I did a 3-hour long Q&A session covering the breadth of stock investing.
What is the current state of the stock markets?
Where are markets headed?
Should I increase my allocation to equities?
What stocks to buy?
What returns should I expect over the next 5 years?
Interest Rates and Inflation
Transcript of the Q&A session
(I have used Descript software to auto-generate a transcript of the video, so expect several errors in the transcript)
I have categorized the questions into a few categories. And I realize that a lot of you have questions on markets. What is happening? What may happen? What can we expect in some stuff? So let me start by saying nobody can predict, okay. So it’s a useless question to ask
The reason is very simple. If we are able to predict, we are able to make so much money, that we will never be talking about it.
nobody can do it with consistency. The problem is the fact that it’s such a difficult enough unpredictable problem. That is the exact reason why everybody’s perplexed with it. So in investing, we are paid to solve difficult problems, not we are paid to find the simple problems and then fall those simple problems.
Big money is not made by doing some complicated stuff and, you know, being right, because what happens is you will be right about off, but you will not be able to consistently make money. Okay. So let me give you some background of what my investment philosophy is and what my investment philosophy is not.
So what kind of stocks do I buy is I want to make big money in. Not every year, every month, every quarter at the end of 5, 10, 15, 20 years, I want to make a lot of money though, stoppers, right? The way I do it is I buy good quality companies where I think the profits are working. What a period of time in the short term markets will be one a day.
They will go up. They will go down, but they never, a company is able to increase its series profits over a period of say, five years, seven years, 10 years, or whatever that X number of the bank is. Then obviously the stock price will follow the profit. And this is projected. There will always be periods of under regulation, what evolution, but over a period of five years, what matters most five plus years?
What matters most is the economics of the business right there. The lack of traveling could be, it’s a tough question. I don’t think that the profits of the company will be, is a much easier.
Okay. So let me first, you have, uh, questions that I already have and then I’ll open up. So just first off it took 10 minutes. Okay.
Now what happens is show you what happened if you invested in paid industries before the last financial crisis, when the star index fell by 40, 50, 60%. Right? So if you invested in page industries in 2007 in full at 425, These crash came here in March, 2009 and the stock price is 44,000. So basically one leg has turned into one court.
Now, if you are invested in an actual motors, these are great examples that everybody gives, right? But there is some reason why these examples are given. So if you’re invested in this company in say 2007, at 36 rupees during the financial crisis, it actually went down to 19, which is a 50% drop, right? But at the success of the company, 24,824, which is like an 80 times, right?
Even if you look at it as BMC bank type of a company, what happens is if you invested before differential crisis at one 13 or 1 61 17, is it traded to AP, which is like a 50% drop. But today, how much is it? 1400 rupees. So, you know, it’s still like 10 times, right? Which is not bad money, which is like 23, 24 times 23% CAG or ducks.
Now what happens is there, the markets are going to be is not the big question. The big question is, am I invested in the current companies or not? Okay. Second, if what is your time? Horizon is one year or six months. Two years. Great. If your time horizon is emotional, your risk is not valuation. Your risk is, am I in the right company?
So I tend to spend a lot of time and trying to find out the correct company that I want to invest in valuation is one of the last things that I care about. Right. So now what happens is having said all that I understand everybody has their own questions. I also think with the buckets of Vodafone full, let me show you a few things, uh, about this, uh, you know, markets they are, they are.
So let me quickly ask you guys questions. What is your return expectation, uh, for the next five years? Anybody, what do you think? Will you make a 20% CGR, 30% CGR, 15% CG? Or what, what can somebody, you know, come and say 15 to 18? Maybe? Yeah. More than 15%. Okay. Do themselves. So I think, and I think we’ve been given this deep illusions.
Okay. Okay. I would say index plus 5% index plus 5%. Okay. So how much is that over the five-year period? So whatever. Okay. So I think people have reasonable expectations over here, right? Anybody who has expectations, 50% CGM?
Nope. There is nobody who has 50% CJ expectations. I think want to speak. I think you’re going to move yourself at speed. Uh, sorry. I have some bullshit. That’s like really angry then for that though, I don’t have on that talk about expectations. I don’t expect anything from market. So that did the reason for that.
So let me quickly, I know some of these questions, so unless you have, so first 10 minutes is up preventing them after that everything is acuity. Okay. So now what I will, nobody knows what the future returns will be, but what I will see is something like this. Okay. Let’s see what the current state of the economy is.
Right? So let me show you one, a couple of things that are actually happening in the market, right?
So that is this
for Greg and share my screen.
So this was the
He had said this about the markets back in February, 2021. So it doesn’t matter. When did he see that? What is he seeing is very important. Actually see some of the best performing funds on 97, 99 in the U S also ended up being the biggest wealth destroys in subsequent years, the.com bubble made. He goes first and then the crash wiped them up when he shut down.
The funny thing is that the 19 nine in the months leading up to the crash, many of the investors and fund managers who later potluck the hardest had publicly recognized the accesses. But few imagine it would get as bad as it did as quickly. Maybe it is very similarly. Frenzy is playing out now in us world in areas like electric vehicles, SPC games, IP.
So many SAS companies crypto’s and blah, blah, blah, blah, blah. Right. So what he’s basically saying, now you look at this point, so this is the most, one of the most famous, you know, innovation tech funds in recent years, which is like the render category in the U S so if you see from 2014, right, 2014 to 2021, it has gone up from 20 to 84, which is quite decent for us markets where interest rates are absolute physio.
Great. So your CAG add is I think around 20, 22% long-term CGM, but if you look at it in the last funnier, then deeper couple had mentioned history dock 23rd, fifth. See the peak of this innovation tech fund was 1 56, 1 56 is down 2 84. So it’s almost a 50% drop. So in my opinion, there is definitely a bubble in the us.
Right. And it was also almost posting. Okay. So there are a couple of other, you see, uh, there are a couple of other anecdotal kind of evidence and you will keep seeing all these things, uh, uh, everywhere. So I’ll show you something. So there was this very famous, uh, series on Netflix, pretty games, right?
South Korean, So look at this chart. Okay. It started as critical cryptocurrency and it went up to something like worth some tortilla dollars or something nowadays. How much, when is the 99.9% drop? Right. If you see your to date, what you can basically see, you know, for this small period of time, it went up.
Right. And it just crashed. Right. See, you can see here is going up and going up. So three months, if I see them, basically for that one week, it went up and that’s crash. So these are the kinds of things that we are living in. Now having said that, let me also tell you what, you know, uh, what impacts the markets the most, right?
So some of you have also asked me this question, a board and the markets will go and which sectors will be good and such stuff. Okay. So what a long you don’t have time to things also impact the market the most. Okay. The two things are interest rates and corporate profits as a percentage of GDP. So economies gold, two cycles.
Companies do value corporates do well. Profits substantially increase, right? And corporate profitability increases a lot. Now in India, this figure is somewhere between 1.5 to say four, four and a half percent. Now, way back in 2007, when we were one of the best, uh, best bulletins that we ever had, uh, in Denmark, the corporate profitability was as high as 4.5%, which drop to something like 1.7, 1.8 or even lesser, approximately because I’m giving you some time in 2020 before the coronavirus.
Now this corporate profitability figures started increasing. Okay. The second thing that is there is that be interested. So if interest rates are 20%, obviously these stock valuations would be much lesser interest rates in India.
half percent. So what basically is happening is that this 6.5%, if it goes to 10%, you basically mark in diocese brought by 50%. Okay. It’s six days at six, then there is no impact. If six comes down before or three, like in the developed world, then we are on for bigger market. So what we have to see is corporate profitability and interest rates for some kind of a sense of whether we are in a bubble, not in a bubble.
Right now where we are, um, for inequities, the sweet spot there. I think our group is going to be good for the next decade or so the China plus China person strategy prioritization, opening up low interest rates, real estate cycle kicking in, and so many other stuff. So Indiana’s going to move in, but U S markets are definitely probably in a bubble and the bubble is busting.
Okay. Uh, so not as, this is what I wanted to do, uh, uh, or talk about, uh, you know, markets. Now, what I will do is I will open up the Q and a session for everybody. Uh, so who wants to go for the first question?
do you want to ask a question? Uh, yes, sir. First of all, uh, thanks for the opportunity to actually answer IO, a few questions in regards to, uh, not when the into market or like where will be the market go. But my question first of all, is, uh, with such valuations when it comes upon into the market. So when there is some companies, I don’t want to name it, but some cosmetic companies having such a valuation brief with such a growth, and there is some complaints where it’s a grocery Mart is been a high driver of value right now, the valuation is must and B is right now.
You can say the irrelevance of P. So do you think what, what would be your criteria to get, uh, exit into this type of stocks? So what, what would your be a structured way that would be exit from this type of stocks? So do we want the stock? Uh, no, I don’t know. No, actually, if, if there will be any possibilities of what, what are your strategies to get exit, like not any type of stock.
So first it starts with whether you want it or not in my unit. So if your answer to that question is I don’t own any such, then that’s, that’s the best case scenario, right? You don’t have, but sir, if I want to buy them, what will be the scenario mainly, but if this wouldn’t be this, like what will be the criteria to say.
I am talking about evaluation spurs. There is a such of a valuation, right? So valuation regarding we said, or what was the perception to sell? I think so long of questions also have a lot of people have questions, take questions, but are you from China has the same problem of it’s a very high evaluations.
Rachel. And address that question. So that that question gets answered. The point is you have to first concentrate on why do we want to buy these stocks? Okay. If you already own this stock, then the answer is different. If you, the question is why did you want to buy these thoughts? The only reason you think that this company is going to be far higher than what the current valuation is.
So there is a consequence. He was DCF. Okay. So it’s a little bit technical. You guys can, it’s not very difficult. What, what basically was the, it was his compact cashflow implied is that given the current evaluations of being an issue or whatever those metrics.
Okay. And he’s got somebody who are not speaking. Just everybody.
I need some headphones that
Well, you will not be able to hear us. Its problem is if you are, unless you have the headphone, you are not able to hear anything.
So we can’t hear you. Okay. I have one. Sorry. So yeah, I think that everybody, including me, everybody working through. So the first question I was talking about it, it was this year afforded, it was DCF sees is that if the valuation is a hundred price droning, they show what has to be the longterm growth of this company to be able to make reasonable returns.
What is the reasonable returns here? 10% return, 8%. So in that formula, whatever. Okay. For 400 10% discount rate. You know, the growth has to be easy. I don’t know, 25% CDR tips. Right? If you think that the growth is going to be more than 25% CHR over the next 10, 15, 20 years, then it still makes sense to go.
And then the next question comes, are you so sure about the business model? And are you so sure that these companies will actually make 25% for the next 10, 15, 20 years? Right? How many companies are actually made 25% seizure? What are the risks in the business model? Can somebody else come in, reduce the profitability?
They go, the market share. Is it like, these are questions that you want to ask? Not what the exit strategies. Now, if, if you ask me, what do they exist strategy you’re trying to play with. not, how can I save myself from getting bored? Don’t go near the fires. That is the first task. Okay. So can exist when to sell is a generic question, but the reason to set up two, three reasons, okay.
The first reason is the business metrics change, which means some competitor comes up. Some disruption happens. Uh, this company makes some forms. There are some corporate governance issues, which you later realize, right? Or basically a 50% growth producers to 10% or 2% of 5% of whatever XYZ, right?
Suddenly the markets fall and you know, the funding story. For these companies cannot raise more equity and then they will have to stop giving these losses. These are still loss-making companies. So these are some fundamental changes that happen to the company or the environment or the cooperators, which will prompt you to send illustrator water prices, whether you are in profit or loss.
The second point is
so you realize this is not a good company and you made a mistake. Irrespective of the price he told, the reason is you found a much better company. So what you found was, okay, company B is much better than company. You sell a company or a company, and then there are crazy valuations. Those four things for parts will be a a hundred times price to sales and some, something like that.
So then you say,
okay, so my, my next question would be on, uh, the, I think would be a difficult one, but, uh, do free cash flow meters or do the corporate, the EPS, the meters, the more the profitability of the company matters anymore, or the free cash flow meters. Because one of the PMs is more focused on free cash flow. But if you check on the historical side, the sales and profit have driven the stock price.
Like the 87% of the stock has been driven by the profitability and sales growth. So what, what’s your view on that?
Uh, they are not mutually exclusive profitability increase in free cash flow increase along mutually exclusive. Yeah. Separate, not mutually exclusive, but some, uh, business which requires a heavy CapEx or required. Uh, you can say a working capital requirement might stuck with this, uh, uh, don’t deliver a free cash flow in a better way, but might have a position into getting a better profitability or generating a better, uh, you can say safe.
So what’s your point on that? No. So the point is the best businesses where you can redeploy all the profits of the company inside the company and generate a high return on equity or a higher return on capital. Right? So not many companies are able to do that over 20, 30, 40 years period. What ends up happening for a lot of good companies in the 20th, 30th 40th year is that they generate so much cash that they don’t, they cannot deploy to grow further.
Now, what are you’re talking about? Sorta McCarty’s Marcellus varies, winning, uh, Asian paints and these kinds of companies right now, Asian paints is so profitable, such a good business that it just can’t redeploy. It’s profits into new businesses or inside the growing the same businesses. So they’re three cash moves increasing going.
