Author Archives: ZerotoBillion

There has been a considerable attention all of us have paid towards the EV play stocks, ranging from charging station operators to auto components makers to vehicle producers. With India having unveiled its EV charging policy today, my gut has been proven right and I now firmly believe India’s EV play is likely to be similar to its Telecom revolution. Let’s see what, how and why.

There’s no denying the fact that EV is here to stay. However, a lot of people have been betting on companies vying to put in Charging stations such as Tata Power etc, which in my opinion is a bit misjudged bet. If EV is like our telecom revolution, it’s end game is every person charging at her home with a plug-in fast charger, which charges in under 30 minutes to run atleast 500km in single charge. This vehicle has to compete with the IC vehicles in performance, looks and durability, ofcourse along with price. Now on the former front, players such as battery makers, charging infrastructure players are being rewarded and on the latter front, it’s about which car or bike is better and who wins the race.

If we see how telephones have moved to smart phones, the real juice is in garnering market share in smartphones, and not in being a component maker to iPhone or Vivo. Also, the charging station operators will be like the PCO operator or a cyber cafe guy whose shop was killed the moment people got wireless phone at cheap rates and cheap data to consume. In 2002, anybody who would have said India’s telecom story will be huge is proved right. However,if you would have believed that a guy running a STD booth wi be rich ten years later, than you misjudged. It’s extinct now. Similarly, if you believed Indians will consume a lot of smartphones , you were right. However, if you believed, it will be great for cheap Chinese firms or telecom companies, you misjudged.

Similarly, this whole charging station theme is going to take us nowhere. Today, India has allowed anybody to operate a charging station without license. So a guy running a shop can very well open one and he doesn’t need Tata Power to set him one. He can just put solar panels on his rooftop and provide a socket. Also, come elections, politicians will offer free charging stations, zero price etc as freebies and in five years, even though we will have huge number of charging stations, nobody will be paying a dime for them.

Secondly, those believing that a battery maker is going to make a lot of money needs to look no further than her smartphone. Ten years ago, in an age where we have less than a GB RAM and one camera, a decent phone cost not less than 30k. Now, at the same price, you have almost 12GB ram and latest operating system. So even when the phone got smarter year after year, it’s almost being offered at same price, which means adjusted for inflation, phones are getting cheaper every year. And for every company to survive, they have to bring out even smarter phones at same price range, barring let’s say Apple.

In the same way, batteries will keep getting more powerful and cheaper as EV revolution unfold. So except a few early players, they are not going to make a killing. Also, in five years time, when you’ll have your car being recharged in 15 minutes to run 500km, you will still not be paying extra bucks for battery.

However, the real juice in telecom was made by the phone manufacturers who led the way. Apple is now worth more than $3 trillion. Similarly, we have Tesla over a trillion market cap. My bet is, a carmaker who can keep rolling out models after models of cars which can be better in all ways will get a disproportionate share of market’s adulation. And the ones who think they can wait it out are staring at irrelevance.

On this note, we had Greaves Cotton suddenly being treated because it has significant stake in Ampere which makes electric two wheelers. If that’s a template which is going to play itself out, Hero might be on the cusp of a very strong upmove as it owns 34% in Ather Energy, another electric startup and just yesterday announced another 420crores investment to raise its stake further.

So in my view, this Tata Chemicals and Tata Power type fad will fade away. These two will still survive as they’re part of a larger Tata plan to build in house capacity to eventually sell more Tata Motors cars. However, other companies which have caught investor frenzy recently might not take you to the moon and back.

The US has Amazon, China has Tencent and India, maybe Reliance Industries. Those of you following my blog have not seen me talk about it much but I truly believe Reliance is going to surprise all of us in this decade and beyond.

Here’s a company which recently bought a five star hotel in Manhattan, a golf resort in London a few weeks back and has been busy buying a quick delivery app along with Sodium battery startups and a bankrupt solar company, all in the past few months. This sounds a bit haphazard to most of us, more like a billionaire buying toys for his kids but it does make sense, a lot of it.

Let’s rewind a decade to 2012. Amazon was yet to launch its India operations, prime day, Echo & Alexa or even Prime music n video. It didn’t even tell folks that it was a hugely profitable warehouse running the biggest cloud computing network this world has ever seen or will ever see. It was worth about $150B thereabouts. In the next five years, it did everything I mentioned above, produced Emmy winning movies and is numero Uno in India, way ahead of Flipkart ( I don’t even know if anyone still busy from there).

