Author Archives: ZerotoBillion

So lest you guys think that I have turned this blog into a history blog, let me quickly do what I do best- talk about Tata Motors.

I have long maintained that TaMo will be a four digit stock and the price action has already taken it to an all time high of ₹800/-. It is now firing on all cylinders, especially its nuclear reactor which is the JLR. The JLR is the reason why TaMo will go to a price of over ₹2000/- and still be a value stock. Consider this fact, TaMo sold 1.01 lakh JLR cars this quarter. At around $100K per car, that’s $10B of sales In a quarter. And since TaMo has begun to break even at around 75-80k cars a quarter, the additional 20k cars per quarter or at least $2B in sales is its operating profit.

There are not many companies in India which can easily do $2B in operating profit in a year, leave alone in a quarter. Now multiply that by 4 and you have close to $8B in operating profit a year by JLR alone. Now add to that what it’s Indian business is making thanks to a resurgence in its PV sales and an upswing in the commercial vehicles business.

As TaMo is fast reducing its debt burden, a greater portion of its Operating profit will flow to the bottom line and it won’t be a surprise if it does over $2B in net profit! At close to 400 crores shares, that’s 40₹ EPS! And at 800₹ a share, it’s trading at just around 20 times earnings, half of which has already become trailing!

So a company which is growing its frees cash flow at almost 100% a year, will soon be net debt free and has a cash minting machine in the form of JLR won’t be trading at 20x but 30-40-50x forward earnings.

The PE expansion is the biggest contributor to a stock returns. Trent is now trading at over 100x its forward earnings, and so is Titan and so is Avenue! It won’t be a surprise if TaMo gets retakes and starts to command a valuation what Maruti got at its peak in 2017!

Even if nothing fantastical happens, considering the fact that it still commands over 80% of an ever rising EV market in India and smaller players with one hundredth of revenue such as Ola are getting $5 Billion valuation, there is no big a deal if as and when it’s EV business raises funds again or does an IPO, that alone will be close to $30-40B!

So my hunch is that we are witnessing an epochal shift in the way this company was valued at and it won’t be a surprise if it goes 5x in ten years from here! At over $50B in current sales, that’s 4x sales in valuation, which Maruti with its horrible products trades at currently!

PS: has anyone seen the new Velar? It’s an amazingly beautiful product with such smooth curves, almost like how an IPhone felt when it revolutionised the way we thought of phones. If a company’s products become aspirational, the valuation has to follow! No doubt LV has the highest market capitalisation across the consumer brands, in the league of Amazons and Teslas!

If you have read my previous post about reclaiming civilisational values, you’re aware of the kind of propaganda we all have faced growing up and are still subjected to in daily lives. Let me try and address as to how the ecosystem works and functions:

1. Self-anointment and distributing certificates is the biggest tool in their hands. Read a newspaper such as The Hindu. A normal newspaper report will have a citation such as “ an eminent historian Romila Thapar said this; a far right extremist organisation such as the RSS; renowned civil society activist Prashant Bhushan said that; etc” Read the adjectives carefully. Whenever they’re mentioning a person from the left, the adjective is positive and praising of the person while the reverse is true for the people on the right. So subconsciously, your mind will also refer to a few persons as eminent while use derogatory terms for the people of the other views. These historians continued to use a term “revolutionary terrorists” for Bhagat Singh and his friends who gave their lives for the nation. And they had the gall to defend it too.

I remember reading India since Independence to prepare for my civil service exams and I also subconsciously learnt this. Plus, since the papers were also set by their clique, your UPSC mains exam will also refer to Bhagat Singh as a revolutionary terrorist! This is the power of written propaganda to capture your thinking. Also, as most of us also used to read The Hindu to improve our English, we were also using these words to show off that we have arrived! The vicious circle continues unabated!

Since a large number of Hindi speaking candidates used The Hindu and their text books to prepare for UPSC, we were under the impression that if someone is writing front page article in this newspaper, he or she must be a big shot. Then we also saw them speaking eloquently in fancy lit feats so the verdict was complete. They’re the true dispensers of the gospel and the RSS must be a pretty bad organisation.

So the myth of Ganga Jamuna tehzeeb, and the orgasmic cult of the Urdu zaban and Nasser sahab and Jawed sahab as the true actors and fancy reminiscing of oh his family is from Lahore was set in our minds. Sufi music was sold as the only spiritual music worth its salt and Kun Faya Kun was the best song on planet earth. We all hated Modi because he’s a bigot and why Nehru must be celebrated for giving us democracy and saving us from regressive behaviour of the Hindu religious practices. We all loved the Pakistani actors for speaking English accented Urdu and practised shayari to impress women!