So that is just a coincidence. I would add that I have Asian paints, which does not be a single rupee dividend and grow profitably with a good return on capital. Like Berkshire Hathaway, doesn’t pay a single rupee dividend.
So, but the fact is also that if you have, if you made so much money and so much free cash flow, that means business. If this replaces your businesses true, true serve. My third question would be, uh, what will we like as per right now, the market? So the, all this scenario has been very glossy and all this stuff.
So will you bet on turnaround companies, like some like
or sort of a thing where there is a constantly a turnaround companies or you don’t like system days, you bet on mode two growth. It depends on what my conviction is. So if I study and understand the business very well and am fairly confident enough on the turnaround on alternate terms, generally don’t happen.
The base case has done around, uh, successes bad, but it doesn’t mean that you should not bet on turnarounds B. So a lot of things are beyond your control. So your position sizing, you know, you have to be reasonable, like don’t put 50% of your money on that happening. And some of my more next last question would be on how do you constantly track so much of business in a matter of a, you can say a year as we track 5,000 of companies and we buy out 10 or 12 companies, or sort of a thing on a portfolio site.
So even though we are buying 10, 12 companies, but we are culturally monitoring 5,000 companies. So how would you all certainly been into that key? How would you track all these companies in a manner of, in a, in a limited time, or is it it’s not possible to track for you appropriately decided whether you’re interested in the company or not industry in the company and you have to be okay with missing out on a, of big, okay.
Otherwise it’s not physically possible for anybody, one person or a team or whatever it is you will keep missing. The point is this, you will keep missing good companies. The part is that you should not be trapped in by companies that is under your control. So it doesn’t take much time to realize whether it’s a bad company like Nike, I’m not invested.
I don’t want. ’cause I think it might be highly overvalued. I need to perform that event to understand the business, this, that, to be able to make a lot of money, I would rather buy an kind of a company at 20 PP types of it and be a little more shorter. So they’re built on, there are opportunities in that it will be such a possibility to buy a good company that reasonable.
And so just, just a follow up question on that, uh, on the valuation side, if you say that Michael Mohsin always says that now PS 11, because of this intangible assets been included in the asset side. So what would your metrics, uh, what do you see when you get into a buying zone or this will be the right price to buy or sort of a thing that is priced to book by price to an English price to book is a little more relevant than it was 20 years back.
He’s right, because the kind of business models have also changed. The basic thing is growth versus valuation and it was this year. So read up on reverse DCF and you will get a better sense of this. So if I’m expecting the growth to be higher than the embed, valuation suggest, know what suggested by that he was DCF model, then I’m going to buy.
Okay. Okay. So that’s my question. I will come follow up. Thank you. Yeah. Thanks. Uh, so is that in the, not in the hip, on this call? Not is there.
Can you just take up the questions from the farmer itself by kind of voicing them out? I think that would be better. Yeah. That I will do so not. Have you had questions on, so I think more or less markets, I have a no, take down a few. So the, is this saga? No, not via just a minute. Okay.
Uh, yeah. Any car company specific or portfolio specific questions anybody has
she show? You can hear me? Yeah. Hi. I have a question about portfolio construction. I send to you on the link as well, but I don’t have that in front of you. That will be that. So it’s more about, you know, um, DIY investors where we are investing ourselves or may have something in the BMS. Now I have some positions which have bought, there are some positions, which up there in my PMs, obviously buying and selling.
I have a small cap portfolio. I have a momentum portfolio. And all this does is that I have 50 to 70 positions. But now if you look at this, as this is a single portfolio, then it is 50 to 70 positions. But you say, I have a small cap portfolio. I have a mid cap portfolio. I have a momentum portfolio. You’re talking about 20 with patients in each portfolio right now, pushing there is how do we go about concentration versus diversification here?
Because if you want a concentrated portfolio, you’re looking at probably higher times less number of companies. But if you want to diversify into these buckets of momentum, small cap, long-term, short-term all those things, right. Then how do we, where do we find out when type diversification is already done?
So first as you are, you have PMSs advisors or you’re running all these portfolios yourself. Uh, I’d say I’m reliant on other students. So I’m learning on border protection to be, to be transparent. Yes. Are you following that advice to the D or you’re using our own brains to make those decisions? Either decisions.
Yes. So let, let’s put it this way. So if they tell us 10 things, I’ll read those 10 things and I follow say 70% discard remaining 30%. And fortunately, whatever discarded decision has been good for me for, for now. Okay. Okay. So, but what I will say is this, okay, you have multiple strategies, so don’t treat them as one aggregate strategy.
I haven’t have 70 portfolios. If you have a momentum portfolio, there is no need to concentrate in that moment and portfolio, right? If your momentum goes better, if you have 20, 30, 40, 50 stocks, because the downside is protected, right? If you have a look, you know, whatever, the strategy that you have. So it depends on the strategy, the concentration only concentration versus diversification.
That question only comes if you are doing stock picking yourself and you’re trying to do like growth investing, value investing, or basically bottom of stock picking what we call fundamentally bottom up stock picking that concentration versus diversification only applies to this. It doesn’t much apply to the adult portfolios.
Like they have their own logic. Like don’t invest in only two stocks when you’re, if you’re being momentum investing that obviously you will invest in 20, 30, 40 stocks. What is the number of stocks in your fundamental.
So we took it right. Secondly, it also depends on what there is no correct answer to this, but the point is, suppose you have what is DLC back 20 years back. You never sell it. It doesn’t, it is not your 26 stock. Then just look including your number of stocks. It’s a stock will never sell. If you have the plus in the last 30 years, don’t consider it a stock.
The question, what is the new number of staff that have won in the last two years? What should that number be? So I think this is part concentration versus diversification portfolio construction. So a lot of the people had questions around this one, right? How to approach a portfolio sizing, how to approach portfolio construction, how to, whether to concentrate or diversify or what needs to be done.
Right? So the first thing, you know, basically let me address position sizing, right? Position sizing goes in this space. You don’t stop comes into your portfolio because of the upside, but this size is determined by the potential downside or the worst case. Downside scenario can be. So if you can lose a hundred percent in that stock, you have to limit that position size 2%, 5%, 3% or something like that.
Okay. Now, if the doubt is the upside is not very high, but the downside is almost zero, then you can go slightly higher. The second thing is, it also depends on your investment philosophy and of time and the way you approach things. So I am somebody who likes to go in depth into a few businesses. So I don’t want to read about 500 businesses, right?
I quickly decide these are the 10, 5, 20 or X number of businesses that I want to spend a lot more time on. Now, if I have spent a lot of time and I’m very much aware of what is happening, why is happenings scenario? This that then automatically as an organic thing, I develop conviction of putting say 20, 25, 30% in that one single store.
For example, I put in 25% in IEX. Okay. The reason I will do once, it was a very organic thing, many units, which are top key, 25% money. It’s Leah Donna, keep March 20th, April 20 may, uh, south Harkey. The one was ending and I was pretty sure the electricity companies will not in energy consumption will still happen.
It might maximum good over 10, 15, 20% for a few months, but these debt-free monopolistic businesses in basic industries, electricity when definitely not. Come with me happens with coronavirus and the valuation was also quite reasonable and cheap.
nothing. No, you look whether it desire, but what am I doing to underwriter what it is right in without basically everybody’s launching of Dubai. So they put in 25%, but I, X is not my best performance stock since March, 2020. They know which one is something worse. Some will be more, went up some from 42 to 40, which is a six diamonds.
I yet, for me as went up from, I think a average price is about 1 61 70 times. It has gone up to now. I mean, before the bonus, it has gone up to about 8, 7 5800 clicks, just still like four, four and a half, four and a half cents. But suddenly more than only the cuts to put in 2% of the books, because somebody moves into, you know, leasing of creeds.
Now, if the entire economy is going to be shut down for an extended period of time, you didn’t know in April, right? How many years it will be, how many months it would up. So nobody’s going to take their greens. It is not a debt-free company. They had debt on books. So the question was built. Everything turned out to be very good, right?
So the upside was very high, but then the answer was also very high. So I just did not have the guts to put in more than 2% of the. In fact for a lot of people, I didn’t end up buying for my existing clients, right. Because they’re just punchline. So upside it decides whether the portfolio company goes into a portfolio downside.
So second thing is that people want to ask questions about large cap, mid cap, small cap, mid cap, small cap, MC technology, Alaska, public apology. Again, the question is this. I think if, what period of time you have built up your position and 20% is a nation pains and 20% is an HDFC bank. And, you know, 20% is all your other, uh, Britannia or PNG or Gillette or whatever XYZ.
I don’t think you have a problem of market tanking, not taking interest rates. Does that just doesn’t bother you. Right? It’s like buying a
market. appreciating voluminous. It’s going to be one cross at any point of time, right? So will companies make 20 to 30, 40% illimitable issue, new type provided you have built type position over a period of time and not overpaid of it. Last 10 years, SAP kind of you have that. Now the point is this a lot of small caps and mid caps have do value a bit of time and you cannot predict the business trajectory.
Does anybody want to work for a company, but the BetterLesson salary at a non-metro location, nobody wants to date the best talent people from IDM. Do they go there from the best of India’s colleges in APS and whatever other colleges are there, they don’t go there. They want to go to Bombay Delhi by law.
They want to go to funded startups, right? Not doing the non FinTech startups. They want ESOPs. They want big fat salaries, right? They want work cultures where they can come in G you know, come in shorts and go home anytime. And all that. This doesn’t happen in traditional small cap, mid cap companies. So they have a problem there.
Then they not necessarily become big. Some of them will become a hundred Packers, right? But when you, it’s not a guarantee that 10 years later it will become a hundred million. It’s only in hindsight that we realize who this was such a good company, you know, it became under attack. So you have to start to position smiling and what a period of time, once you understand the business better and things are moving, you invest more.
So you, uh, spoke about 25% position and tip any stock. We use port, I experts say any stock, but are you talking about 25% at cost? But then, as you said, you know, uh, IEX didn’t play well. And the other stock, which you mentioned did that did play well. So aren’t we taking that risk to our return over a period of time, because we are kind of putting too many eggs into single basket by putting 25% that cost putting 25% add Cosmo single company has to been exception.
Not that is what I’m saying. You actually went up four times for me. I met a lot of money. The company went up six times. That’s that’s the only thing I’d say. I mean, I used to not work as much as the other company, which was a 2% position. Yeah. Yeah. So other question I have, again, similar, very similar question.
I think there’ll be lost from me until others pitching is when to pick up profits because you never know how hard the company will run, where you would go. And you know, you always think of maximizing returns out of this. I have certain number of stocks in my portfolio, which are 10 X for me. And I haven’t sold recently.
A lot of slabs are ran so hard, right. So I definitely took a little bit of a position off from that. I sold say 25% of my holding. It was probably six or seven X for me. Right. And that too, within 12 to 18 months, maybe 12 months. Right. And, uh, I sold 25%, but I haven’t stalled much. I still have, I had some automated alerts.
Notify me if price drops and then I’ll sell it that still at profit, but because we never know where it will stop the running, right. Uh, at what valuations will stretch, but still it will go up. So when do you start taking those profits out? And again, there is no right and wrong answer, right. What I do.
Okay. So I think somebody else possible that it’s extracted. So now these days, this techno funder technicals and all this is info. Okay. I don’t do technicals at all. Absolutely. That’s the way I operate. So I don’t do technicals at all. I will be looking at business metrics. Okay. So if you look at Laura’s labs three years back, it was, I think, what a 10, like a 10 PE types of a company.
They, a lot of operating, not that, I mean, the logic was quite sound right. The growth will happen. CapEx has been done. Operating margins will increase operating leverage will come profits, substantially increase, and period relating will happen. All that has happened in those labs. What does it mean? It’s a bad company.
No, but does it mean you should have 50, 60, 70% of your portfolio in Laura’s of now? So I think that’s a little slow. So you have to reduce your exposure to this company to a level that you’re comfortable with given that 3% for others, right? There’s no right answer to that. So, so like, like I’ll tell you what I did with my exposition.
So I actually, as a company, which I’m very confident about it became seen 50, 60, 70% of my portfolio to reduce my health.
I’m still getting, it’s still 30% of that portfolio at these elevated levels. So I’m comfortable with the people. So I was not comfortable with 60, 70% of the portfolio. Yep. Thank you. Uh, so yeah, anybody else has a select me check? I had highlighted a few. Hello, Amy. Yeah. Yeah. I’m Rakesh. Yeah. I remember reading a report that you had published more than a year back on a show Cleveland and I invested on that basis and I’ve doubled my money on a shop Leland, but I would like to get some feedback on you on whether this is still a good long-term investment.
Yes. More or less the juices out. It was a cyclical investment. It was not a compounder or a consistent compounder takes of a company. Most of the juices are taping last 10, 20% is left is what I feel. Thank you. Thank you for that. You can go to better pastures.
Yeah. Anybody else has questions? So this is a
macro question. The fed started tapering and started raising interest rates. The
what is, what is the new laptop playing out? Not this year as well. I started with this session with this land who can predict markets who can predict microbes. Okay. Having said that I knew. Okay. So, so the answer doesn’t lie in what is going to happen in the future. The answer lies in, if this thing happens, what will I do with my portfolio?
