Monday, September 21, 2009

Why India Has Always Rewarded Long Term Optimists!

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!

Yogesh Chabria

What do you feel about being long term optimistic? Share your views here.

Read what fellow Happionaires had to say to some Investment Advice To A Friend


harmeet said...

What you said a year ago Chabria ji was what bought sanity back to my life. I followed your words and today thanks to you I am not only much wealthier but had a much more relaxed year while the entire media was talking about panic. I have sent you an e-mail and want to really know how I too can invest with you. I know you must be getting several e-mails a day and can't accommodate everyone, but please give me a chance. Even if you don't I thank you for the service you are doing for Indian investors.

Keep sharing your views and wishing all my fellow Happionaire brothers Eid and Navratris greetings. May of secular India grow and create wealth for millions of others.

asim said...

Harmeet, Yogesh Sir and other Happionaires. This is the beauty of our India and the love here is not going to be found anywhere else. This is the best advice always given here and that is too be optimistic and positive about everything. Eid Mubarak and please enjoy the dance and love of the Navratri nights!

sanjeev said...

Jai Hind brothers and sisters. Let us make our nation the ultimate super power and increase investment amounts form only 3% to at least 30%. Time for us to build a nation on our great Indian culture and values. We are having the most superior ones and need to send them to the world. This is only nation which has Ali in DiwAli and Ram in RAMazan.

Jai Hind!

gautam mishra said...

I have been one of the many who has made sizable returns thanks to your calls on Gold and also the value buys you shared. I would want to know if you have some investment company or fund you manage, where I can invest with you.

Anonymous said...

chabriaji, it was very true in this day. some people donot know about economy & share bazar but they advice unnesesery to another people and create rumers about bazar.we seen in march 90% broker & chartist was wrong.i invest too much money for your kind knowledge about market. And make lot of i really believe you are my godfather. Bye. shobh navaratri.

jatin said...

chabriaji, it was very true in this day. some people donot know about economy & share bazar but they advice unnesesery to another people and create rumers about bazar.we seen in march 90% broker & chartist was wrong.i invest too much money for your kind knowledge about market. And make lot of i really believe you are my godfather. Bye. shobh navaratri.

gulshan kumar said...

Chabria ji as our other brother Happionaires have said the beauty is in the power of being positive for our greatest nation. Not by becoming just scared uselessly by these media persons. I never read any bok in my life, but yours are the one I read only always over and over again. It is speaking the truth and very good guide. I too made very good superb returns by following your advices.

Good work and pleas econtinue to give it to us always.

rohit said...

Even I have become a long term investor by learning from my mistakes, I made only 30% returns yoy from the period 2004-2007 by trading, but even if I would have invested in any good index stock at the start and done nothing I would have made 7-15 times returns leave alone midcaps, e.g. my re 1 just doubled to rs 2 by trading, and I spent much more time, energy and brokerage, if I had just bought cheap and waited that re 1 could have been rs 7 or rs 15 also I would have got dividends which were missed because of trading. But yogesh I have 2 questions, I heard you started investing at the age of 16, how old are you now? Also why dont investment advisors like marc faber, robert kiyosaki, or jim roggers or ramesh damani or you declare your networth like Rakesh-J or Warren-B which gives ppl like us confidence, otherwise there is a constant doubt about how successful these people actually are or are they just made by the media for entertaintment, I mean not the portfolio but the wealth created, which gives us inspiration, because to have 1RJ IN 3cr ppl is no big deal, ppl get confidence when many have done well and am not talking about the amount but decent amount of success.

Sunil said...

Hello All,

After a long time i have come across someone who has a bit of a similar view as Yogehji, abt the current Bear market rally and why I say these is cause after the elections almost every other so called expert has been calling this rally as Bull market rally...other day I happen watch this program on this specific Buisness channel were the MD of Enam Securities came in for discussion. This person spoke in a such easy and understanding manner that you just feel like beliving him, whatever he spoke made a lot of sense with sufficient reasoning. I am posting a link here if you'll wish you can go through his interview which is worth looking at ...atleast once.

Anonymous said...

made good money sir ji in gold and value buy. pls share more sir ji.


Anonymous said...

Chabria ji,

As usual, a very encouraging post. I just have a few small questions. We understand the situation in America and Europe very well, thanks to your insights, but can you please elaborate a bit on why you say China is a bubble waiting to burst?Is it because its economy is largely export driven? You don't think a country like China would be able to find a way around it?

Also, you mentioned about your private wealth management and investment research team.Do you also have an investment company where we can invest with you?

Many thanks and best regards,


kumar said...

I had a similar request as too Chabria ji. If you could analyze more the situation of China it would be of great help. You spoke about it in brief in Cash The Crash and the problems with them being overly depended on exports. But it was brief.

Gurpreet, yes he does have an investment company also. I have been very satisfied with the excellent service provided by his investment company to me - FAMS -

Only one minor thing I want to point out. You have been right and very helpful in most areas to me and with my investments, but I am not sure if your negative call on real estate has really kicked in yet. Prices haven't corrected that much.

Sandesh Kamble said...

Regarding real estate I do agree with Gurpreet. It has not corrected that much though the realty stocks got huge beating. In fact the real estate prices have already started increasing.
Still not in a position to buy a house even in Thane near Mumbai. The prices are too high and builders are charging on Super-Built-Up concept so that we unnecessarily have to pay 30%-33% more.

john said...

What is update on Gold. Heard China wants to buy gold that IMF is going to sell.

Is this the spurt that will lead to gold price shoot up?

viswa said...

u must come up will new set of resarch rport sir,hope allpeople can benefit.