2. Satire- A leftist will always put you down if you espouse the cause of nationalism or praise your religion by either questioning your credentials in the most demeaning satire or would taunt you for not being educated enough or not belonging to a particular college etc. So if you didn’t go to Stephen’s and then Oxford, you wouldn’t be accepted as a member of the club and you’d be derisively termed as a desi. If you didn’t speak English with an accent, you weren’t smart enough and if you celebrated Diwali and didn’t know your Carols, you certainly were a person from the Gaon. If they can’t put you down on facts, they will put you down on your clothes, your accent and the college you went to. If you didn’t know Shakespeare , you didn’t know literature. If you spoke fluent Hindi, you were a desi whose language nobody understood.

3. Outright negation- how many times have you heard this line, oh Hindi is such a difficult language and we must simplify it. Ask yourself this question, if I was writing this blog in an English full of grammatical errors and didn’t use a good vocabulary, would you say that I write well? If someone uses words in English nobody really understands, he’s termed an expert orator and not a blabberer! So if I use Hindi as it should be, and because these anglicised idiots don’t follow, why should I degrade my language instead of them using it. So an Englishman using legal English language to make his point is an eminent speaker but me using Hindi as it is will be ostracised as desi! This is also fed in our brains through subtle propoganda of which Bollywood is a huge tool. Anyone who speaks fluent Hindi is either a villain or a comedian and the hero invariably was an Urdu speaker. And everyone with a place of power spoke English.

This is not just true about Hindi but about most our native languages. And these are the same people who will tell us oh who uses Hindi these days or who can even understand what Modi says! If you cut a person from his language, the root is cut from the tree and in no time the tree will die.

So this was not surprising when these two jokers Saif and Karan Johar couldn’t follow what Putra Moha meant. They’re the epitome of what this ecosystem has done to our society and how these are the people who make films which further takes us away from our culture. And if anyone who’s an Indian can name his some Taimur is still considered a star is not his fault, it’s because we have forgotten what Taimurlang did to our country through his invasions 1000 years ago. It’s our fault that we have not read history and consider it cool to name our kids Sufi, Taimur, Auliya etc!

So speaking English became an aspiration and Urdu spoken in English accent was the fastest way to fame because these people made us believe so. Every tradition, our festivals, our gods, our food habits were regressive and how we must move forward in the 21st century.

And then the trump card- Ask rhetorical questions with no relevance. Does building the Ram Mandir gives you a job. Now ask this loser a counter question that does that mean if people have unemployment, we should stop everything, every train, every airport, every hotel, every mall and give people a job! So till the point there is one unemployed person in India, we must stop playing cricket, use internet and eating out. These rhetoric’s are amplified by the leftist YouTube channels with crazy hashtags- India celebrates G-20 when millions are below poverty line in Gujrat. So you stop making every progress till people are above poverty line? But how would you generate the resources to lift people out of poverty if not by building infrastructure!

These people have a single point agenda to keep you cut off from you country, your language, your culture and your way of life so that you become the perpetual slave in their age old anti India machinery. It’s time you wake up and smell the coffee!

So this is the first post of 2024 and this is not about investing. This post is about something more important- reclaiming and owning up to our civilisational heritage and why is it so important.

Like me, most of you would have grown up in an India with middle class values wherein going to a temple wasn’t important, doing great in schools and getting ahead in life was and rightly so. We also were told that India was mostly ruled by weak Indian kings who were fighting amongst each others and this was used to their advantage by first the Arabs and later the British. Also, it was a given that our major temple/spiritual towns were dilapidated, filthy and congested with not even a notion of basic infrastructure in place. This, we were told also reflected on the fact that the religious places weren’t as important as say a Vetican is. We always dreamt of going/settling in Europe and praised their cities for the sparklingly clean roads. All in all, our country was deservingly poor, filthy and regressive.

Anyone who wore a tilak in school was looked down upon. We grew up in times when it was fancy to say, oh I’m not a Hindu but atheist when we didn’t know what either of the two meant. We said it because the celebrities and the powerful said it and we thought this was a way to prove we aren’t less progressive. I personally didn’t visit a temple for over 15 years because I truly believed my faith wasn’t important and going to a temple meant being tricked by a greedy Brahmin. Cracking jokes on religion was acceptable and truly progressive, but only on our religion.

We read in our textbooks that the only two kings worth their salts have been Ashok and Akbar, both were proponents of peace, interfaith unity and were indeed great. Ashok got us Buddhism and Akbar saved us from killing each other. And ofcourse, the only beautiful monuments were built by the Mughals and rebuilding a temple was a sin, a certificate of regressive behaviour.