It’s selling groceries, books, iphones and everything else you need, along with movies and music and payments. All that because it had money flowing in from its warehouse , the AWS. No matter what happened to its retail or how much money it loses in payments, it still will churn cash quarter after quarter on the back of its cloud database facilities, the Amazon Web services.

For what Tencent has been doing in China and beyond, you’ve to watch some recent videos of Mohanish Pabrai which are sure to blow your mind off. https://youtu.be/-vF_nZ526y0 this is one of them.

Coming back to Reliance. It’s trading at about$220 B market cap with almost $8B profits. What it doesn’t tell you is that on the back of a hugely profitable oil to chemical business, it has become the indisputable leader in Indian telecom but hey, you already know it. What else am I telling you here?

My version is that Jio isn’t where the juice is. Jio was just a means to achieve the end which is to capture an ever growing Indian household who has more money to buy stuff, as it grows richer. Since Jio is here, people can now go online and shop. This is the level 1 when one in three Indians pay monthly rent to Reliance in form of recharges. The second layer is Jio Fibre when it’s making people addicted to its services because at 1000rs, it’s unbelievable the kind of things you get. You don’t pay Amazon for prime, you pay Jio for Amazon prime and get a hell lot others for free.

However, this is all peanuts when you realise Reliance is selling everything from milk at Reliance Fresh to luxury clothes in partnership with Armani Exchange and Hamleys toys to Zivame to now jewels. If you combine everything and take a holistic view, a company who’s deploying cash to make sure a customer ends up buying one or the other things from one of its subsidiaries, you realise you’ve an Indian Amazon in the making.

My simple bet is in three to five year’s time , most urban Indian households would be paying about 5000pm to Reliance, in one or the other form and that makes it a bigger story than a lot of Dmarts and Asian Paints put together. This is not expensive at $220B. It is a steal here for if nothing unforseen happens, this is going to be the first Indian company to cross $1 Trillion in market cap. That’s still a 5x from here.

PS: I learnt this lesson the hard way as I had Reliance way back in 2018 at now adjusted Rs 800 per share. In my over enthusiasm for Graham’s methods, I sold it at about 1100. Then came Covid and the Jio platforms deals which changed everything.

One of my first blogs was titled” joys of being an individual investor.” This blog is however the flip side of the story when as an Individual, you’re left to fend for yourself and end up miserable and bewildered.

So most of my retail friends have put in 1-5l or some more into stocks they know next to nothing about, basically as tips from friends or colleagues and are either happy the price has gone up or are lost as to why this sure staircase to heaven has nosedived to hell. If you’re one of them, you’re not alone.

The problems are aplenty. 5000 stocks to choose from, multiple ways to make money, hundreds of mutual funds and all of them stuck at jobs which makes their lives miserable. They don’t know if there is a way to get rich and if there is, it’s not for them they have been made to believe. Leaving the rat race called career is not for them, they have learnt it in school. Now all they want is some extra cash to buy a flat, a car, put kids in good schools and die at 80. Unfortunately, this is true for many of us who think we are financially independent. We aren’t.

There’s a huge difference between being financially secure and being independent. Your salary makes you secure to pay bills, it doesn’t buy you freedom.

Wealth is freedom, to do what you want, with whom you want, for howsoever long you want and at what place you want.

Unless one strive to be financially independent, she’s destined to be middle class, fighting for that extra increment or promotion to somehow buy that duplex people call Villa.

Now why do so many of us don’t get rich? This is where the power of vision comes into play. In markets, you get whatever you truly wish for. You want an iPhone, you’ll get it. You need a car, you’ll make enough to buy one. You want a vacation, it will be done. However, less than 1% of those in the markets are here for bigger stakes. You don’t get rich buying ten shares of Tata motors and seeing it rally upwards. You don’t get rich partime. It’s a full time passion and demands the dedication of a fanatic.

