biggest trees and forests start out as small seeds. All you need to do is make sure you plant those seeds – and regularly water them with knowledge.