We also were told that India had this Ganga Jamuna tehzeeb where we never fought with anybody but only because the RSS came along in 1980s that we had riots. That December 6, 1992 was the day our secularism died and we shall forever abhor the RSS. Talking positive about the RSS or the current ruling party at school or work led to social ostracism, punishments and remained an absolute taboo.

And weren’t the British so benevolent for giving us Railways and English?

So what am I trying to say here. We are going to witness a historic event on January 22 this year when the Pran-pratishtha of the Ramjanmabhumi temple is going to take place and a historic wrong will be made right. Now this isn’t something you’ll expect out of me, right. Why would someone as educated as me will be happy for a temple? Isnt it more important that a hospital was built at the disputed land? Shouldn’t we be ashamed that the secular state is involved in rebuilding a temple of all things? Aren’t we a secular state and does this not impinge on our constitutional values?

If you have any of the above or similar questions, I must congratulate you for being a victim of the larger left-liberal conspiracy of guilt-tripping you.

If one has to rule a large populace with vibrant culture, one must make them mental slaves. The easiest way is to ensure that the younger generation considers everything about its own heritage as filth and regressive while also selectively being brainwashed by planting a porpoganda in the name of history. Once you teach your kids a morphed history, they’re more than happy to mock their own values. And in a generation or two, they are so cut off from their own land that they begin to detest it. This is exactly what has happened with us, beginning first with the British and later carefully nurtured by the Indian state itself through its army of left-historians.

Ask yourself this question, if every civilisation which faced the crusades of Arabs was converted in less than 10/15 years, be it in Persia or in Egypt; why did India still remain the only continuous civilisation with largely the same values even after centuries of both Arab invasions and the colonial rule? The reason is that our nation was full of valour and cultural pride for which both the kings and the common men and women laid their lives for years and years together.

It was not without a reason why our temples were desecrated but we still have the place in our control. It was not without a reason why we still treat Kashi, Somnath, Puri, Ayodhya, Ujjain and Rameshwaram with reverence. If all our kings were weak and fond of opium, why is your name still the same as used by your forefathers centuries ago!

The left historians post independence used history textbooks as a potent tool to obliterate everything that was great about our past and replaced that with everything which went wrong. Like Vikram Sampath says, if Indian history textbook only has the list of wars we lost, how does India still exists? There must have been some wars which we won!

The leftists will try to either try and negate the history of our great land which they did for over 65 years since Independence or now they’re trying to guilt trap you into not calling their bluffs. They are the same lot who for 35 years since 1980s said there was never a Ram temple in Ayodhya. This was later disproved by the excavations conducted by the ASI and upheld by the Supreme Court judgement of 2019. So now they’re trying to say, why can’t we build a hospital or a library there! Ask yourself this question, does India with a gdp of almost $4 Trillion not have hospitals that unless you build one at the Ramjanmasthan, our population will not get health benefits!

These are the same people who will say, oh why are you sending a moon mission when people are dying of hunger! This argument is so pathetic that it’s laughable. They want you to close all technological research, all scientific institutions, all banks and hotels till every person in this country has been lifted out of poverty. Sounds logical. So ask them how will you generate the money to lift people out of poverty! And then they will run away like chickens. The leftists want India to remain poor, filthy, and deprived so that they can further criticise it for being so backward. Then they will say, oh Indian railway stations are so dirty. Basically, their sole agenda is to indulge in this psychological warfare using us as their tools.

Watch any American superhero movie and you’ll see them saving America from all problems. You make one such movie in India and you are a far right anti secular fanatic!

Friends, life is not just about getting wealthy. We must also read and learn about the glorious civilisation we are fortunate to have been born in. The pride in being Indians and Indian-ness must be revitalised. So next time someone try to guilt-trap you, beware and fight back!

PS- my favourite guilt trap moment was when one leftist YouTube channel was crying as to how building broad highways and airport and railway station in Ayodhya has robbed the town of its old congested lanes,and how sad is it that the people of Ayodhya can’t enjoy their evening in peace because so many tourists will visit! Just slap them hard and move on in life!

Jai Shree Ram!

This has been the most kind year for my portfolio, which went up over 140% YoY. Two of the biggest wealth creators were right up there- BSE and TaMo. I’ve held both for over 5years now and the story has been fantastic.

One has been a true 10 bagger from the first purchase while the other is up almost 4x on the average price. Both are up 25x and 13x from COVID lows. Tata motors DVR is up over 17x from COVID lows. Why I am still holding on to it is pretty simple:

I’m trying to compound wealth over time, one year at a time. In 2021, my portfolio was up 100% while it stayed literally flat in 2022. This year, from March lows, I went up over 2.75x. This is the nature of the beast when you make almost lifetime money in a flash while you make nothing for what feels like a lifetime.