Most people are either too afraid to put in large sums of money or believe it’s a casino and are punting around. One big problem I’ve observed is that most people truly believe that you don’t make money in the markets. It’s all for big operators, not for us. Hence they stay away or stake too little to begin with. A growing percentage are the ones who believe it’s a get rich slam dunk machine and can buy them an iPhone or a vacation but not serious money. And somehow they’re convinced that the money they made here is to splurge and not to reinvest. Since they had not toiled hard for it, this money is somehow less powerful than their hard earned salary. This has been covered in my earlier blog https://zerotomillion.business.blog/2021/11/07/all-money-is-equal/

The biggest money myth people have is that you have to work hard to earn money. This is like saying since Elon Musk didn’t go door to door selling cars, his $300Billion networth is a myth. Stop living in the prehistoric age when your labor equalled your output. We’re in an age where if your mind can come up with one idea, you can make millions, if not billions. However, we salaried persons have been fed this deep within that any money you make easily is bad, evil almost. So if you made 1l in stocks, either splurge it or convert it safely to FD or gold.

Unless you begin to take money seriously, you’ll forever be short of it. Learn to make money work for you and not the other way round. Financial independence is possible and there are millions of humans who are already up there.

So in this new year, if you’re entering the stock markets, commit yourself to work hard doing research, learning basics of markets and finance and listen to the big ones who have done this for decades. Making money is simple, not easy. Once you put in the work, and begin to believe you can make a million dollars, you will find a way to surprise yourself.

2021 has been a kind one for me and I believe for all of you too. This has been the first time when many of us who began investing 4-5 years ago have seen some green, like very dark green in our portfolio. Until then, specifically until August 2020, when my portfolio broke even for the first time, it was mostly a journey of being down 10/20% on portfolio level. So here are a few learnings I’ve experienced and some random thoughts thereabouts:

Investing is the art of making money predicting the future. However, since that’s impossible to do, most of us try to drive looking in the rear view mirror. However, this is the biggest mistake one can make believing that the future is more likely to resemble the present in one or the other form. In that ideal state, a stock which goes from 100 to 400 will go back to 80-120 at some stage when you can buy it back and make similar gains. Well, real world doesn’t work that way. I too am guilty of believing if Reliance goes from 800 to 1600, I can buy it back at some stage when it falls to 800, totally ignoring the changes which has happened in the meantime. Many of my friends who were not willing to buy Tata motors at 100 are now staring at the screen at 470 believing it’s going to come back to those levels at some stage, ignoring what has been happening to the company and its business. Its like asking to buy Tesla at 100 when the price is already 1100. It doesn’t work that way.

We need to look at the way a company’s business is going to look in three five years and if that has changed fundamentally, what was possibly cheap at 100 might be cheaper at 300. Let me illustrate this with something which has stopped participating in the bull run for a while.

I picked up ISEC at around 400 and bought it all the way up to 900 and still am buying it at 750 thereabouts. Why? Because I believe two years ago, a company which was making 400 crores in a year is now making almost that much money in a quarter and I sincerely believe it’s going to make almost 1000 crores in a quarter, not too far away in future. The key here is to believe certain things which are most likely to be true than to predict hypothetical stuff using Excel. My case is simple- Indians of my generation are now increasingly going to put money in stocks either directly or through Mutual Funds and ofcourse through NPS. In either case, as more money is going to come in to the markets, more money is going to go to brokers through commission even if the brokerages are going to go down since volumes will be huge. Today we do about 1l crore cash volume daily which I believe in ten years will be atleast 20 times from here as our markets become more mature. So even if the brokerages are going to go down, this incredible increase in volume will more than make up for it.

Now as we’re looking at digital only brokerages, this industry is going to consolidate going forward with incremental market share being accrued to the strongest incumbents. Even if ISEC maintains its 10 odd percent market share or say even if it makes 7/8% of a ten times bigger pie, it’s sales will grow atleast 10 times with profits rising 20-25 times and share price hitting through the roof. Let me explain.

These businesses have a very limited fixed cost in terms of salary and some day to day expenditure and technology related costs. So once they have the systems in place, let’s say their current fixed costs is around 300 crores per quarter, and sales around 800 crores. So they make 500 crores gross profit. Since fixed cost won’t rise to add more clients as all it need is ten additional computers for another 1lakh clients or so, let’s say sales grow 50% to 1200 crores in two years. And let’s say fixed cost rise to 350 crores. So it’s gross profit goes up to 850 crores, which is 70%. But when sales grow to 2500 crores, and even if cost rise to 500 crores, it’s making 4x profits to 2000 crores. And with every additional rupee it makes, it’s profits grow exponentially. This is what scale businesses can do. And once your profits begin to grow that fast, you’re sitting on a very big compounding machine.