So if they bring happens and interest rates suddenly go up substantially and the markets fall in, or whatever scenario that you’re talking about actually happens, will you be able to put in another 20, 30, 40 lacks into your portfolio and whatever, a substantial portion into the portfolio, if your current portfolio and the markets tanked by 30%, we’ll be able to put it another 50 X.
That is a question that has a much, you know,
I mean, there are multiple scenarios that can happen. Placebo interstates cannot go below zero that more or less minus one, minus 2% behave in some of the European countries, but they cannot go to minus 10% like this. We are pretty much at the bottom. So the only way for interest rates. I thought about that interest rates go up.
Once I going to have a big sell off all kinds of bubbles everywhere it does slowly or suddenly start deflating.
So the only point is what is your time? What is it? Can you stay Mr for the next five, 10 years? And what is the amount of money you will be able to put in?
Thanks Evan. Any you on the currency? Uh, because it’s been the key to look at the past 10 years. Uh, I not USDS
for the past three, three and a half, four years. There’s been more change. So it’s due for, uh, , uh, every anybody’s guess is as good as mine. I am one of the last people to make a guess, but I still do. So India has opened up one markets for us
in the last budget. Not if you as roller flows into India, I think, uh, give is going to appreciate the second thing that has happened is for the first time in history, the services exports out of India, the ID services exports is higher than our
right. So I think I appreciate.
But the opposite can also happen. Okay. Thanks. Next
one is, yeah. Hi this I here. Yeah. So it’s always good to learn from, uh, investors, uh, you know, experiences when it comes to hits and misses. And I think you had discussed what I experience with border housing once upon a time, which is a pretty interesting story and how you went about it. Uh, so would you be able to share any other, uh, you know, um, uh, experiences that you think, you know, things went wrong or you’re called and wrong and how you sort of, you know, what did they actually, it’s just one question from my side.
Thanks. There’ve been a lot of misses. I think some of you have asked me a question. Okay. I think you, should. I put in a question that why are we not in, uh, IP Stauffers for people not here, ask me, but bring to be planned to buy IP stocks. So I think that this IP read it being five by 10 times or stocks I completely missed.
And literally I was on the waters of buying persistent sometime in 2019, when they had basically lent 500 close to bundle this ifs and
so, so they basically had like 500, they have so much cash. You were not only debt-free, but they add five rows of cash or something, some big amount linked to LFS in unsecured loans, which basically they lost everything. So at that point of time, the stock culture corrected by 2030s as a knee-jerk reaction.
It was almost there buying, but somehow I never ended up devoting enough time to develop the proper conviction to be able to buy it. So at that time, I think the
mistakes I have done is so you may have observed that. I’m not some of, some of my investors I’m not in looking because companies, same thing happened with chemical companies. I just kept on thinking
I just didn’t understand or realize that, you know, the upside was much bigger than what I’m imagining in my mind, but see, uh, I bought the net, you are getting cited for and read in, uh, March.
And, and unfortunately I didn’t buy after that because I always thought the valuation was really high, but I’ve made a buy back in last week since much, almost four years now, but five, I got in four years and it was a decent tech person and efficiently. So it does
not have such mistakes. So you’re still discussing some arrows or missions, the stocks you didn’t, you missed out on what about the ones? I mean, if you can, if you’re open to sharing the ones that you got completely wrong after buying your, you know, your thesis or that was before,
what they would have discussed before that there is already there in the public, it takes government lost a lot of money, right? Uh,
yeah. More things are not entirely come into my mind, but. Frankly speaking, nobody has lost any money in the last one and a half year. If they have that fundamental investing, right. Reading, maybe they might be pluses and minuses
then. Okay. I’m sorry. Um, so, um, I, um, I mean, thanks for conducting this, this is a very good session as usual, and it is a lot of, um, very good information or, uh, um, going in and out. That is great. Um, I have, um, two questions, right? Um, one is it’s, uh, it’s the same question. It’s probably, you must have heard elsewhere.
Um, in 2022, if you are picking up two stocks, if you have a conviction like, um, X, what are the two stocks you could, uh, highlight to us and also one sector, which you would want to go behind that, uh, knowing that, uh, macroeconomic condition, which is going in, uh, elsewhere as well as that, that’s the only question that that’s a two question.
Those are the two questions I was having. I not really investment with juvenile. Okay. Uh, it’s like a six month, 12 month kind of a thesis where in my opinion, the market is oriented to what the underlying business quality is. It’s not an, a DFC bank, but it’s definitely not a yesterday. So market is kind of, you know, treating it somewhere like, uh, Nope, uh, slightly better cause interferes bank.
So I’ve put a lot of money in, uh, I think that this is what play out in the next six, six months. Not more. The second I am quite confident about, uh, is, uh, you just get sector. I am invested in our shallow housing. Uh, it’s a very conservative company. Uh, it’s on very low debt and I think the real estate cycle is done.
So I don’t know whether this will go up two X, five X, 10 X or whatever, but a lot of these real estate companies and a lot of them actually went up on TEDx, but it doesn’t, I don’t think that repeat is going to happen, but you never know, right? If Indian economy keeps finding an 8% GDP growth for the next 5, 6, 7, 8 years, and interest rates remain somewhere around this, right.
Inflation does not go to 10, 15, 20%. One other in the habit of inflation also comes. It’s good for you. Right? So I think real estate is going to do quite well, but valuations are definitely not as cheap as divorcing in one, one and a half year back, but it’s still, I think a lot of things is left.
Absolutely. So when you are suggesting a name and, uh, um, the real estate sector, um, definitely would have looked at, um, DLS. Um, macro tech developers and so on and so forth, probably the macro tech developers are coming up good. And then they have a very good, uh, for an investment so on, so forth. Right? So is that a reason why you are choosing with the it’s more conservative than everybody is?
See, the benefit of rationalizing housing is if I cannot predict whether, you know, such great macro things are going to happen or not. So that is my first thesis. I cannot predict whether in Desmond to grow at 6%, 5% or 8%, right. So I shall see those varying book cycles in bad things. Also, it is a good company stock price, but the business does not suffer much.
And in a good times it will benefit like everybody is. So maybe I might not think that we will go up 10 times national housing. We work three times or four times, but my money is safer. I’m able to put in money with more confidence to Microtech developer in 2019, for us, a prime candidate for bankruptcy.
In fact, capital. had lent some 4,000 cross from Microtech developers and it was ripped off for this colossal mistake in 2018, 19 after the elephant crisis, which idiot gives so much money to one single developer. And literally this stock fell from 3,300 to six. Because of the aftermath of this crisis and real estate slowdown, and you don’t talk off own car developers and Microtech developers and ozone of Bangalore, and some of the others going back up and not being able to be back to, uh, predominance.
Okay. Similarly, BF has been a very bad company for the last 10, 20 years, except the last one and a half year. So what happens is when things improve divorce performance actually tend to go much higher, which is correct. But if things don’t improve, not so far, one, one scenario is that, you know, literally there is big us tapering and us inflation goes to 10, 20%.
They start raising interest rates 2, 3, 4, 5% that inflation comes through India. What happens in that case? I’m not worried about rationality and not make money, but you know, I’m not worried about bankruptcy and what will happen and what about so much debt and all this. That’s the reason I’m, I’ve chosen nationalism.
Perfect. Last cycles. It is very easy to make a lot of money doing good cycles. The problem that happens with these entrepreneurs in real estate is that they think that they are willing to make money in that three years for that engine generations. So they go overboard and we, as investors are never able to determine what that exit strategies.
So what you’re thinking is it’s yeah, we have still just left in real estate for the, probably next to two to three years. That’s what you are doing. I don’t, even what I think of is salaries are going up in it. Uh,
I don’t think they’re late when these are started by houses yet. Yeah. The flip side to you or a conviction is it’s rising interest rate is, uh, increase the rate for, uh, um, the loans as well. That will eventually bring down the demand for the houses. Right? This may happen after five hours a week. That’s one
C increase because there is a
little bit higher inflation and little bit higher interest rates are actually, I would say
less than 7%, 7, 8, 9 year seven 11, then everything would have enough time to realize that trading at 900 P isn’t it as of today is completely irrelevant to over there because of the way, uh, in comes out of recognized. So it’s not like, I know you sell one flat and profit on that. What happens is unless you deliver the entire project, you cannot book revenue and profits.
So projects, they will be five, 10, not even 10, you have four or five projects that they are delivered every year. Right? So those projects become, secondly, it has been a loss making company for the last one in Africa. So they are, uh, it’s, you know, it’s going through a rough patch, but future is not tolerating.
Secondly, it’s almost a debt-free company. So the downside is much less recently. They have more than a lot of land parcels. So six, seven deals that they have done. In fact, they have also spent something like, I think wander growers are almost a hundred gross mainland in sector 1, 0, 3, or something. Right now they have their average selling price is 2,600.
How much? 2,800 or something. Once they have projects in , you know, some of these places that average selling prices go to work to 4,000 for,
uh, how do you evaluate? So the last company through my nursing, sorry, uh, uh, price to book, price to book, and I don’t know future’s going to be better than the past. Okay. Okay, thanks.
Um, the last question, and then I will probably leave it to the next one is. It’s a simple question. If you’re looking at 15, 20, 22, um, what kind of, what you are looking at it’s probably was going to be negative or it’s going to be positive, or it’s going to be 10%, 20%. I know you don’t want to guess it, but still I’m asking this question because you are standard.
Disclaimer, I don’t want to get saved. I don’t base my decisions, buying or selling decisions based on that. It’s only for some good talk, you know, that I will engage in. I think it’s going to be minus 10%,
but just because I think it shows me minus 10%, I don’t send, or I don’t buy.
Good question. I’m uh, on, on the real estate, uh, this is sufficient. Uh, what would you think about NBCC? I don’t know. I don’t know. I haven’t started that business. Oh, plenty of government projects. They were supposed to building up your ideas, new items. All of those projects was supposed to go to them and some of the, uh, stock products and Google, et cetera, were to be taken up, taken over by them.
But right. It’s not about, uh, it’s not a real estate developer. It’s a more of a contractor is what you’re seeing. You’re guaranteed profits. So it’s like two types of a company is they’re able to execute projects quicker and make more money as in present.
But most of it is government and, uh, we’ve, you know what the payment cycle right. And cycling will always be challenging any own projects. Yeah. See what I also like to remind you of the pastoral care fee, the best companies during the 2003 to seven period, what, in fact companies, power companies, steel companies, all these companies, which have been one of the worst performance for the last 10 years.
See, I’d also show you something else. Okay. Somebody was also talking about consistent compounders and, uh, uh, blah, blah, blah, whatever, you know, Marcellus, you know what my problem is, why do I do not buy those kinds of companies at this moment? So if you look at this, I’ll show you ration pains, okay? You shouldn’t paint save between 2006 or say seven 80 has become 3,600 amazing returns, fantastic returns.
It’s how much, almost fucking time for something. Right. But the bigger issue at that time was 28 PE ratio for in fact, companies was a hundred at that time. Right. And was 105. So almost like three and a half, four times is made out of be ready, know what is going to happen in the next 10 years? So you look at this, it can run 36 profits in last 10, 11 years had only gone up to 3,450.
This is almost four times. So its profits go up four times in the next 10 years, MPD should comes down from a hundred to say, 50 or the third P then you are basically kind of making some five, six, 7% returns on innovation things.
So the problem is with these companies is that, see, secondly, they have not been growing that even, it’s not like they are growing at 25%. Right? What I talked about, the reverse DCF. When I talk about reverse DCF
they should, the company should be growing as profits at 25% every year for the next 10 years for what have they done in the last 10 years? See 14% in fact, see as good as 11%, what happens in an inflationary scenario, your margins will contract. There will be pressure on margins. So profit is not going to grow higher than your seeds.
So suddenly these profits are not willing to grow 25% year. That’s why all these make, you know, made up metrics. Our founder, FCF is going there. See if it’s going right. Somebody asked me if CF is growing. If, if see, if more important or earning per share more important, the problem with is that it cannot deploy money back into the business.
That is his major problem. They have to pay it out when you pay it out. You, the only thing that you can do with dividend is your 40% taxed. First of all, and then you can reinvest in an FTE at 5%, which is again, 40% text. So the option is, but to your question, it’s account there, this is another side of it, right?
Because of their quality, they have the pricing power. Whenever there is inflationary pressure and the margin is coming down, they’re able to compensate with the price increase, but still the people are going there, right? May the I, what I’m saying is they will still be the best companies in India, but will there be, they should become 500 or right now their feet cashflow growth has been more as stated 23, 24, 5, 20 5% of the last 10 years.
The reason is more and more cash is free, cannot be redeployed in the business. Now, when inflation comes, they will still be able to maintain more or less the profit margins, but they cannot increase those profits. Again going it’s again, going back to a question it’s probably a little stop there. There are two aspects, right?
When based on what you are saying is inflationary pressure is going to be bringing the margin down at the same time, which were same conviction on the, uh, real estate. When the, there is going to be a boom in the real estate sector and the quality of the company, which is like, uh, Asian paints with the pricing power.