I look back and recollect the COVID days when TaMo was available at around 20k crore market cap and stock languished at 60₹. The market cap was less than one fifteenth of the annual sales! It felt horrendously low and I doubled down multiple times. My personal targets have been very clear that TaMo will be 1000₹ and still be cheap. It’s a matter of elation that now pundits are coming out with 1500-2000₹ targets on the stock. TaMo for me is a story which is going to unfold in the following way:

TaMo was in 2020 valued at less than Hero Moto. It recently crossed the market cap of Mahindra and is ne within touching distance of crossing Maruti’s market cap. At one point, Maruti was valued at over 2lakh crore more than TaMo. Today, the difference is less than 35k crore. In a few months, TaMo will cross the market cap of Maruti for one obvious reason- Maruti is facing the Kodak moment where doesn’t matter what it sells, its product is laughed and scoffed at. A Maruti car is undesirable, considered inferior and cheap- all things anachronistic in an aspiration also Indian marketplace. TaMo sells aspirational luxury- JLR, its SUVs and EVs are all premium to luxury and people flaunt their cars.

Most importantly, Maruti has been consistently valued at 3-4x annual sales. On that count, TaMo, when it reduces its debt fully and cash on the EV story, should also get similar treatment, if not more. So in a base case, TaMo should be valued at around ₹10lakh crore which means the share price should be ₹3000/-. And if that sounds outlandish, please remember that I was talking of a valuation of $100B for TaMo, which will be approximately 2400₹ a share. A company which sells aspirational luxury to this rising Indian upper middle class will laugh its way to the bank. And what better luxury than a gorgeous Range Rover or a Jaguar.

So TaMo is very well a 4-5x in 5 years time from here, if nothing really special happens. Also, note that in the meantime, it is also going to sell for almost $50B a year. So if you really give it a Maruti type valuation of 4x sales, even ₹5000/- is possible. Don’t feel nervous, NVIDIA is still selling like hotcake at over 30x Sales!

BSE on the other hand is on to something significantly different. Its market share in equity derivatives has crossed 15% in December and it holds the key on both Monday and Fridays now. A 200crore profit company is on its way to do 1000crore profit in 2-3 years is going to change the entire landscape of Indian equity markets. It was a micro cap which is now a small mid cap which is most likely going to be a significant large cap in ten years time. BSE is a very solid 10x in 10 years or less story as the second largest exchange of the then $8 trillion or more economy should at least be worth 3lakh crore, which is the current grey market valuation of NSE.

One more stock I am supremely bullish is HDFC AMC. The kind of flow Indian markets is going to get over the next 5-10 years will mean that a company with this business- 60% PAT margin will make a lot of money by just being there. It is also a ten x in ten year story, if not earlier.

All I can say is that the party in India is just starting. It’s not everyday that you feel the economy running at full throttle and growing fast so what you have is an even more faster P/E expansion as market begins to price in faster revenue growths. Over the next three five years, our entire lives will be changed as India crosses the rubicon or $5 trillion and marches ahead towards $10 Trillion. The per capita GDP will be almost $7000 by then and some of us will have per capita income of over $100K. That is the market we are trying to capture through our stocks.

It is India’s year, Indian decade and The Bhartiya century. Stay bullish on Bharat, you’ll be phenomenally rich.

🇮🇳

Over the past few months, and over several years, my reading interests have taken me to different facets of our national history, to what many would understand as alternative history of the country. I have been a keen student of history, especially financial history to understand how things move in markets and how over several decades of investing, the fundamental laws have been the same. It has helped me process information with a sense of sanity, and become a more informed investor.

We are also at a time in our history where as we move towards becoming a first world economy, there is a growing resurgence within ourselves to learn more about our past. It is more like a modern day inverse Renaissance taking place where the nation is becoming more self aware. What we were as a civilisation, as a society, as a country, as an economy and how we should be going forward is a constant engagement which is taking place and the growing awareness of the self is essential to combat the forced narratives we have been fed with over a long time.

Personally, the realisation that the leftist historians have done a lot of harm to our national psychic happened a long time ago. I however could not fully understand the depth of the rot which has set in. It is only recently when I came across a fantastic book by Omendra Ratnu on the history of Mewar that I sat down and took notice. How many of us realise that the first Arab invasion of India happened in 712 by Bin Qasim but the Sultanates only took roots in 1200s. It was a five centuries of resistance which has been whitewashed in all out text books and yes, the NCERT books ends the ancient period with the end of Gupta in North and Cholas in South and suddenly focus entirely on the Mughals. So the great civilisational contributions made by the Kings in ensuring sustenance of our national identity is never taught.