My simple bet in these stocks is that they’re all going to go up atleast 10x in ten years if not more. And with dividends, they’re a true multibagger stories we’re going to look back in this decade.

My biggest learning this year has been to a. Bet on India and B. Don’t bet against technology. I missed a lot of good stuff because I was trying to look at the balance sheets a bit too much. Too much of Ben Grahamic Value investing is harmful to your wallet, is a lesson I learnt last year.

So my suggestion to you is to try and find stocks which are on the right side of India story and also on the right side of technology. If they’re not growing when India goes to be a $5trillion economy, is not making efforts to move or grow business using new edge technology and is not betting on a green future, better stay out of them.

It takes a lot of time to buy Reliance at 2500 and not look at Ambuja cements at 250. It’s a mental leap I took this year.

For those of you who are yet to do some hardwork on your own, put this as your new year pledge.

Ye fatne wala time nahi hai, ye bull market correction hai.Most people will be out of the market in no time and when it recovers, only the true believers, who have stayed invested and bought more will be rewarded.

This blog emanates from a conversation I had with my wife yesterday when the screen was bleeding and indices fell another 3% for the day. Portfolio ofcourse would be down some more and we scrambled for money to add something we always wanted to buy.

Basically it happens this way- it’s a Bull run, market falls, you buy, market recovers, you feel happy. It goes on until when it dips and you buy, market doesn’t recover. Then you see it happening for some time that whenever market moves up, more selling happens. Now you’re in deep shit. You see market recovers 100 points and falling 500. So you stop buying and get out of the market. Then one day, bull resumes its upwards journey. Market moves up and people sell. Voila, it doesn’t fall. People cover their shorts and market zooms upwards on thin volumes. By the time people gather their nerves and begin to participate, it’s already up good 10% and mst stocks which have fallen are up over 15-20%. Thus, those who went out not only sold at the wrong Time, they also missed on the gains when it recovers.

Having the nerves to buy when your portfolio is down nuts and there is bad, very bad news on the screen required a sense of maturity which if you develop, and you don’t load up on junk or the fancied stocks, you’ll make handsome gains.

Two months ago, India was the shining land of Sun which was on path to recovery and CNBC made you believe it’s India’s decade. You wanted to buy Tata Motors at 540 believing it’s marching to four digits. Now two months and some Omicron cases later, you don’t buy it at 440 because their will be no sales as there is an impending lockdown maybe and what not. Well, I’ve spoken about it multiple times that when the price is right, news will be horrible and screen miserable.

In order to sustain gains in markets, you’ve to develop a sort of immunity to market grapevine. You’ve to believe in the work you have done and that the stock is a living company which has survived multiple decades of turmoil and this too shall pass.

The problem is we tend to focus on decadal growth stories when the market is right and pay a heavy price buying into the. On the other hand, when the market falls, we tend to believe the company will never make any money . The biggest fallacy of stock market is to equate stock price with company’s future.

So what am I saying here? Nothing different. Stay invested, fully and totally. Buy into what you believe are the companies which can make greater profits over three five seven year periods and which you believe are on the right side of technology. This has been my biggest learning. I’m now only looking to invest into firms which are adapting and developing new technologies and which can scale non-linearly. Happy investing.

Today’s fall has been fantastic! There are falls and there are down circuits but this is special- 5% down on a non circuit day is something. However, with the pace it was rallying upwards, it was also not totally unanticipated.

This brings me to an important lesson market teaches you and the one you must learn early on. On a long term basis, if you’re making around 15% compounded, you’ve done well for yourself. At around 20% annualized, you’ll join the league of legends who are worth north of hundreds of millions of dollars. So to get used to making 2% a day is expecting an average of 1000 in T20s.

How do I see the current fall? Well, if BSE was going to go up 40% in a week, it had to come down 20% in two days. So this is the importance of staying in the game, for longer term than just the happy days and waiting it out patiently until the market rewards your thinking by moving in your direction. Most people who were looking to make quick bucks have realised making money is difficult and to maintain it is even more so, in an environment when if you get 5% on FD, you’re lucky.

There has been a new generation of day traders who have flocked to the market in last year or two when making money suddenly became easy- you buy the dip and it goes up, simple. You chase momentum and money triples in a month or less- Simpler. This is I believe the beginning of a strong trend when you’ll see failed dips and multiple months when buying dip can get you killed. How do I believe I’ll behave? Well, not differently.