It’s supposed to be increasing the profit margin in the next three to four years, right? Supposed to be what it’s supposed to be. Having the profit margin increased with the tailwind of both the real estate festival is the pacing problem, no solid pricing. So they have been able to maintain their operating margins at about 18 to 20% in the dusk.
For many years. I don’t think this is increasing this 20% margins is not increasing. It would either stay at 20% or reduce. If you please see in the last September quarter operation teams, the profit margin is only 13%, whereas if it was 24% in September, 2020, but they have increased 15 percentage on the price.
That’s that’s my point. No. Okay. Let me put it this way. The price, the expectation from the market and the PE ratio is suggesting that that day we’ll do a 21% CHR or the next 10 years. So the price is going to go from 3,500 to 35,000 stock price in the next 10 years. I’m just seeing what they were able to do in terms of stock price.
In the last 10 years, we’re not going to repeat it. I’m not saying the stock is going to work on 1,015. Definitely not. Is it going to be just one? Is it going to fall? It’s going to be the best paint company in India. It’s going to be a great business, right? But is it going to make, is the stock price going to 35,000?
Definitely not. That’s the only thing
you’ve ended up as don’t expect the future to be as bright as the past. This is what I’m saying. I’m not seeing business productivity suffer. They will have problems. The thing will happen. They had a brilliant business.
my question. Hmm. Uh, said I had the radio even thesis on the Quito. So this was a fantastic note. It was very, very clear. Everything was very, very, uh, easy to understand for even a layman. But what has happened is that. Speaking to my boss, some of my investor, friends who are invested with other PMs and other, he also other investors.
Also, they have also discussed the same with them. It’s still, it is not being universally acceptable by them. Still. Not sure are we missing on something? You say that you have a bet, a lot of money on this particular company and when a credible investor, like you does that and still people are not ready to buy it.
So what exactly could be the reason they talked to me? I said, heck yeah, I am by nature. A contrarian kind of a guy. Okay. I don’t like to go there. No, I am uncomfortable where consensus is there. So that is the reason why I keep finding these kinds of opportunities, which are at least initially not liked by most people.
Uh, if you have, so I will also ask you to go and study my thesis back in October, right? Okay. So read it, draw some parallels between this and that. The problem with our Sugarland at that time was this, that everybody knew India is in a school, down in an economic slowdown that proxies suffer heavily when the turnaround will happen.
Nobody knows. Everybody knows the turnaround is going to happen. So everybody knows that Indian economy, at some point of time will start growing from 4% to 6% or 7% that truck sales will record. You know, recovery will happen, but the PO the problem with institutions is that they want to be right in the next six months or one year.
They don’t want to be right after five years, because for four and a half years, then investors will give them money. And many , I should have invested with some brilliance and they will pull out money. They will literally whose fees, right? What’s the point of being right in the 50th and nobody’s invested in it.
So they don’t go for these kinds of investments, which, you know, look quite shaky to justify at this point in time, having said that I am very open, to be wrong in Louisville. My take is March, 2022 results. These December results are going to be decent. There has been some initial data that has been given by the company, which looks encouraging gross.
NPS have not increased. Uh, collections has seemed to have improved disbursements, have improved deposits, have substantially improved, right? What is the biggest problem with the bank? If the deposits starts reducing, because there’s going to be bankruptcy. That’s what happened because it’s actually increased year on year, substantially 40 50% types.
So trajectory is fine. Honest. When you do research, then things will be even more obvious if people don’t want to buy. I would say it’s okay. All in my opinion, in my opinion, and I can be completely wrong about this. What is happening is people are scared.
The opportunity is not that obvious. So everybody understands the logic, but they also understand that there are a lot of problems in this company. For some reason, I think deep problems are solvable and they are not going to kill the company. Also realize the underlying microfinance business is extremely profitable.
If there are no NPS. So if the MPS are not there, this company will make a 600 core profit after tax. And the bank is valued at three and a half thousand dollars, $3,600. So it’s like a P 20% Roe business ethics. At that time, it will become very obvious for anybody. Correct. So, same thing happened with real estate for a lot of people.
If so I bought into real estate, you know, uh, made a big positions in national housing in October 20,
like companies loss-making still problems are the second way will come. This will happen. That will happen. So many things will happen right now. Everybody’s talking about. So it’s not that people didn’t see it. So two things, people see it, this kid want to be more sure. They want to wait for more data.
Okay. Well, the second thing is maybe I’ll be wrong. I said after six months, three months, 22 results will come out sometime by 15th may she came to me as a day of reckoning, for sure. Understood. So these kinds of concentrated bets in not, uh, like just wanted to have two more questions. So these kind of concentrated bets, which you have in your portfolio as well as in your client’s portfolio.
So isn’t it risky for the client or to have such concentrated beds and my clients know what I’m. Okay. Okay. So there is enough, uh, alignment of, uh, uh, investment philosophy and the way I conduct my business and do my investments for my personal investments and the client portfolios are the same, except sometimes what may happen is one or two stocks, which are like we not the organics, which I buy.
I bought for myself and some of my, those initial clients, then I guys don’t have, it may not have it right. Or at least do not have it in that same proportion. You may have a much smaller position size given that it’s no longer as cheap or as obvious right about it. That is one second. See, it has to be concentrated.
Investing cannot be a philosophy. What of. It has to be an exception. You’re so confident about that one particular company that you’re willing to bet 20, that people sent in after so much study. Right. For me, it doesn’t happen with only two companies. Frankly, you get some Juven or you examples, right.
Would you, and I don’t know whether I got it as yet. I maybe don’t but then I have not gone to such high concentrations in any of the understood. So you mean to say that, uh, so this kind of concentration or this kind of a conviction that you have it’s basically because you work on less than number of companies, you give more time to each company.
Yes. Yeah. Okay.
Thank you so much for this.
Uh, may I ask the question? I’m a Bhushan over here, just two questions. So one is, uh, do you, uh, study SME stocks, APS? I will contact you after the call. Um, no. Okay. All right. No problem. And the second is a bit of a personal question kind of thing. Um, uh, so basically I’m having a flight, which I’m planning to sell and buy a, probably a new one, not for sell condition Westminster.
The real question is whether I should buy a flat, uh, or put money in stocks for the next 10 years. And if you say stocks, whether it should be mutual fund PMs, direct equity, what it should be.
Thank you. So what is your debt to equity ratio right now? Sorry, what is my, what is your network is in stocks, uh, networks say mutual funds, about 50 lines. Um, the, in the, in depth, maybe, uh, around 20 likes. And how old are you? 44. How much are you saving every month? About, uh, 50, 60. Okay. And this flat must be worth about 50 likes at least, uh, which one, the one I’m planning to buy it’s about once here.
So the thing is I’ll sell. Yeah, the sell it’ll go about 65 70, maybe. So in my opinion right now, um, 80% of my network is in stocks. Okay. I’m comfortable with that. Probably even 90% is installed right now. Right? Having said that we are no longer in March 20 or April 20, where, you know, everything is going to be just work.
It’s going to be a bumpy ride. So you need to have the correct advice. You need to have the correct, uh, mindset, and you need to have savings to be able to hold on to your stock investments for the next 10 years. So it’s not just about you need your environment also to be like, that should be okay with stocks dropping by 30%.
You should be okay with putting in more money required. Well, you should have enough savings, enough job security, blah, blah, blah. Okay. Third thing is, I think this is not a good time to sell. Uh,
restrict is one. I don’t know whether the prices will go up by 15%, 20% or a hundred percent. But I think the disappointment that people had over the last eight, nine years in real estate, that people are really frustrated with. Okay. Literally frustrating love. I have so many people in any Miki
uh, next 7, 8, 10 years experience. This is going to be satisfactory. Well, it make 20% CHR. I don’t think so. It’s going to be satisfactory. Okay. If you say don’t sell, maybe I can just sell it and buy a big, expensive with some, a bit of extra loan, which I’m comfortable with just to, uh, increase my, yeah, you can do that.
And, uh, the, the thing that you can do is whatever rank you get, that you put in equities, it will be a much smaller amount, but at least slowly steadily, you will keep building our equity portfolio. Got it. The way to go right now is slow and steady, not jumping. So there was one more question. I now realize where, which I should have tackled before.
Okay. Uh, which is, you know, one of you had asked me, uh, is this the correct time to increase portfolio?
Okay. So your question is very similar to that. The point is this. If you are 90% into equities right now, and you are not yourself investing like me, you’re not that confident. Then it’s time to be a little more cautious. If you’re only 20% invested, like one of you actually returned to me that I’m only 20% investor, 80% in cash.
I don’t think this is a market to be 80% in cash. Okay. It’s never obvious that things will only go up or go down. Okay. So you don’t have to be zero or one instructs. You can live, we measure it. So this is a time if your equity allocation is what you should steadily increase it. Think in terms of what I will be able to put in the next three years, you’re one, will I be able to put 25 X plus 25 X plus 25 or whatever the number is for you more or less, right?
So that you are able to reap your benefits. After five years, seven years, 10 years in the next three years, at least one year is going to be a negative, but negative yields are actually good for people like me and people who follow my investment philosophy book, cause cheaper stocks are better for me then customer stocks.
So I’m happier than bear market comes. And you know, I’m a little more uncomfortable in bull markets and make a lot of money in bull markets. I get uncomfortable. Right? So could you increase your portfolio allocation? . Stick to a plan, proper steps. The other one, this is what
PMs. You must be at least 50 Lexile. Yeah. So currently I am with in MF itself, Berlin cannot take out all and put it in PMs or just continue with MF. Then you would have to only go with one PMs. You have to be very good friends with that guy and all that stuff. Okay. Yep. All right. Thank you. That’s it from my side.
Uh, should I take what you said? Let’s say if I’m 90% invested of my builders in equities today, you know, between that X stocks and mutual funds, are you saying I should not be allocating more funds to equity or just hoard on or, you know, take some money out of the table. So you seem to be around 40. Yeah.
Yeah. So the question is despite us down the line, but then your business income salary income is going to be so much that, you know, your equity portfolio will be much larger than what it is today likely. Yes. So then I don’t think you should remove anything. The second thing is, are you getting really uncomfortable with the positions that you have investment in bred comp?
I don’t know if you are, then I think you should reduce, what are you invested in some. No, not such a great business, decent business, but with a 20, 30, 40% allocation of the portfolio, the portfolio, which you know, that this business is going to suffer. If things turn back, but not, I would not be worried about it.
The only thing could be, you know, potentially I could take some money off the table, maybe do some timing, you know, six months, money or two years. We’ll not do that cash. And then deployed, uh, when the opportunity silly look at extremes, similar average performance, we will never be able to get, suppose you have equity portfolios.
Now, whether you should take off 10 legs for 20 legs or 30 legs, whether you should take out now or after three months wolves, whether we should put back after six months or when you lose. The point is if the market falls by 50%, do you have the capacity to put in 50 next month? What will LT given extreme?
Will you be able to send your second house and put everything in equity? What, what knowledge, what scenario, what conviction you need to be able to do that big? Um, if market force like the weight fell in mass 20, where the world was ending, and I think, you know, then you can go home and, uh, invest in whatever you are.
The capacity also has anemia for six months. We recorded, it can swipe one to three years ago. But you shouldn’t have that cup. So I’ll give you an example. I have this one friend client, um, what, basically, so for him, I told him this partner, okay. Which he also resonated with. I said, can you have your people?
How much do you have any equities, including our houses, this, that everything he said, I think his number was about 25 to 30%. So they would check it here with stock. You’re going to buy are not willing to buy, or they know that this is going to make 20%, 30%. Tell me what not in, what, what can we give you the conviction to have 90% in equities?
What a 10 year period, equities beats everything, right? It beats inflation. It beats of these. And in all probability you your house. But if you put on it, 20% of your network and eight quickies, and you keep saying I’m a long-term investor and this and that, it’s not only a changeable model. So I give you a divorce.
What’s the kind of stocks you buy. The kind of conviction you have in companies has to be commensurate with that high elevation quickly. You cannot be just investing one bottle of conviction without absolute zero study. No people have enough study. They are only investing is cloning. Also. I also get ideas from somebody else.
It’s not every single idea is. I also bought all those ideas from somebody else, but I do my own study. So are you confident about that string? Right. So if you think the marketers would remove 20%,
are you comfortable with our allocation is the bigger question right now.
And don’t have 30% here, your expectations, right? Maybe you will have 5% for the next two years. Hmm.
Maybe one of your mutual friends is for your sons or your education. You just sit 10 years down the line.
I invest in preparing the children the day. My son was born seven years back when the attending
a hundred rupees tie deploying mutual funds. I think is not the funds. I mean, just forget it. Don’t try to come out, come no question to answer any equity chop up. When are you asking yourself such difficult questions? You’re going to feel so uncomfortable in your room, on this field. Okay. Thanks. Hello, my purpose here.
Uh, oh, I bet. Yeah. Yeah. So, uh, first of all, thank you so much for your beautiful notes. I really like reading them. Uh, so my question is more related to the thought process of understanding the growth trajectory of a company. So, uh, one obvious way, which smart investors like us have as access to annual reports and call transcripts.