It was almost surreal to realise that Rawalpindi was named after the first ruler of Mewar, Bappa Rawal and it was not until the 13th century that the invaders had even went south of Vindhyas. Thus, there is a method in the madness when we must celebrate the Ram Janmbhoomi Temple or the Kashi Vishvanath or the Somnath or the Mahakaleshwar temple because it is because of centuries of resistance that these temples have managed to exist.

I would highly recommend most people to subscribe to a fantastic podcast on YouTube- Vaad, and binge watch some monumental sessions by Meenakshi Jain, Sandeep Balakrishna, and even by Kunal Verma and Anuj Dhar. The more you read the past, the better you understand the present and only then you can imagine the future you want to create.

Every great modern or ancient civilisation was or is based on a deep sense of pride on one’s heritage and values. The Chinese or the Americans will go out of their way to talk of their worldview to propagate their ideas of life and it is no doubt that they remain the two foremost powers. Even the Germans and the Russians harp on their past to assert themselves. Thus, it is essential that we first understand the great nation we always were and how first the invaders and then the British subjugated us culturally and psychologically to rule us. Post independence, the left wing narrative essentially ruled us as masters where we were taught to abhor of all things desi and be the brown masters who came to rule us. The hogwash in the name of non-violent freedom struggle is the prime example of what we were taught so that one set of rulers could continue to lord over us.

Why do I write this all today? I am telling you this so that you also take out time to learn a bit more about the great land we belong to and bet even bigger on India, the future leader of the world. In our lifetime, we will be the largest economy in the world and unless we learn from the past, especially the mistakes we did, we won’t be able to secure a great future for ourselves and future generations.

We are blessed to be a part of the generation which is living in a resurgent India. After five centuries of oppression, we will be the second and the largest economy in the world. It has come at a price. The price your and mine ancestors have paid with their blood. It was easy for them to have accepted the inevitable and give up- their way of life, their religion, their culture but they didn’t. There is not a single living civilisation which continues to exist post medieval crusades and modern colonisation in more or less the same form. We still revere the same gods as we did three thousand years ago. If you are still praying to Mahakaal, your ancestors have paid a huge price for this privilege you take for granted and criticise on Instagram to sound cool.

There is a reason why America is the biggest cultural force in the world. The largest companies still exist in US even though what’s happening to their elite universities is going to take them down in a generation or two.

If you have come this far, let me now tell you something. You are investing in a country which could not be subsided by invaders, colonisers and brown masters. We are the fifth largest economy and the fourth largest stock market despite of the left wing narratives. Imagine what we will become when you and I unleash our true potential and make this India the global power it truly has been for centuries. So if you think Nifty is topping out at 22k, imagine what will you say when Nifty touches 220k.

Bet big on India, bet on Indianness, bet on yourself.

PS- trivia time! What’s the biggest scam of modern India?

The Ganga Jamuni Tehzeeb!

I’m currently reading the biography of Elon Musk and that has brought me back to this question- how genius works!

The true nature of genius minds is that they create so much impact over the times they live is beyond belief. The problem with judging them by the yardstick most suited for average humans is that they are the outliers- the far right tail of the Bell curve nobody thought exists.

This is the truth of genius- they are one of a kind. So trying to Judge them on things average people do or are is stupid to be honest. They’re not found playing in the park with their dogs because they’re busy chasing goals which affect humanity. So if you get offended by them for not being as polite as you would like them to be, it’s your problem to be honest.

The mind of a genius is full of wisdom. The mind of an average human is slavish. Most of the people around us will work 9-5, sleep on weekends, watch a movie, raise a family and die. The entire fulcrum of our society is based on the idea of keeping our minds slavish. This is how we never complain, we never question and we never stop being nice. The people who are most liked are the ones with the least impact on humanity. No nice man ever was a billionaire. All nice men work in bureaucracies, in offices and are polite and of course, don’t question authority. They are the status quoists and it suits everyone.

Why I am writing this today is because the way Musk has made his half a trillion dollars is by questioning the unquestionable. He single handedly changed the way we drive cars, launch rockets and make payments. PayPal is the original UPI.

This is how investing works. If you’re trying to make as much money as nobody in your life imagine anybody can make, you have to challenge everything being taught to you. You can’t invest in index funds and become a multi-millionaire. You can’t make portfolio allocations in equity, debt and gold and make 100% over two years. You can’t pay someone 2% fees and expect him to make you 200%. The whole edifice of financial services industry is to keep you poor while they make money off the commissions you’re paying to them. They’re not giving you free gyan on TV out of love for humanity but because you’ll end up buying their Mutual Funds or PMS schemes which will generate for them fat commissions.