If you can survive these blips, dips and corrections, not buy junk and have a clear vision of what the company is likely to become in three five ten years, everything is a buying opportunity. The only thing you can’t always do is to buy as nobody can have ready cash available to be deployed everytime. So, when Markets correct and your portfolio bleed, be happy that you’re up 100% for the year and another 5% would have been great but not having it won’t kill you either.

This is why people who have thrived in this market have stressed on one thing- you must learn to survive cycles. You can make 100x in one cycle but can lose everything when the market turns and get burnt badly. This is not what we’re aiming at. We are here to make some money in 2021 and then conserve it to grow in 2022 and still be around when it’s 2025 so that come 2030, you’ll look back and say, oh I’m up 5-10-15x in ten years and it’s been a great journey.

Think long term, be bold and remain invested. Don’t buy junk, work hard to build a portfolio which can weather price corrections. A ten percent drop is nothing. You must be prepared for 20-30-50% drops in order to make 20-50-100x your money.

This is more like a sequel to my early posts on BSE when I celebrated the fact that it has gone up to around 850 odd levels in May 2021 and then again sometime last month when it crossed 1600. However, when yesterday it cruised past 2300, all the way from about 400 in this year itself, my wife insisted I ask myself if there’s anything else I’d like to add. So here’s my two cents, maybe four:

First of all, this has been a massive price movement in the stock. It’s up almost 55%+ in less than a month and there’s nothing even a massive market selloff could do to it’s one side move. Now the real questions are three? One, if it has gone up too high. Two, if it’s a buy or a sell here and last, how high can it go.

First things first. Yes, BSE has had a massive run in the last six months, more than tripling from 600 odd levels. However, if you see that it came with it’s IPO in 2017 February, and got listed at around 1000, it has only doubled in just under five years. So the run isn’t that great. Even from when I first bought it in 2018 at around 735 levels, it’s basically triple in three years. So it’s only optically making up for all those years when it languished at sub 500 levels and nobody wanted to touch it even when the entire market capitalisation of BSE was less than the cash it had on its books. Yes, it happened. Check my earlier posts for details. Also, now let’s see how costly has BSE become. As we have compared it earlier with NSE, it’s still trading at 5% of what NSE might get listed at. It’s closing maket cap yesterday is just over 10000 crores while NSE might very well debut at 200000 crores.

Secondly, if just by being a platform play makes you get valuations north of 50000crores with low to nil profits( read Paytm, Zomato, PB etc), how come India’s best platform stories can’t be valued at 50000 crores with a permanent cash making machine at its disposal? Any money coming to the markets can only come via either the NSE or BSE. And if you’re following it’s turnover data, things are looking better in most segments, including commodity where it’s daily turnover has crossed 5000crores.

The only way to value a stock is by comparing it’s current market capitalisation with what can possibly be over next decade or so. And my estimate has always been that BSE is not a four digit stock but a five digit stock. Ye Maruti nahi, MRF banega!

Now let’s see if it can go up still higher. Well, ownership by Mutual Funds and FII is hardly significant in this stock. Now that it has zoomed up to market cap of 10k crores, my hunch is it will not only be lapped up by institutions but also get a place in some of broad market indices, which will enable additional passive funds flowing in. This is a virtuous cycle which allows stock to stay and move up sharply. Just see how Bajaj Finance went up from 200 odd levels to now 7000levels in a decade. Fund managers have to jump over each other to buy anything which goes up in order to mimic the market and if they’re not buying one of the best stocks in a falling market, how will they sound genius on TV?

Is it still a buy right now? The short answer is Yes. Long answer is what I always say- if you think it’s going to be worth more three years from now and can handle price gyrations in between, buy it. Ofcourse this rally will end at some point and there will be 20-30-40% cuts as it matures. But that’s all part of the game. If you can’t handle 50% price drops, don’t invest.

So now my own take. The feeling is surreal with one stock taking care of the portfolio in a falling Market. It would have been a brutal fall had I not been holding BSE. Though this has been exactly what I learnt from Nick Sleep. He bought Amazon and never sold. So even if everything else goes to zero and Amazon goes up 100x, he did retire a billionaire. The key is to have sufficient quantity so that one BSE becomes an Amazon, your networth moves to nine figures.

Imagine two scenarios: Nifty is up almost 5% in the preceding month and is holding up in green as you watch the screen. You’ve been wanting to buy XYZ for a while as it moved from 800 to 1200. Your friends have bought it and it’s the best thing in the world which can happen to your portfolio. You’re wondering, I’ll buy it when market cools down a bit, maybe around 1100.