Right? So, uh, using that, we can definitely gauge what the management is talking about and using past traffic. Or we can say, get a fair idea of whether they are able to deliver on that, or they just were promised under the law, but, uh, in most of the cases, uh, what happens is one, uh, like get an idea that this sector is growing and has probably a three to six month window, uh, in between which the price reacts to that.
But then after that, uh, at almost every point in time, you find that the stock is very expensive. Uh, Given the current, uh, trajectory. So because, uh, it’s very difficult. So my question would be how should one get whether, uh, the group trajectory is like whether there is a still longer and varied office and, uh, can the management actually beat the group expectation that they have communicated to the investors?
Because I guess, uh, only in these two scenarios, can you actually get a fair amount of returns from, and expenses from an already expensive or unidentified story? Examples would be the chemical story that you highlighted, uh, sometime, uh, what is the question? So yeah, the question is how can one actually build that conviction or identify that gluten-free apart from the con called transcripts and, uh, annual report for an already identified choice, exit example can be chemicals.
And other examples can be, for example, these CDMO companies, we talked about last labs. I mean, for the past 10 years, it has given the sales growth of about 30%. And the average B has been meeting P has been around 30 for past five years. And, uh, you still mentioned that does not sound like, uh, uh, like a hundred baggers, something from now.
It looks expensive to you. No, no, not us. No, I have no global laurels to the point is this first is you have to be answered in a slightly different way. You have to be willing to let go of a lot of opportunities. So that. I actually lied and orderly in the correct company. We make a lot of money, right? You need 2, 3, 4 such company who would attend to view 20 companies.
You don’t need to invest in every Laura’s lapse, right? To do that in investing, please come to that realization yourself. Right? If I tell you that it’s not going to stick, right. Second name investing is a very uncomfortable game. Markets go up. There is a problem. Markers go down. There is no problem. The invest in some companies, the price doesn’t go up.
There is a problem. If the price was upended on invest, investor is a problem divided up by only 2%, 20%.
it’s like this. There is only one constant emotion. When you’re investing as a director, it would always be somebody granted
position sizing is the most important because nobody can get it. Right. Right. Every single person who leaves say a yard, exit strategy, nobody can get a date. May not be going to talk now.
That’s true. So you have difficult question secondly, be a little more technical, uh, one sort of go through these Concours and another potential stuff. There’ll be a lot of other materials you will realize that you need to read. Okay. Can you share some examples? It’s quite important, uh, uh, annual reports, because then it gives a sense of the industry competition, uh, business foreign companies, competitors in some other country, these kinds of stuff.
Okay. Companies downstream, upstream . So there is no, uh, uh, ABCD kind of an answer, but if you go to annual reports of the company, you basically kind of realize what I need to hit and what I need to second, you need to realize what are those two, three important pattern meters that you need to be stored off and calculate?
Or what are those three parameters, which impact the business the most, right? You don’t need to know everything about every company, everything about that particular company, right? But you need to realize, get a notice labs, may the June last because of that, China shut down this then whatever it is, I got APS cut prices.
50% drop, which is going to be the impact on a lot of snap profits, right? And in the worst case scenario, what is going to be the profit. If the property is going to become half, then the parish was going to be 60. Am I buying her 61 fit windows? No XYZ. Thanks. Right. Well, you will have three main important parameters.
Yeah. And want it that, and then you will realize a little bit, we’re not going to the companies and the Broncos, this you realize what other resources that you need to look. See, second, I’ll give you examples. Okay. Or these days not articles or YouTube videos are there of CEOs they’re giving a tech talk or they’re giving some interview.
Apart from CNBC. They’re not talking at some industry forum or something like that, or it could sometimes be, you know, some government, uh, um, documents on that industry. It could be an anti-competition, uh, uh, capital. The investigation could be anti-dumping duty investigation or something like you will realize that keeps you up at night.
Okay. Yeah. So thanks for that. Uh, so I have a question on, uh, two sectors per se. One is financials. So, uh, lately there has been a talk around these new ways, FinTech companies, uh, trying to disrupt, uh, the financial world. And, uh, one of the most talked about points is usually that banks have these low cost deposits and they can always go there.
And, uh, like they they’ll always have an advantage in terms of, uh, giving, uh, cheaper loans. But recently now we finance, uh, now different tech started offering home loans at 6.4% and that’s I guess, the cheapest in the industry. Uh, so, uh, this is, uh, one example that has popped up and, uh, it’s, it’s only time when other fintechs would start catching up and replicating this.
And, uh, we really have no idea of how much we see funding. Obviously they, the only source for their funding is VC funds right now. Uh, that’s the only way they are able to lend so, so cheap. So, and we have no gauge on how long this can continue. So, uh, in this scenario, uh, and given that banks are not as cheap, they are not as expensive as they were, but they are not even as safe.
I mean, they are over three times price to book in general. So, uh, how do we see that sector? How do we, uh, like.
I think lending is not an industry where we not. Excellent. Alright. Second base capital equities, the raw material that is required following me, right? In fact, lending is a business there. Every single penny can be reinvested. A free cashflow can be zero for a long, long time. If in then GDP grows at 7% plus 5% inflation, just credit per cent credit road will be between 12 to 15% for a long time.
Next, a hundred years shoes industry. And a lot of the notes on there. The one thing that you have to realize in lending is that MP who is able to manage and be as the best. Okay. So we have
don’t worry about that for the techs. I’m not going to kill because all these fintechs are very bad at managing and peace. That’s really, really very bad. You look at all these fintechs the last one year, what has happened to the credit cost? How much , how much, right off Sunday, 10 grand, 15, 20%, right. Or something,
whatever it is, it doesn’t matter. I mean, what I’m trying to say is MPS is the biggest thing
At least they didn’t want me to read right now. Right. Okay. When these types of companies do, when they would also be pretty, it gives you an right. Okay. I have just one last question. And, uh, that is on the capital goods cycle and related companies, but it comes about almost every two to three years. Uh, but whenever I look at them, they almost always look very expensive.
The, at least the frontline names. So, uh, like what valuation parameters should look for these companies who are difficult to answer, because I am also struggling with that. The point is this, you know, there has to be very clear indication of substantial capital investment. And the second thing that we have to go through is we have to look at a big central is don’t go with each of them since doing this Catholics, you know, for look at companies which provide to these people who are these CapEx.
Okay. So that is a better way to go.
you know, if, if really Catholics comes back, then a lot of these companies that want to go back 10, 20 times profits, then this valuation is also knock back. I’ll show you one thing. Right? So this escape is a very good company. Hmm. Yeah. I’ll show you one small thing. So there is this company called escape beddings and this and that got all that stuff.
Okay. So if you actually see, say in 2005, six, it was a 300, a piece to date is 8,000 rupees, 811, 12 bags on the last 15 years, which is not bad. Maybe percent types of return rate is good. But the problem at the 10 minutes, 11, 10 mate is profit. It was 1 77. Today is four times the good times of constantly there’s only two and a half times.
So stock has gone up 11 times. This is one of only two and half times the issue. Hmm. Okay. Peter show was in 2010, 11. It was 20 at the bottom. It was five. So this one is
right. But the time to buy it on was, you know, somewhere I don’t impose in know to somebody here, it was more obvious, easier to buy. That’s true. Yeah. It’s not easy to buy. So sometimes. But then there was no sort of CapEx available in the plus 10 ordeals, right? I mean, this talk has been, there was enough talk about CapEx revival in 2014, 15, th there has always been taught that has not actually converted into a cycle right.
For a substantial period of time for, so that’s what I’m saying. I know it’s difficult.
yeah. It’s, it’s, it’s a tough answer. I don’t have an answer. So this, this links to the first question directly that a similar sort of thing, uh, I, in a lot of other sectors, so how do I make that in which the stock already looks expensive? So how do you give that? Okay. The runway, they say, how much money do you want to put in?
Do you want to look at 10, 20% of
stocks go down on markets? Correct? Will you still have 20 to 30% cash laying on the sidelines, which you will be able to deploy. And then you pick two, 2% beds in Texas companies, right?
try to buy three companies if you want to be safer to buy, say for companies. So to see the same logic that I given Ashkenazi, who want to go to a show about something, because I know they’ll do better than our cycle. If the down cycle comes on, the bad things come, I will lose my shorts.
Okay. Thank you so much for
ask a question. Uh, I’ve also been waiting, so I’ll wait whenever you’re ready. No, no, I think, uh, I don’t know. A lot of people want to ask the questions, I think. Should I go ahead,
please unlock a new mask. Hi. Hi. So I’m not going to ask a stock specific, uh, Gary, uh, I mean, uh, regarding your small case. So I know what I’m going to ask is an order situation, but, uh, it, uh, rebalances quarterly. Yeah. So assuming that you in the middle of a quarter three months is a long time, you could possibly get to know some information about any country that you would want to change.
So do you pass on the information to the subscribers in the middle of the quarter? Uh, when it’s not been rebalanced? Uh
like, I mean, I don’t chase those top competition after three months old, so that three months is indicative cycles. Okay. You want to make any changes in between them? So you do send out communication that you rebalanced that has been rebelled. Okay.
Let me just fine. But just in case, like, I remember you want to having a conversation about, uh, was uh, uh, what does that company, where the promoters were caught into a case where yeah, I remember that you had, uh, you had a view saying that, you know, it’s not, uh, in fact, even IEX you and I had a conversation where in the middle, you said that, you know, we should sell and then you had, uh, partner back again.
But anyways, that’s that’s besides, so you do send out a communication. Secondly, I wanted a quick view on a momentum investing from you, or what is your thought on that? And if you do have any belief in that, then as, as we know that momentum can have various strategies. So if there is any strategy that you think so momentum investing to, okay, but there are a lot of other good people who do momentum investing and it also works.
Okay. The, my problem with momentum investing is that I won’t get the conviction. When the stock prices start falling, I will get scared to follow. So that’s the whole point that you, you get that exit. I mean, you keep that exit stop-loss or the speed with the academy doesn’t place. That if it starts falling at a certain point in 2018 and to the marshals and to, and everything was funny, when was momentum investing and then not making money momentum investing has today become so popular only from April 22 genuinely because it doesn’t make a lot of fun.
See, I put it this way, putting 20% of your portfolio into momentum or 40% of your portfolio,
a moment capital in mind as a good momentum strategy. That mistake, where does a good momentum strategy I looked at, I began investing as a good momentum strategy. And then obviously what those also, so do that I am seeing maybe it’s not one putting 90% of wealth in it is good enough or whatever quarter of your portfolios.
Alright, thank you.
Yeah. Really quick two questions. So at the beginning of the session you are said, what do you expect? What you expect in 10 years has a return given to your investor as in what is your standard?
if you wait for 10 years, four times is quite reasonable. Okay. And hopefully we’ll be able to do. Um, even going from here, see, because what happens in 10 years is years evaluation plays a much lesser role. If you wait for 10 years, it’s going to play a much, much lesser role, then the business that you bought.
Okay? Okay. So if the business does well, then we are going to make a lot of money. Now, maybe the difference is 15%, 20% or 25%. But even if you do 15%,
secondly, I know I’m a few other things. Also, I told you, right, if you are under-invested in equities, it’s not the correct approach, right? Because there is no guarantee that markets will fall. Okay. Pick a method approach to year one, year three, I think we have discussed, this is the same thing to everybody lose zero ones in investing.
In any scenario, you should be ready with your plan. The best grip right now is X plus X plus X for the next two years. Okay. If things change suddenly. I have a trip planned. Okay. And one more question. I mean, so as an I’ve been investing with you for almost six, seven months and really good kind of a journey.
And when I say journey is not only about the money you make, but really about having no conviction and are kind of also like an ease of investing, right. You not worry about on a daily basis. Right. But that’s one thing which I feel is, and it could be a trading mindset said why don’t we sometimes consider taking profits and then entering, if we convince about the company, sometimes just take a profit and enter back in kind of 10 to 15%.
Usually what happens is it requires very different skill sets. So like buying IEX at seven 50 and sending at nine 50, and then again, the reentering and that kind of stuff. Right. And identifying an IAS when the price is 1 50, 1 6200, 2 50 requires a very different mindset and a very different skill set.
I want to be great, not just good. I want to be great in my life. At one mindset I have chosen, I will try to identify it.
So I need to determine, uh, I need to put my, all my energies in trying to do the decade if I die. So I admit I probably make some money if I tried it. I know
but I make much more money if I buy it. . So I don’t go behind the bigger fish. Right. I’m okay. See, secondly, I saw
I have CPC. He mentioned to me. Yeah, you have mentioned, okay. The plaintiff while the observance of dogs, right. You buy at the 901 for select 700. Then what we do that will completely bogged down by the conference rooms with attention QR, let me start focusing on all the wrong things. Okay. Thank you.
Thanks for that.
Some people would very bad. Let them do it. I don’t. And I not come in. Yeah. I think that a lot of people who want to ask questions that you can cook you some book, which you really haven’t. And then I think a lot of people also questions about EXR. Okay. So very quickly, pretty short question, two questions.