So when you read this blog, ask yourself if you’re trying to somehow retire at 60 and die at 75, trying to do asset allocation or trying to make a million dollars and stop going to jobs you never liked for a second. There is nothing worse than spending your life at a place where you dislike mostly everybody, people dumber and who can suck up to the seniors get ahead of you and you’re asked to be nice in order to be liked.

It will only take one BSE to change your life. You first need to dream bigger.

Today marks the beginning of the next leg of the ongoing bull market, which began at the depths of the COVID crisis. The first leg took the market from 7500 Nifty to about 18K Nifty followed by a correction- price wise and time wise for almost two years. The breakout beyond 20000 on the back of real fundamental good news heralds a new era. The market has sensed continuity on every front- political, economic and thus is beginning to price it in.

It’s time to go long on the country! There are times when you are bullish on a sector or a theme or a particular story. This, however, is the time to go long on the India story. For some of us who have held through the bad and boring times of the last two years have already seen portfolios doubling in the last 8 months. This is the time which according to me the Index will outperform everything else.

There have been previous instances of strong index performances, especially in the past bull runs when the index itself have gone up 25-30-40% in a year. So I won’t be surprised if we see 25K Nifty before the results are out. That’s my base case scenario.

Also, as the index has been flat for two years, this should be the time when markets go up before the next run of consolidation and corrections as they eventually happen.

So what am I bullish on? I personally have always been a bit more than hundred percent invested so unless I sell a position, it’s difficult to crest anything afresh. Having said that, the FIIs are coming to paint the town green. They have been off the bus for a while and with the kind of indication the market gave us today, it is but natural to expect them in troves. The large caps- the HUL, Reliance, ITC are the ones which will be back in favour along with the current favourites. overall, unless Reliance moves 40% from here, the index can’t go up 25% since there’s a hesitation with large erstwhile FII favourites.

Here’s an ode to TaMo and BSE- these two stocks are now up 10x and 25x from COVID lows and still can be safely considered as cheap. I have been incredibly blessed to have owned them and continue to hold them for as long as I can imagine.

I however feel that it’s the breakaway point for something like a United Spirits and an HDFC AMC. Even my little position in Colgate has been a rank out-performer . I personally believe that large companies will be back in favour for they offer the float to absorb larger flows and also because a tectonic shift in favour of these themes have taken place.

So how bullish I am? 100%.

How worried I am to avoid junk at any cost? 200%.

If you go back and read my earliest blogs, I have maintained that in times of euphoria, junk flies the highest. So what I have been doing is to avoid anything which is over leveraged/ debt heavy or is not of the highest quality, even if I underperform a bit. Once you spend a few years in the markets, you realise that every couple of years during good times, punters look like geniuses. So I have been happy in underperforming during happy days because that allows me to hold my breath during the eventual down turn.

Anyways, we are just at the cusp of a mega run so no worries for the next few thousand points!

Stay Bullish on India- it pays, a lot!

So I won’t be humble about it- BSE has been a huge multi-bagger for me. From the time I first bought it to its recent highs, I have seen it drop 60% and then go up almost 25 times from the COVID lows. Now the thing people generally ask is, how much is enough and when should one sell.

The question is most relevant because only yesterday Buffet sold his Paytm position at a 40% loss after having held it for 7 years. This is when he’s on record stating that his favourite holding period is forever. So even the Oracle of Omaha can’t suffer losses long enough.

So one thing which I have learnt is to cut loses, book it once and for all and get out after waiting for about three years. I generally wait two- three years in first buying a position and then building it sufficiently sizeable. If the story doesn’t work out, I generally let it be. Like for example, ISEC has been a huge under-performer in the past two years but I have had my faith intact. Similarly, earlier, I sold Sun Pharma, Care ratings, IOC etc at either loss or nominal gains after keeping them for well over three years. So in my case, three years is an absolute reasonable timeframe before getting myself to change my original opinion.

This is the cost of holding an extremely concentrated portfolio. My top 2 stocks would easily be over 70% of the total value while top 5 would be over 85%. That’s how I have kept them and I have no fuss about it, at all.

You become a serious investor, and make serious money( life changing) when you finally realise and rise above the following myths:

1. Portfolio sizing – it is important so that your winners keep growing while losses drop in value. It is however misunderstood as selling winners to maintain an arbitrary weightage of stocks. A rising stock which goes up from 5% of the portfolio to 50% of the portfolio doesn’t mean higher risk! The risk is to sell it because it has risen to 10% and then miss the next 4bagger!

2. Diversification- I currently hold ten stocks and would be happy to cut them down to 5 in 5 years. Further, in all practical terms, HUL, Colgate and ITC are one type of stocks. So the real holding would be 8! That’s too many stocks to own actually. You can’t even track that much on a daily basis. You should not own a stock which if doubles, doesn’t take your portfolio up significantly! a lot of people claim to own a lot of multibaggers among their 30-50-100 stock portfolios! Even if then you have a 25 baggers BSE, a 15 bagger DMart, your overall returns are just around market!