Scene 2- Nifty has fallen 10% from its recent highs and there’s blood on the street. FII are selling and there’s fear about the latest news on China border. XYZ has nosedived to 1000 and is down 5% for the day. Your friend hasn’t returned your call and you’re panicking because it’s going down to 500 in a week( as per the experts on CNBC).

Scene 3- five years later. You’ve almost forgotten about the first two scenes and moved on in life, happily buying and selling random stocks. XYZ suddenly moves past 5000. You tell your friends, I almost bought it at 1200!.

This is almost true, if not exact for many of us. We’re always waiting to buy when price goes up, fearful when it goes down and freeze in moments of great joy or panic. Market timing and analysis paralysis are the worst drugs to sniff on.

First things first. I’ve been asked this question multiple times- do I book profit? Do I keep cash to buy at a good dip? Short answer to both of these questions are- No. I don’t know anything about booking profits nor do I can time the market in such a way that when I buy, it’s always bottom. I buy when I have cash, period. I’m always 100% invested.

Why do I behave in such a way? Well, one thing is very simple. You can’t time the market. When the price is right( read low), market will be in such a bad shape and the news will be bad and there will be so much blood on the street that you’ll panic and never put a penny in. ( Read March-April 2020). When the news is right( October 2021), prices will be almost unbelievable. You’ll not buy while waiting endlessly for that elusive dip. So in either case, you’ll not be able to buy much, if anything at all.

Two, corrections will come in a Bull Market. It’s as true as death. However, if you wait patiently for that 20% dip, are you sure that your stock will be available 20% down too? Let’s take today’s market. Nifty is down 8% from top, while metals like Tata Steel, NALCO are down almost 30%. Tata motors is down about 10-12% while BSE is up 30% in last week. So was Nifty at 18700 cheap or expensive to buy BSE? TaMo went up 3x in one year while Nifty is up just 30% or so. So is it a good time to buy or not?

I can’t deny that having cash during a bear market is the best thing in the world. You make the biggest money during such times. However, by the very nature of law, bear markets and bad days are less likely to persist than Bull Run and good days. You may make a killing during Covid crash but if you sell once that is over and keep cash in hand to buy during the next depression, you may wait forever for one. Buffett has over $140B in cash which he didn’t deploy last year thinking market was expensive even then. Even the greatest couldn’t time it, leave aside you and I.

Thus, if the idea is to buy minority stake in a good business and hold it for long term so as to reap optimal rewards,the best time to buy is Today. You can’t be penny wise and pound foolish and say- if I had bought Eicher shares instead of Bullet in 2009, I’d have been a millionaire. Well, maybe in 2030 someone will say, if only I had bought Tata Motors shares instead of buying Nexon, I’d have bought a Range Rover today. Who know!

How would it be to have a portfolio like Nick Sleep? The idea to shut your fund down and put all your money, a sizeable hundreds of millions of dollars into just three securities is crazy and scary at the same time. However, if you reverse engineer it and see how it happened, it is one hell of a journey.

So what will it be to hold just three stocks and live with the extreme results it might throw up? How is the process like to think this through? Let’s try and analyse.

If you base your decisions based on outcomes, you may forever be confused as to what led to what. If you think through with the right processes and outcome isn’t to your liking, this doesn’t mean that the decision was wrong. It just meant bad luck. Similarly, if the outcome is great based on pure luck, it doesn’t mean the decision was right.

Put simply- you have to wear seat belt while driving and not overspeed. You may meet with an accident if you were following traffic rules. Also, you may be overspeeding and still reach home safe. This also doesn’t mean you’ll never meet with an accident if you’re speeding away.

Similarly, you may do all your research and the stock is fundamentally sound, you enter at a great price and you think it’s the next multibagger. The company is doing well and everything is set. Howeve, the stock doesn’t move. Now does it mean you made the wrong decision? This happened with a lot of us with ITC/IOC or even NTPC.

Imagine it was March 2020. You had the money and the prices were depressed. Om what basis will you not buy ITC or IOC and buy let’s say Tata Elxi or Alkyl Amine? That the former didn’t move four times doesn’t mean you made a mistake in buying good businesses and if the latter turned out to be multibaggers also didn’t imply that you weren’t plain lucky.