I have one thing is that, you know, given the fact that it, uh, services companies have a very good run up during past one month or so during last one year itself also. But whether at the current prices, does it make sense to get into it because you hear a lot that now in times to come, the index voltage would ship from financials tool technology or it services company.
And also given that their peas are inside 40 or in between 35, 40 weeks, uh, you know, with the existing, uh, you know, a high cap stocks, which is reasonable and, and yeah, given the fact that existing steep revolutions across large cap stocks or index stocks is pretty high than 35 to 40.
But it’s not a hundred, 120, like some of the, yeah, some of you that certainly. So it why IB substance company, you know, they have a very strong governments like TCS and Infosys and consistent, uh, you know, the growth in sales, uh, high revenue, visibility, cashflow visibility, given their clientele’s diversified revenues, dollar exports, where dollar is keep, you know, strengthening.
So one thing is that, whether it, this current prices, uh, does it make sense to enter at? And we, I expect that the expansion also, and at the same time growth in, uh, what am I Muslim? I’m expecting these to work from 40 to 60 80, because they, the only, because that it services company that, you know, if we read there’s a talent war going on, so why didn’t what is going on in it space because, because the business is so great that they need more and more people that is where I’m taking you from.
You’re right. There’s a huge talent war that is happening. That is for sure,
maybe some more juices left. Uh, but see, see, I’m the kind of investor who wants to buy cheap things during this call. So I said,
I’m never able to get back. I mean, it’s really tough for me to now go and buy all these years or even a persistent or a Tata Lexi. Oh, KPId, it’s a very difficult question once. Maybe, you know, maybe I will, maybe I think some companies might be, you know, better fishing ground, like some of the intellect design or the grade gain or something like that, that I’m seeing is what we’ll have C I D services is a linear thing.
less margins will not improve even if they don’t reduce. Right. I don’t think the margins are going to 5% operating margins. 20, 25% newscasts business is also increasing and, you know, whatever XYZ is happening, but Jenny like Turkey three years down the line, does he know there’s going to be way better than today?
I don’t think so. I mean, that should not hit
sorry. You’re on mute. Uh, Monica, I just ask you a question. Yeah. So I was, I was asking, I was just saying that you’re not taking a conversation in Warren buffet that he said tells that, uh, you know, you should buy a company, which eventually I knew did can run. Right? So TCS and Infosys are, are at such a stage, you know, that nothing is going to disrupt in terms of either management or in terms of business.
They become too big to fail, though. It is a very, I I’m, I’m not sure about it because in long-term no company has such a huge, you know, a track record barring very few. But from that facility, I think that if, if a person is having, uh, expectation returns of somewhere between 14 to 15, some mid teens then is doesn’t it make sense to rather to go for 25% returns for a 15% returns, this company should surprise the purpose.
I think the way to build a portfolio and diseases kind of certainly up 10% of the portfolio. Now, though, you will be like, did I buy it cheap? Did I buy the expensive vessel? If you have a running business or your job is there and you’re saving some things would kind of, you know, put in every month types, what, 5, 6, 7 years we don’t sub
some of us are doing like what aquatic made some mutual fund me.
right. Who then we never see on a monthly or a daily basis Mulligan a 7% rate of Italy was civic.
okay, great. I may add another very quick question that I was looking at CGD companies in India. They have a monopoly kind of a business in India, right. And at that 225 years of network associativity, but again, same thing we see that their PE ratios are at a pretty, you know, uh, low at, around low means in comparison to the other companies like around 30 or 35, despite the fact that they have exclusivity period, and the competition is not there because of the monopoly.
So there are four listed company, three RPAs use, and one is Adani barring Adani because of the total existence of total over there, all three are, I don’t know whether it’s a value trap or a value buy, or it is a PSU tag, which is dragging them some, some thoughts from your side, uh, five PE ratio going to 15 or 20 is fine bone bank on today, going to 60 or 90, that cannot be your investment thesis,
but it’s not helpless. You’re not allowed to make so much money. Let’s it’s not an easy business. So much biplane needs to be done so much. CapEx needs to be done. Employees are . They don’t want to work. Maybe it’s a good business. It’s a monopolistic business, but it’s not like the best business in the way, but don’t expect it to be a hundred people.
These 30 people, you feel happy buying for the group by
before I was wondering only because there’s no growth in MTN.
These businesses are not going to a hundred. Sorry. They are not good. Fine. Perfect. Thank you.
So I have a question related to the gold companies and the golden sectors in general. It is basically a secure loan on the companies give out their own based on certain percent of the goal, my view, but even for the past 20 years, is there any reason why these go wrong companies move to very lowly valued in terms of BB and B?
No, that , I’m just trying to go. These trips extremely profitable businesses globally. The concern size is a concern for them. Okay. And I knew that four times price to book value, which is very expensive. Monachorum is act two is a little more reasonable, but I don’t think when I put arms around to be valued at four times book, when
they see the problem is they don’t necessarily lend to the best of the customers. They are not lending to UNB lending to people who don’t have so much money or other connector. Okay. These are so gold is very safe, but what happens when that money needs to be taken and given to vehicle finance or microfinance or affordable housing or some of the other sectors, those are not as good businesses as old, old, right?
So that’s problem with Golan companies right now always happens is hit a profit hair. Where do I invest it later? All right. So we’ve reinvested in other lending businesses. Those other lending businesses are not wanting to be as good as good. If you see the period between 2008 and 2012 gold loan companies were able to go at a hundred percent CGM, 80% CHR for four years.
Okay. Look at the history. 30% CEDIA, Justin Golan, every year, they were up 500 bunches. And the second is regarding, regarding would you like, uh, I read your blog like few weeks back, and then I started following the company and I saw that it says this quarter, I know blog, actually, you had mentioned that you will, your exit strategy was like, if the pricing doesn’t improve, the two quarters have good performance.
And if you make a certain treatments, so how do you view this as a sense of the company? Like, what is your opinion on this quarter? Is provisional numbers better than last
but on a standalone basis, like alone with, it’s not what you need to see. You need to see whether there is improvement of our standard on doesn’t record at all, because standalone results are already factored into the price. Right? Everybody knows the NPS of area. Everybody knows management has gone to get one.
There is used in the management, all of the problems that are going to be open. The question is, is the business improving or are there any other negative surprises which are not already complete? Okay. So there are more negative surprises. We have a problem. Okay. I’m just going to ask question, like I’m moving, listening.
Maybe you’re investing for the last two years because I started working at school. Yeah. I think by the way, has joined us from the U S we.
yeah. Too glad to speak to you actually, finally,
it’s a nice dock actually. Um, uh, a disclaimer. Okay. Um, uh, I’m uh, uh, uh, my all the time, like close to like two years after leak. Uh, my question for Emilia is, uh, uh, by the way, you know, uh, I actually closely double the money, uh, with I administered max is, you know, uh, because of the central banks are doing, uh, these guys know, keeping them stress low.
Do you consider these macro things like mainly interested suddenly within, you know, to get the, uh, stock market up, you know, because nobody, nobody else stopped my work to be down at least many years. And in India, to be honest, you know, just wanted to check from the macro side, like, well investing to, uh, William missing in the stock, you know, okay.
When you’re not a concern, like exotic stuff, apple, India,
companies, uh, easy because of the corporate thing, uh, per Godness thing, the you’re not dealing with the IP, the DBAs stocks, is it solely because of the growth rate where you’re beginning to make the
minister, to be honest, but because, well, I think that your voice is not very clear by knowing the last question, but let me first answer this micro thing, interest rates, that, that thing that you asked. Okay. The problem with macros is that it is very difficult to predict. And even if you are able to predict the impact is so complex, that even not be able to, uh, kind of, you know, make any good sense of what it will impact it will have on our portfolio.
It’s just too complicated. And too, secondly, what happens is when we in hindsight realize, okay, this happened, that happened, that happened. And that’s why, you know, I made money or I lost money because of my course. Yeah. Okay. What we have to be sure off are we, you know, irrational bubble or investment undervaluation that we are able to.
Okay, this is secondary. We are able to tell, are we in the bad stocks or the correct stocks? That question we can answer, but what will know, what will be the impact of interest rates and this and that. These are too complicated, too much. You know, it just, there’s no good answer for that. That’s that’s the only thing I’m saying.
Okay. How if suppose interest rates in us, which are like 0.5 or something, right, right now, if it goes to 5%, it’s going to have a big impact, but really would have 5%. Nobody knows. Suppose it goes to 5%. Who’s going to suffer the first stop. First bonds will have a very bad week. Okay. Number two, all these high growth, negative, you know, high growth, negative profit pick companies, innovation companies will suffer, which you have already shown there started suffering.
No, the accumulation fund they already started. So I used to say, as ratio of 50 will reduce to 10, will it be a good business? Many of them will still be a very good businesses, but you’d have to wait for 15, 20 years. Like, you know, people have to wait for a good 10 years for Amazon to each back to what aspires was in 2000
Bert, uh, will the bubble burst. Yes. But then nobody knows. And will it be like a soft landing or a hard landing? Okay. That’s the only issue. But the second question you had asked was why do I, why am I not in effort or some of these high-flying companies everybody is, and that is, you can see that is my limitation also.
And sometimes my strain tops. So what happens is,
uh, but not before, before it becomes like a consensus and before it runs up on the valuation or so. Yeah. So maybe in the future, I will evolve beyond that. But like now maybe, you know, in some sense it is my limitation that now it becomes difficult for me to get on an it services company and a chemicals company, that kind of stuff.
So I would rather, I show you, we know something like this, um, uh, one sec, right? And show you this.
Sorry. If you have time later, if you know, , after the questions, you can take it up. Yeah. So see, this is too limited, right? This is one of, uh, yeah, this is that chemical company. Right. See the correct time to buy in the easy way to Bible us this period, man, who doesn’t tend to do those. And the truck was a hundred, 200, 400 grade is 9,000.
See, I don’t show you this company was through some of the other companies with Kyla mines,
looking at mines was a very small player here. If you see the profits that are only 10, 15, 20 course. So here, see now it has done very well, but you know, the correct time to buy with somebody here, you know, it was, I would say relatively easier to build a conviction than it was chemical was not a love sector.
It was a bad sector. A lot of the companies were making, right? None of the companies were having huge problems, debt, this, that all kinds of problems right now everything’s hunky Dory and valuations are high. If things go wrong, what do we do? Yeah. The question for me is lik, you know, how do you develop that contract?
And we, you know, just getting into the financials are like, how you do, how do all of that activity? And not only that, okay. I have seen that you’re regularly doing the portable sizing accordingly, you know, just putting more money into those drugs. How do you do that? So see, look at the downside. What is the downside?
Okay. So what happens is. If you’re confident that the downside is not very high, then what is left is the uncertain upset. Sometimes the absurd will be not be very high. Sometimes the, also the upside will be very high. Now, for example, I’m invested in care ratings. It might so happen that the upside doesn’t turn out to be as good as I’m thinking
fine. I didn’t lose much money. I got some dividends. I made five, 10, 5% returns in that stock, maybe. Right. But I don’t have the downside. The problem is mines is that 50 P ratio. If the profit margins start reducing, then the stock will not order the right. The stock will not stop at 2,400, the stock we order, we can do it in 706.
And every single moment, I will be like what to do, what to do. Then there will be a lot of these momentum sellers there, you know, because, because these momentum investing what it very high was saying a moment
because of the momentum exists, the stock will go down 2000 and I’ll always be, you get the point. So that’s the issue. So I’m looking at downside the conviction. So I’m okay to wait for 2, 3, 4 years. If the downside is still limited on. I’m I’m okay. Maybe after three years, four years I’ll be like, okay.
It was a bad investment decision to invest in characters.
that kind of companies, it’s not a bad company, but yeah. I don’t think I’ve made money in it. And it’s yeah. And one more thing is, uh, uh, you’re you own that cyclical slip cyclical stock
the last two years.
uh, I’ll be able to hit me now. Yes, yes. Okay. Uh, regarding the cyclical know, like the metals or whatever, you know, like, what is your view on that either? Because they may be an interpreter if you don’t do the boat on it. So if I heard it correctly, you were asking me about, uh, cyclical or making stocks, right?
Yeah. Cyclical. Yeah, cyclic . We have to be able to catch somebody in the one time. I was not able to do that or in the cycle, I had looked at metal stocks, cement stocks kind of stuff, but. Uh, bring myself to buy them. We always underestimated the improvement in the scenario.
Okay. So 5% of the portfolio on any particular cyclical industry or cyclical company, but then track those parameters of prices and demand and supply that stuff and be willing to be wrong weekly. That is what I can see. But yeah, I have not been able to pick that up
We have discussed a couple of stocks where we have looked at, okay. The right time to buy was about 5, 7, 8 years back, obviously with the hindsight bias. So in current scenario, what are those sectors do? See those kinds of valuations don’t differ as a head right time to buy me. It wasn’t obvious thing to buy them.
Right. It probably was a little more obvious then, and definitely totally with exit buys. But every time you actually see what they do, the problem with these companies, the problem was China was very bigger than Indian chemicals, current account deficit paper from a high cost of labor, low labor reforms, or many chemical companies, making losses, all kinds of problems we have.
