“The first principle is that you must not fool yourself and you are the easiest person to fool.”
Believe in India’s future. India is best placed for growth among all large economies in the world. India nominal GDP should grow 12-15% CAGR. Stock prices are slaves to earnings. If earnings will grow, stock prices will eventually follow. If you don’t believe in the above, you should not invest in Indian equities.
We value our independence, respect for the individual and need to have a sense of purpose. We take our responsibilities seriously as they impact others’ dreams in a very meaningful way, while allowing us to live our own. We do not promise returns. Our only promise is “Solidarity with clients” through complete alignment of interests and investing other’s money as we do our own.
Prudence and simplicity are core to our functioning…and need to be reflected in every aspect of our business: our investment ideas, our agreements with clients and conduct with entrepreneurs.
Every customer’s needs are unique. The ideal investment solution is the one that allows you to sleep well at night. Customers should educate themselves on basics to ensure they are not mis-sold products, and are comfortable with level of risks being taken on their behalf. Customers should be realistic in return expectations. Capital preservation should be paramount.
Superior returns can be achieved by defining an investment process that is focused on long term outcomes, and then consistently adhering to the same. A good process will deliver superior outcomes in the long term, even though short term underperformance cannot be ruled out.
Take concentrated positions in quality companies – businesses that you can understand, that can compound earnings over long periods of time with high degree of probability, and are available at a fair price.
Understand drivers underlying profits rather than just the earnings . Structural changes can deliver multi baggers if identified early as step changes in growth or ROIC leads to re rating of multiples.
Ignore stock market indicators used by analysts to give trading calls. They don’t work. Worse, they cloud judgement by forcing short term orientation and lowering post tax returns. Separate investment and trading portfolios if you have an irresistible urge to trade.
Measure returns against a market index, post tax and advisor fees. Many investors forget to consider reinvestment risk, illiquidity risk and impact of taxes while considering options. The race is long and it is only with yourself. You have no idea what level of risks others are comfortable in taking or the race they are running.
The key variable that affects investor returns is not the choice of stock or fund manager, but investor “behaviour”. One needs to control need for activity … impulse to sell… especially during market corrections.