Ofcourse you could say that you already wanted to buy Tata Elxi and it was zeroed in to be your top buy candidate and it so happened that you got a March 2020 price and made a killing. This is different from just chasing momentum, which most people do in life. You can’t say that until February 2020, metals were a lousy businesses but all of a sudden you realised that in the midst of a global pandemic, we’ll have a commodity upcycle which will propel Tata Steel and JSW and Hindalco to lifetime highs. Unless you already were ready to buy Tata Steel on the way down from 500 to 250, you couldn’t have played the upswing. And nobody but God could’ve predicted that Tata Steel would move 6x from 250 to 1500 in less than a year with decade high steel prices. It’s impossible to make such decisions.

Ofcourse, forget the experts who have to copy market moves and buy everything which goes up and try to justify it’s existence ij their portfolio on TV. I remember not one would recommend Tata Steel at 300 or TaMo at 80 while almost all predicting they’re going down further. Unless you were always looking to buy them based on your own study, you’ll keep buying and selling random stuff and that’s not makes money on longer term basis.

This is where research comes in. You’ve to keep reading about companies before buying and see if they fit in the criteria you’re looking for in a stock. As the price go your way, you should be willing to take an entry without making a prediction it to be a multi bagger on the go. I read a quote recently and it’s apt- Making money during bear markets and crashes is easy. You have to unlearn it as it doesn’t happen often. Unless you learn to keep expectations low and do the hard work, you don’t make money on a sustainable basis.

Having read an extra book, an extra annual report, following an industry closely trying to enter based on fundamental and not momentum in normal times help. And if and when the crash comes, you’ll make a forward looking decision which may not result in the best outcome but which is based on the right process and conviction. I mean if Dhoni had gotten out cheaply, and Yuvraj hit the winning six, would that mean it was a bad decision to promote himself?

Coming back to Nick Sleep’s portfolio. I can only imagine how much research he must have put in to buy just three stocks. It’s almost art like to not worry about anything else, Zen like behaviour to not sell even if it’s over 100x and hold and hold with all the intermediate corrections. This is worth a thousand years of investing lesson in one man! Google it, read it .

Today’s market fall was fantastic- Nifty and Sensex are down 8% from their highs, while most broader indices are in correction zone- down 10% or more. Well, instead of explaining why it happened, isn’t it most of you wanted it to happen!

There has been so much hullabaloo about markets making new highs everyday and why this is decoupled from reality and the valuations are too stretched that I believe there should be community gatherings to celebrate this fall. This, however is not the case. People who were clamoring for a dip to buy are now worried if the new South African variant is going to lead us to another bear market. My words for them- bullshit. Please ignore.

I’ve said this before and I’ll repeat it again- India is at the beginning of a multi year bul run and all maga runs are interrupted by brutal, sharp and sudden corrections and this my friend, is exactly one of them. I’d quote from Reminiscence of a Stock Operator when all that the old fellow said in similar times- “this is a Bull Market.” If you’re not looking to buy more or atleast hold on to your position, you’re going to regret it pretty badly.

Sensex may go down from 62k to 55k but it three five seven years from now, it’s more likely to be over 100000 than 40k, isn’t this the perfect buying opportunity? In markets, 99% of the time, optimists win. You do make occasional killings while shorting but none of us is Soros shorting the Pound or Burry shorting the CDS bubble.

Now I’ll come to what I think when my portfolio falls 5% in a day- nothing! I’m a firm believer in what I’ve said and most positions I own are company specific. Well BSE share price may fall 10% a day but do you think the company didn’t make any money while there was massive volume to short? Unless you’ve a clear vision of why you own what you own, you’ll get out at the bottom and regret as it rebounds ans enter at the top. Buy High, Sell Low that is!

I know some of you who are not making money in this market who’s portfolio is either break even or below cost and that’s a shame. If you’re losing money when everyone is double, you should close your trading account and just buy index funds and sit quietly. You’ll do much better.

Also, here’s a cue- Delhi recently had its annual pollution shutdown. So there are three possibilities from here. In ten years, pollution will only grow and most people will suffer miserably and develop life threatening diseases. Or, Delhi will be shut from Diwali to New Year completely to control pollution. Or, people will buy electric vehicles because it is non-polluting. If you’re of the opinion that third option is most likely, look around and see who’s smiling when there’s massive runway for growth for electric cars? Hello Tata!