Yeah. Okay. You don’t want to be highly not obvious. The flip side was that the industry was going through a bad patch in the valuation of and there were still, some companies were still making decent profits and decentering equity. Okay. Now what happened was a bad sector, became a good sector for the company in this sector, became a great company.
All right. So European expansion also happen. Profits also increase sales on everything. Basically, everything went up and your stock became 50 X. So that is the fishing ground. Right now. I am struggling to find. I mean, I didn’t buy these companies at that time.
I was invested in something else. I was already able to find them. a positive day. I mean, they’re written off badly, the entire automobile sector, two wheelers, uh, uh, Evie and all this stuff, right? Yeah. But the valuations look very attractive. I mean, given, uh, historical benchmarks, you can cry. I don’t know which company you don’t want to go, uh, because of the problem
they have this huge investment in detail as well. So credit company, Mr. Company, then it makes sense. But what will happen is they into their that’s true, but these are expensive as well. Right? I mean, they are two X the price, of course we have conscious high margins necessarily. Okay. Secondly, if you will have seen history of early automobiles, nobody made them.
China’s story. Uh, it’s like, it’s just come, uh, putting the parts together. 50, 60 companies can easily do this thing together, but again, uh, and this, uh, guessing it from the side that the sector is written down and nowhere else, do you see these attractive elevations? So again, I don’t know what would happen in the future with this.
If you think that is a cyclical upside types, kind of a thing, then you’re like, okay. I think there’s a problem. Okay.
Yeah, sure. Uh, thank you so much for the patient for the last two hours in explaining many aspects. Uh, so I’d be interested to know your views on chat ratings.
yeah, it’s actually a company that is giving good dividend. I think for four oh 4% is almost like what you make in it’s the same. Uh, if the credit cycle picks up this company, Great. Great for that. That is the big question.
Number three happens. I make gladly send money. If it doesn’t happen, I don’t lose money. Lose money. Thank you so much. Hi, my Vasu. You. Yeah. Yeah. So first of all, I’m in, I’m in a switch on my video. So thanks for, uh, you know, doing this session. Uh, I mean, having those nuggets of wisdom with such a candidness is, you know, so clear sometimes, but, uh, thanks for that again.
And, uh, I will just go back to the 20 times where you’re very comforting from the investing point of view, right? I mean, the , it’s like a, it’s so difficult to get any of the ups. And especially if I put it in a way key, we are not thing from the one year or two year perspective, we are thinking you’re a five-year or maybe take care of two decades perspective.
So how, how do you deal with this problem, right? When the valuations are high and how you put some percentage of cash? Because when we say like, valuations can come down, do you put some casts? You know, it’s not obvious to put any of the companies, so maybe 20, 25% wait for the downside or teams you are watching because , I mean, on a personal level,
In first instance, it looks like you took the hats. So no idea. So how do you deal with this problem in any sectors you are watching like, you know, decades stuff and all because any of the, you know, even people are talking about our government is talking about they’re all high valuation, you know, e-commerce renewables or ESE and some of the stuff, just so much money out there, like insurance and all, you know, so, uh, I don’t know.
So have you deal with,
so you also have a question on St right. Do you want me to take that out because you had given it? Yeah. Okay. So my question is about position sizing of any particular store. If it has grown up by 25 to 30% of my overall portfolio, for example, CDSMP, it has rallied up for how much so 10 has been a 10 mega or something like that has gone up from 17 to 60 PE price to book ratio has gone up from three times to 17 times.
So what should I do with this position? Great. Yeah, that is, so let me first answer this question. So price to book value is not relevant in case of CDC because it doesn’t, it’s a price to book. Vendor is only relevant for those businesses, which require a lot of investment in physical infrastructure, plants, and machinery and factories and such stuff.
Okay. Yeah. So it doesn’t, uh, price-to-book is not a very. Can I just one industry’s definitely not cheap, but it’s a great business. So you identify the credit company that’s growing grow big portion of your portfolio just because it is like 60, 70, 80 people on sell normally percent. Having said that if you are very uncomfortable with the position 20%, one one 50 days.
right. Use that money somewhere else. Some productive thing. Right? If you buy a necklace for your buyer, she is still happy. Right, right, right, right. secondly, oh, sorry. Sorry to interrupt on this one itself. Uh, what is the case? If I am comfortable, but the rules which I created is I’m not comfortable know, not allowing me to do it.
So for example, I put an old key participants with any cargo, but with any Jana, is it fine? Is it the same? I mean, if you are, if you’re confident about C rule doesn’t mean all you, the rule will benefiting, right. Pool is full, prevent you from making bad mistakes, right? So if you have the mechanical rules, not beyond 25%, I think you are better off over the longterm.
Following that rule without. Okay. Got it. Okay. So you’re better off in this case, in my opinion, should not send you a CDSA position. You did go to 50% of the business. It’s fine. Yep. Yep. Okay. I know it’s what they do this in the next five years, you’re going to earn and save. So I know your position and your salary and your savings kind of, you know, better.
So I think in the next five years, you’re work, whatever investments you have in equities right now, what savings you will have in the next five years. Yeah. Well then automatically serious if you become half of it. Right? Makes sense. Yeah. Good one. Well, I know for example, you don’t want to own a house right now.
They tell you, change your mind. You want to buy a house at that time. You said the city is right. If it comes to that. But, so, so number one, if 25% rule, you want to follow, just follow it without emotion. Even if it is harming you in the short-term, it will benefit you with the month. Okay. It will help you from you to prevent you from owning bad stocks at the wrong positions.
But see, I’ll tell you, I do look this make Monsanto, you know what I mean? The money, right? Yeah. Yeah. He made a lot of money in, uh, Infosys is correct. So there is this another great investor who is worried about housing gross. He’s not in the news or something like that. Okay. Okay. Same south bay guy, 99.9%.
Office portfolio at one point of time was an Infosys. Okay. That is precisely why his 1000 close to me. Yeah.
If the business is making you uncomfortable selling, if the valuation is valuation, not atrocious, it’s not the price,
it’s a profitable business. It’s not a loss-making business, which is an atrocious valuation. Right, right. Yeah. Great one. Yeah. I go to the point. So business does the trick here. I mean, business. Yeah. That doesn’t mean it will not fall by 50% after money or you might, but you would still be okay with it.
Yes, yes. A hundred percent. And especially when, I mean, to what extent we don’t know, but the tailwinds are still intact. Having said that you look at CVSL profit profit margins for eight years before the current. So you make that judgment for the last three. Our revenue growth has been exceptional. Yes. So if I look at the, I think, uh, if I just shared this
So, if you look at CDSA C forty nine, fifty one fifty five, fifty one forty nine, forty four, ninety one, eighty six, one hundred and three. Cause this place, it was not growing much. It’s only here that it has grown so much. This is not willing to continue.
Then this 63 to become noticeable. In my opinion, when the bull markets is the revenue and profits are going to declare
Yeah. So, uh, I think, uh, if you have questions on I send out an email to everybody. A lot of, I understand a lot of people have questions that are, I don’t know whether they’re still there in the, this webinar or some of them have left last few questions. Anybody has.
Sorry, you would like to answer on that. Uh, uh, the question which I asked, I mean, how you deal with the problem of, you know, not finding ideas of the patient, just keep studying at some point of time, March 20 kind of situation comes with always. Okay. And any sector you specifically look into from the decade perspective.
Okay. Fair enough. Thanks a lot. I had imagine since have no really great session. Um, just a quick question on the, you know, when we talked a lot about these financial businesses, like, you know, the banks, I guess the biggest challenge is that see that is really strong right now in your numbers look good.
How do you judge the asset quality? Because eventually there comes this moment where you realize suddenly that the asset quality, which is what happened with Gevens cases, where the asset quality certainly looks out of whack and that pushes the stock down massively and all the returns go for cost. So are there any early indicators or is there a good judgment of that asset quality early on?
Because the businesses look great until, but there’s no way of judging their asset quality to very late in that cycle for them. So I can do this. Okay. Financials are very opaque and it is almost impossible to judge a good financial. Okay. So there are only two ways that you can invest in a financial company.
So either you keep buying a GFC bag every month. So 10 stocks yep. Five stocks up, but just finance, right? Since 2010, 2009, it was not a good company, but yeah, it’s uh, some quota or say city union bank, or a chola Manila, or some of these known good companies. Right. Everybody knows these are good banks. Good in BFCs.
So keep buying little, little irrespective of the price of the regulation every month and just keep holding for the next 10, 20 years. That is one thing. The other way to do it is something like this. Okay. And you might kind of get lucky or whatever you call it. Right. So look at this in the same bank is the same bank.
It was a party at the peak. It was at how much? 1500. It’s a 65. Yeah. So you have to look at the descent bank, which is not going to go bankrupt in a bad, a bad times. Okay. So 2009, 10 was a time when you buy. And if things keep evolving in the correct direction, you keep on holding, you might actually end up making for three days.
Got it. And then when you start seeing the NPA or anything started to hit and the, the second heart, that’s the part. So you, so if you analyze the last 10, 20 or NPS, you realize the difference between is DC man. So, you know, RBL is RBL and is DLC is the Buddha. RBL is . Yeah. So you buy it, you look at BCP bank because any mediocre bank, even DCB from its bottom for free 14 rupees, right.
Somewhere near the top. When you put 33, that is 15 times
and even more mediocre bank than ideas. Uh, this industrial bank, it’s still giving you 15 times in seven, eight years, right? That is the entire logic, but love you. You’re going to those kind of mic tire kind of bangs right now, which you kind of are shorter. I’m not going to go bankrupt and are going to be around for another 20 years.
And when good things are done, suddenly they look very good businesses. I’ll give you this best example of that. They just article, they just Netflix watching. Huh? I bet sharing my screen now.
Uh, I learned share, there is this company called Peter’s networks into now the school getting into PPLI and this same that and networking, all that stuff. You see, this was a 32. Now it is at 4 25, but you know what? See, it had losses, massive losses. See this minus 1 38 course. So in March 20, what it did was it declared a loss of 1 26 crores because of some inventory write-off and some receivables right off and all that.
So what I’m trying to tell is it was like a bad, bad company. Then we didn’t go bankrupt. And now the stock is up 10 times. So banks McDonald’s, what I mean to say is in Mars, 20 people started as a very bad company. Now people think, I think it’s a decent, good company. Got it, got it. So your perception changed
thanks me. you have to buy the evergreen banks or the
or you buy these mid tire kind of lending businesses, which are descendant, you know, when good times come they will do away. Got it. That makes a lot of sense. I think that’s a good strategy. Any anyone that you guys are seeing that a hundred, the new mid dial. Uh, the logic applies to a lot of these IDFC and these kinds of banks, finance bank, and quarters also is, you know, kind of you think idea of see what it will die through.
And cause there was also some questions on that asset as well, but they’ll do, I did not see I’m not investment ideas.
he’s an aggressive, like not actually, if you look at this capital foster record, it was not worth true, true work. Somethings out
there are some actually management has to change, right? So the new management is Google cleanup. Then therefore is money because equity capital is very important. So the money has to be this. So you, those are some of the milestones are be able to raise money from the market. So if you look at investing bank, there is money multiple times actually in the same bank.
Uh, I think you can see it here. See 2010 issue QYB issue 2012 QIP issue
some 2009 preferentially. Because 15 preferential issue. Doesn’t 20, again, they’re able to raise money. So they’re able to raise money at the right time that gives them the ability to type and group about it.
Yeah. Anybody else? I mean, do you track, uh, who’d won called quartet partner developers. Yeah. I think they’re the same, they’re good ones, but I don’t have, uh, I don’t own them and I don’t have very strong, positive or strong or good, I think. Yeah. Yeah. Thank you. You talking about financials? Home finance is one which came to my mind, but I haven’t picked up yet.
Sorry, I didn’t get there. Was that a statement question? I can do this. Yeah. Home finance. I think it’s again a MBFC, uh, they’ve been growing, uh, pretty well. Uh, that’s what I’m studying, but I’m not sure that that that’s something that you’ve studied in, in the recently
uh, yeah. Bye. Thank you. Hello. Uh, hi, I made this, this ratio, uh, just a quick question. Just wanted to know your thoughts on, um, you know, the healthcare sector, particularly the hospitals, uh, which are currently in the line, like, uh, that, that there have been, you know, a lot of, uh, you know, brokerage updates on these companies.
Uh, any thoughts on that?
So I think they are businesses. A lot of them are good businesses. Okay. That extremely Catholics have been. So I come, I think the cycle is there. They are not investing because of actually, because of COVID, what happened was a lot of the business got impacted because those elective surgeries basically start for six months, one year.
So only COVID patients were there and a lot of the others are optional. Surgeries were postponed. So a lot of these hospitals suddenly realize that we can’t, uh, you know, keep reinvesting the group that says, let me not open the next, uh, let me not buy the next machine. Or they cannot buy the grow and expand to a new geography, that kind of stuff.
So a lot of these hospitals have kind of stop that massive CapEx that that was happening. Okay. So what does it naturally happened is that, uh, there was a lumpiness in, so now suddenly after COVID it goes, everybody wants to have their surgery that, that knee replacement that they wanted or whatever. So the things are looking good.