3. Experts are dumb, institutions dumber- the earlier you realise this, the better investor you become.

So what I am trying to tell you is that in a lifetime, the most successful investors have made their Billions in one or two really huge multibaggers. RJ made at least 2 of his 5 billions in Titan, Damani first made in HDFC Bank and then in DMart itself, Nick Sleep held Amazon and Costco for decades. So if you’re lucky to have found one ten bagger, don’t be foolish enough to sell it to book gains and appear smart. I’ll illustrate it-

Assume that you invested 2l in BSE during covid at ₹200( adjusted price). It hits ₹1000/- and you sell it for 10 lakh. You made 8lakhs. Now the stock went up to 2400/- share. So actually you lost 14lakhs! Your 2 lakhs would have become 24lakh! And not everyday you can lose so much money by being on the table. So the real money is made in holding.

And most importantly, average and size up! Always! The biggest positions must become bigger when they’re moving beyond imagination. RJ couldn’t buy 5% of Titan in 2001. He waited till 2009 to build that up, at prices almost 30x his original prices.

Thus, don’t be in a hurry to sell your dream stocks. They might be on their way to make your dreams a reality!

Okay so let’s not be humble here. Anyone who did hold any amount of BSE before March 30,2023 and still holds the same quantity has made a ton of money. For the stock has gone up almost 5x from around ₹410 to ₹1900 in just around 7 months! That’s massive with a capital M!

And, to those of you who know who I am and have bought BSE because I kept telling you to over the past three years, it’s Diwali time and I’ll appreciate a couple of bottles of Gold Label! Thankyou for saying thankyou

So here are some facts to the run! BSE has gone up over 20x since covid lows of now adjusted price of around 95₹. It’s up almost 8x since IPO price of around 280₹( adjusted, again) an most importantly, this is just the beginning! I’ve written maybe over ten blogs in the past two years highlighting the same thing but since the story is now playing out before our eyes, it’s a great time to revisit it.

The power of low float with low fund interest is magical. BSE has a total of 13.5 crore shares, held completely by public. Nobody, except a Zerodha and a few others hold even close to 5% of the shares each. As on April 1,2023, BSE was a micro cap with about ₹5500 crores market cap. Thus, it wasn’t even worth enough to be a small cap and thus had no fund or index which mandatorily bought it. Even as on June 30,2023, domestic funds had only 0.18% of the total shares. Thus, it was completely neglected even when the price had crossed ₹650-700.

Once the equity derivatives began to generate significant interest, genuine rerating led the stock to move up the market cap to around 10-12k crores and alongside came fund interests. The funds- MF and Insurance and other PMS houses do nothing but to chase momentum. So they’ll not buy when the stock is cheap but only when it has moved enough to outperform the market so that they can then buy it, do a backtesting which proved that if they had bought it ten years ago, their fund was the biggest outperformer. Plain nonsense but that’s what they will say on TV. Just like that idiot Mukherjee claims to have done with Eicher and Nestle in his early days.

So in a market where the so called alpha generation is rare, not having a stock which has beaten every other index or stock black and blue is blasphemy. Thus, more and more funds began to buy during the September quarter and held over 8% at the end of it. Now, the key to remember is that when a fund buys, in order to even have the stock to have a weight of 0.5% of their portfolio, they will have to buy shares worth in crores. So the demand of a share suddenly goes up. The daily trading volume which used to hover at less than 3lakh shares a day suddenly moves up to over 10-20-50 lakh shares a day. And this creates punters to track and trade, creating more price action.

Now remember this. The stock is moving up with increased sustained demand. As when one fund buys a rising stock but the other doesn’t, the other can’t justify it! So the rest of the funds also have to buy it and that keeps up the demand high for a longer duration. This is the reason why HDFC twins. Bajaj Finance, Eicher kept on moving up beyond logic. Or even a Dmart or a Titan or an IRCTC.

Now did I say anything about the low float? So once the demand is high, the power of limited number of shares limit the supply. As against 13.5 crores shares of BSE, IOC would have something like 1000 crores shares or even an ITC would have close to 1242 crores shares.

Thus, the moment a fund punches an order to buy over 50k-1lakh shares, the limited supply forces the order to get filled at a much higher price. This creates additional action on the upside and the punters- day traders and the likes kick in. Thus, the price moves up. This spiral move on the upside is what we saw in IRCTC and DMart or even in Nestle in the last few years.

The funds also have to at least pretend to hold the stock for a few quarters. And additional fund buying helps shore up the NAV so they all look geniuses. This is what’s happening with BSE, folks!

