Ramesh Damani, the “Nawab of Dalal Street”, is one of the most respected investors in Indian Share Market. He is the frontrunner of our current so called bull run of Indian market and sees plenty of opportunities on the sidelines.
In his recent interview with ETNow he made it clear that the winning strategy is not picking the current winners but tomorrows winners. Here are main take always for small scale investors
Need of buying a good business and sticking to it.
We want to identify these companies young. I mean there is nothing to suggest that you can only make money by, say, the Infosys of today which is at 2 lakh crore market cap or 2.5 lakh crore. There are other businesses that will be great 5-10 years from now. So whether it will be in ecommerce space or the logistics space, the media space, pharmaceutical space.
You have to go and pick businesses that are still 500 crore, 1000 crore, 2000 crore size. In the future what will happen if certain parameters are met. This is what good investing is. It is not necessarily buying yesterday’s winners. It is trying to look for tomorrow’s winners and a large part of time analysts spend is trying to figure that part out. There is an institutional mindset that want to buys today’s winners. See that go up 10-15% but most independent investors like myself or most people long term money the markets, so do not look for things that are going to be good two years from now,five years from now in terms of market cap and there are plenty of opportunities.
This is a young country. It is technology driven business. So innovation is speeding up lots of opportunities across sectors. When I came in 1992, there was big boom in ACC. I used to go back and tell my wealthier friends that okay you are lucky you got the cement boom what is going to happen and I realise by 2000 that there were 50 times more opportunities than they had in 1992. You just had to pay attention to them — the PSU boom, the alcohol boom, the technology boom. All those took places in the next eight years.
I am saying it was the full worth weight of my comments that in 2015 the opportunities for someone at 25 in India are 50 times greater than they were say in 2010. So opportunities is not going to limit you. Imagination is probably going to limit you and the lack of conviction.
Indians for some reason do not have a deep sea conviction in Indian equities yet. They believe in real estate, in gold and we need to snap out of that because it is very tax advantageous for us first to own equities. Equities have compounded over long long periods of time at 17-18%. That is a good as you get.
Bull Market is intact
If you think the bull market has ended, you know through historical experiences that the indices, individual stocks will be down 50%, 70%, 90%. If you want to move into cash and get out of equities at this point. I spend lot of my time trying to time whether the bull market is intact or the bull market is over. There is no evidence that I can spot to say that the bull market is over.
Bull markets get over in a wave of euphoria, poor- quality IPO listing, bad quality numbers, and so on. There is nothing like that in the market. The market is trading at a discount in terms of Nifty premium. There are barely any IPOs coming out there. There is a strong belief of economic recovery in the years ahead.
I am saying that even if something happens in the Greek crisis, which would be of terminally bad value, market will react but nothing more than that. Even if Fed raising rates, the market will overcome all of those potential issues. The other very core belief is that we truly believe that once the bull market starts, and we believe it started 18 months back, the forces that started it will overtake any negative forces.
There will be corrections in the way and there will be disbelief. That is just the nature of the bull to trend higher. The trick is to remain invested in great businesses.