On a personal note, I intend to hold BSE not for now but for the foreseeable future because it’s the business, not the price which matters. With rising derivatives volume, BSE is now beating NSE every Friday on turnover volumes. So the profits estimates are rising with every passing week. And that’s real! BSE last year made an EPS of around ₹13 per share, which is likely to be around ₹22 this year but will jump to over ₹40 next year! That’s what the market is liking. And because the company needs zero additional cash to run its operations, the entire money will come back to us in the form of dividends. So the yield will be humongous!

So, it’s party time now! Hold, hold it firmly! There might be sharp, vicious 20-30% corrections on the way but hold it tight!

One multi-bagger is enough to change your life. If you have one in hand, don’t sell it for your life depends on it!

It is during the period of volatility, the period of sharp pullbacks in the midst of a mega bull run that your heart races faster and you dwell even more on what you own and what’s going to happen to them.

Everyone enjoys stocks going up. It’s the simplest truth of stock markets. Even more so, everyone hates to see their stocks going down, especially when they had finally moved after a long period of no returns. Now the very nature of markets is that it fluctuates on both sides. On a longer time horizon, good stocks go up and bad stocks go to zero.

It is pertinent to mention that in a mega bull move, in the rallies when your portfolios double or triple in less than a year to year and a half, sharp 10-15% correction is essential. It takes the froth out of the system, allows stocks to get out of the limelight and the feeling of calmness prevail. I remember between August 2020 to March 2022, my portfolio went up over 3.5x! That obviously was punctuated by a lot of sideways months, months of negative returns to weeks of mega returns. You sometimes make more in a week than three years in a Bull Market!

A good portfolio tends to go down lower than the markets in bad times while going up faster than the average during good times. Over the next one year, between March 2022- March 2023, my portfolio was down 25% and during the last week of March 2023, I was scared that the bottom was soon to fall!

As keen an observer I am to the noise of the crowd, I also observe my emotions closely. Having been around for more than 6 years, I do not generally take the daily price fluctuations too seriously. I however also felt a sense of adrenaline till last Monday when the portfolio went up 25% in less than 2 weeks. So I also grew worried that maybe the near top has been made. The correction which we all waited for finally came and being down 5-6% from the top feels alright.

In big moves, you don’t get more than 10-15% corrections in leading stocks post which they consolidate for some time and then breakout on the way up. BSE to my mind will spend a few days around this 1200-1300 mark before taking it out onwards to at least 1600-2000. It has been the best performer but also been the best behaved performer in this rally. On no days did it go circuit up or down; on no days did you wanted to sell but couldn’t or wanted to buy at a price but couldn’t; on no days did the entire market came out and praised you not there have been reports raising price targets to the moon. Remember IEX, IRCTC, DMart or even Eicher before they stopped? Everyone owned them, everyone was pressurised into owning them and the media was obsessed over it. Every expert came on tv and said he discovered Eicher in 2010, the other fellow claimed he discovered it in 2008 and one fellow claimed he bought it in 2005. There were funds who wanted to be associated with this idea- just like everyone was buying chemical stocks in 2020-21.

I was once wondering what a decent price target for BSE will be. Now this is extremely subjective for it has already been a huge winner for me but still, it’s my blog so bear with me.

One, I deal in market capitalisation and not price of stocks. So BSE today is $2B plus, just around 16-17k crores. It earlier wasn’t a part of any indices, not even nifty small cap so no fund flow went into buying BSE. Only an occasional MF scheme owned it and most institutions ignored it. BSE until six months back was valued at around 5k crores so it wasn’t even a small cap stock. Now at $2B, it is suddenly an error if the MF house doesn’t own it because it has outperformed the market by a distance, further, since nobody owns it substantially, an active manager can buy it and claim to have beaten the market. This fund flow alone will be good enough to support the price substantially.

Once the price hovers around and over this mark, it gets included in small/mid cap indices so the passive flows kicks in. Now the funds will have to buy irrespective of the price because it’s the mandate. This creates a rush between funds and institutions and the final factor- the scarcity premium comes in. BSE has 13.5 crores shares in total. So the moment someone comes in and wants to put in an order for 1lakh shares, the price moves up because there is not much shares in the markets. People like me who didn’t sell it at 800 will not sell it at 1600 because we know how this game is played. This is how the scarcity premium gets factored in and big institutions have to buy. This is how Bajaj Finance went 300x in last decade. The first 5-10x was genuine, the next 2-5x was initial fund buying and the last 10-20x was big institutional buying.

So I am sure by the end of this decade, BSE would be a five digit stock. It has been a ten bagger since Covid. Another ten? Who knows!