You look at valuations, I got comfortable ahead, or you can still buy. It’s a good growth goal. What is going to be there? And there’s going to be age and there’s going to become richer. People are going to spend more on healthcare, right? It’s specifically on diagnostics. Uh, like we should not agnostics, um, diagnostics role.
Cause not agnosticism, mediocre complete my opinion. It does not have skills. I’ve not studied it in depth, but uh, it’s model AeroCare or suburban model. It’s not a very big company. It’s it’s uh, this would be seven company. So not model. Got it. In terms of the APB structure, like, you know, like goal one, I have not started the company.
So you actually have to see, because I also see that they have a other income of 2 65 grows in 2021. I’m not sure what that was. So their profit is not very high actually. Plus it made losses in 2020. I don’t know why God. So DPD issue is already like 40, 45.
Thanks for me. Okay. Structural businesses. Long run way profitable business was this
I, uh, it was a very good session. Huh? Uh, I have few questions yet. Green energy or energy or whatever, like solar. So why are we not looking into this future energy sectors? They are all wrapped up, but still there are some which may still run up. The second one is
Why are we not considering clients considering that they are gone? They’re almost saying they’re going to beat up. So are you a subscriber to my spot case? Yeah. Okay. So frankly, I don’t, you don’t need to pay anybody like me to buy a reliance on an HDFC bank correlation. You should just buy a few stocks.
Okay. It’s a little unconventional answer, but if you have conviction on reliance or, you know, some of these big, great businesses of India, you just buy a few shares and look at some five, 10% of your portfolio, do that. Okay. It’s better than just putting all your money in, have the right, the same money that you put in equity.
If you put in realize you’ll make 10%, that is what we’re coming to. The, um, renewable energy. Yeah. I have not researched any of those companies in depth to develop the credit conviction, but the C I’d also tell you the path is not. Okay. I think, uh, we’re not, are not going to be so obvious everybody’s coming.
Everybody’s going to cut prices. They’re going to compete. And there are two more new upcoming sectors. One is genomics, you know, it’s, uh, medical genomics companies in India, but they see the tests straight as pharma. They have the subsidiary, which is there, but, uh, it may, it may get, uh, be months. That is one.
And the other one is artificial intelligence. Are we into, are we looking at any items, EA stocks or something that’s high. I’m not aware of any Indian stocks, which are only into AI or something.
See money is made when things don’t change when things change fast and suddenly, typically those companies don’t make much profits. So we have to ask the question, what is not going to change rather than what is going to change. So this a far easier way to make money is to look at companies which will maintain profits, maintain their businesses, maintain their profit margins in artificial intelligence.
You normally kind of thing. These are win, lose. We lose kind of, you know, some of them will win. Some of them will lose. Some breakthrough will happen, certainly, which will completely change the value of the company. These are slightly more risky banks and you were talking about IEX or I think you’re going to do another video session on this.
a good investment, but I heard that there will be a 5% investment on pixel, which is the direct competitor of, uh, uh, which has a market share of 5% by, uh, I think it’s a
business, unless there is market coupling, which comes, I don’t think I X will be affected. Uh, so I don’t think till that time you need to worry, but yes, if market coupling comes, then it’s a big tool then devaluation drops. So don’t, they think that should be book, should be book, any profit thinking that, uh, uh, this might be a overhang on our stock.
So we haven’t been done that. No. So, okay. Little bit of history. I think if you’re a recent investor in mass markets, you have bought it at higher levels and it is a much smaller position in the portfolio than what my other investors have, or my own personal portfolio is, uh, second, uh, This would have to be a little more technically explained.
So I will do a, so the ability for only those people who are interested. Okay. But let me quickly tell you this. There is a concept called a market based economic disparity, which, which is being floated around as an idea. Market coupling will only come after market business pitch. Okay. M B U D, which is market based.
Dispatch increases the addressable market by four times overnight in one single day, the market under four times, it means revenues increased by four times. So it’s not that obvious that X will do very well or X will do very bad. In fact, there is a possibility that that phase one of, uh, MBD will come without market company.
But if that happens, our UX is going to even double from here. Okay. So right now, the price after bonuses per 50 rupees, I have bought personally and for my 200, 180, what lesson there? So if you perfected it, the actual cost price is 60. For some of them
in either case, if we need to exit, we will exit at the, I mean, there is no hurry to exit. That’s what I’m saying. Sorry. Uh, Tara, you were talking about, uh, uh, all the different cities with very high E I think initially one person, a colleague also has spoken about demand, but the scalability in demand is very high.
Uh, you still, that you still taping that they can still grow even after such a high evaluation, then I think 20%, they can easily keep going for going for a long time,
but I’m still, so is he keep going for a long time? Okay. Another little P as it will keep growing at 20%, which is a good growth rate, but when it is a 200 price, so I am scared to buy this place, frankly, three years back also, I was scared and I was wrong. Yeah. But still it doesn’t come down to still learn more than the point is this, can you put in 30% of our built-in demand at this place?
Can you put in 2% of your portfolio? Yes. I think the answer is yes. Good. At putting 2% of your portfolio. It’s a great business to own. Just hold it for 10 years. You literally are more than what you are running an MD here.
These are 4% you’d rather own demand.
Sure. Thank you. And, uh, one more question about . It’s still actually, there, there are a lot of talking about it. So you want to wait for a couple of more quarters and see whether the company is doing better and then we’ll design right on. So the logic is designed. The logic is that the problems are there.
I know, I appreciate it. Everybody has appreciated, but the problems will get solved one by one. So we will make money because the company turns from problematic to be centered variable or respectable. Again, we are going to make money in the alpha, in the transition from a bad state to discipline. So it’s like this.
I suffered an accident. I have a fracture, everybody knows my fracture. We know my leg is fractured. I can’t run, but the bet is three months later, I’ll be able to run because my fracture will imply a cure, not cure in three months or six months or four months or two months. That’s a big question. Great.
And they say that the rivers module two might end
it’s an annual safety net that happens directly. We make 50%. You don’t just want the current prices and the underlying business. From a bad business. Well, we’ll keep business that we are making money on the transition. If the transition does not happen, we won’t make money, everything. So don’t, so don’t look at whether it’s a bad business or what business look at the town.
If the transition happens, fine. Transition doesn’t happen.
Thank you. Thank you. So yeah, I think most of the end it’s more than how fast. Great. So any, anything last anybody wants to ask see, was this, was this useful? Was this something that you guys were kind of questions that were asked or answered? Was this something that you guys were looking for? Uh, uh, thanks a lot.
I mean, uh, to me, uh, it was a lot of wisdom from you. Uh, one last question probably. I mean, uh, I haven’t connected to any investor at this level ever, so probably, and I haven’t heard of your personal journey, your mentors in life, so probably if you could share someone, so that could be great. Okay. Um, see, um, I am 47.
I did my MBA from , so I wasn’t in corporate for a long time. Uh, so I worked in Denver.
worked in Siemens. I used to invest my own money and family money since. Okay. I was in typical post MBA jobs till almost 2017. Now what happened with me was a couple of life changing life defining kind of events. So I, when I was in MBA, Google, or what professor was the professors in the worksheet, the way he teaches the stock investments, right?
It literally changes your life. So it was like my dream in 2010 was a day where I just sit and keep reading books and I get paid for it. That was my kind of a dream job, but I never, when I pass out of my MBA, I never knew how to make that happen. Right. So today I I’m paid for sitting at home and reading books.
That’s what, in one sentence, my business model is right. So 2016, I attended a seminar in flame university, which is in pudding. And I realize a lot of people are doing this. Full-time investing as a career choice until the time I never thought, okay, this can this be a career choice? I mean, you invest on weekends, right?
You invest your extra money. You do your job from Monday to Friday and then, you know, enjoy on Saturday, Sundays and invest on Saturday Sundays types. But then I certainly less at the age of 30 do that. Uh, this is, this can be an alternative career for me. And it is a proper career for a lot of other things.
Who are not billionaires themselves or don’t have family money. Right. So I don’t have a hundred cores of family money. Um, my father was a middle class woman. So October 15 is when I started managing money for us. It took years for me to, uh, uh, develop the conviction that, uh, you know, I want to do this.
Full-time February 17 is when I started doing full-time and, um, that’s five years, I’m doing this now. So managing my own money and management for others is in brief something, all your mentors. I mean, do you still look up to people in your low times and talk to them or have you asked the mentors, frankly?
Uh, so I am good with totally, uh, uh, books and no mentors, indirect mentors. Okay. So I am bad with, uh, personal mentors sharing. So yeah. So I think one or two of you wanted to speak somebody at the,
I mean, yeah, but go ahead. Go ahead. Yeah. Sorry, if you can do a session on NBC for somebody 10%. Okay. Just send me an email. Okay. Uh, I will try to do a short 10 minute video. I put it on. Sure thank you. But please send me an email so that I remember it. Otherwise
who subscribed to any paid resources to do your research. Screener is a must. Okay. The jewelry is also gold. This
thing that car is good for a U S markets. Lucky, I know reports a few magazine subscriptions Maxtor types, right? That, that gives you 80, 90%, whatever 10% is remaining, you will figure it out. You will, once you jump into it, you will have friends who will have access to Bloomberg terminals and all that stuff.
So report information, Hey, the, if I find it, if I put in enough time to find it, I’ll get it in. There’s no restriction of, I don’t have the subscriptions or the money or the right connects to not get pulled off.
Uh, I mean, if I may ask this is the myth again, uh, what would be the difference for your investors who are directly investing with you and, uh, uh, from small case. And when I asked difference, what I mean is, you know, the regularity of communication or, uh, So they make these talks are the same. So let me try to explain these talks are the same.
The portfolio is very similar, the slight difference with people who, so I manage, uh, do a little more customized portfolios for people who give me 40 50 lacks. Right. Uh, I have, uh, time bandwidth where I can’t have more personal interactions with particular clients. Uh, so I have to limit that number to 50, 60, 70.
Now what do I do to go beyond that is two small cases where I have a model portfolio for small kids, allows me to use technology to reach out to more number of things. Okay. So far, one of the people who are joined this, uh, maybe not. I think, I don’t know whether he is Euro now 60% of his portfolio, his skill in, uh, he says I am comfortable doing, I told him, okay, let’s sell part of it.
Uh, but he said, no. I mean, if you are confident about the business, I don’t want to say just for valuation until that. So if it falls, if it falls, I’ll keep putting more money in the next three years. Right. So that kind of customization happens for people who directly come, but that I can do only for X number of people.
That number is not more than 50, 60. Okay. All right. In terms of quality of advice or the quality of companies or the names of the companies is the same. There’s no. Plus, if somebody has given me two cross equals four crores, he wants to be having the opportunity to pick up the phone and talk to me. Right.
Uh, so he deserves that kind of attention.
So like you said, all, if you can always reach me on email, I will at least find reply within the next two, three days. Right. And also, like you said, the Joanne is not that much anyway. So my understanding is that once you sort of identify the company and even in a quarter, if you’ve decided to sell it or reduce the exposure, I think that, uh, even small case would suffice in that sense.
Uh, it’s a very farmer case. Maybe if you put in 25% in nine years and I was on four months, then it becomes 60% of the portfolio, but small, it gives me a link or something because the problem with smokers is that every new investor who comes with copy 60% of spend that right there is what I can tell outside small cases that, okay, everybody access put in 25.
Now you put only 5% at this time, for example, right. That I cannot do with markets. It has to be a standard portfolio for everybody. It has become when you have joined, but that’s like, you know, The last 5%. Right.
Thanks. Uh, I’ll meet you here. As I understand from, uh uh, so the positioning is we down 30th and uptake, uh, is high. So what are your thoughts on that? And maybe like, how do we decide on that? Particularly for Jeevan? Yeah. See, Jeevan went down so much for two reasons. Okay. One was that
the second problem was second wave, really? Right. NPS went up to 11.8%, but now what is happening is the organization is stabilizing the old management, so to say, has taken over. So the ship is stabilizing. The second is we are away from McDonald’s, right? Unless total like really affects us, which right now it seems that it is not affecting too much, at least lock downs.
And these things are not there. So suburban trains are running that kind of stuff is happening right now. Confused. They confused that kind of stuff is not happening. So things are improving. Plus there, it was mostly resolved. Edit bolus. So the first module is like an added safety. So I make, I have, you know, 30, 40% before on the reverse motor thing.
So if things are improving, I said, quality is improving businesses, improving disbursements are improving, deposits are improving.
Then I think the downside seems to be low plus I have enough cost. So there is no fraud in this company. They were miscalculations, there was a bad management, bad execution, a lot of infighting between, uh, Bush and the adults. Right. But it was not a fraud. I’m quite sure that they are not giving out bogus loans and that kind of stuff.
One off cases in microfinance always happen like loans, but it’s not like no they’re hiding NPS. They are not telling the regulator properly. See if you see the difference between Saturday,
be any company. Would you admit on the pinch of salt one month? Notice what? I often notice. He didn’t go over night. He resigned and his last day was going on for almost 40, 45 days after.
So I’m sure he didn’t do anything in the last 40 days. Right. So nobody was listening to him. He wasn’t but he still stayed on the rules. He’s scared that someone talked about how fraud me-time. Oh, so you’re seeing more of like, um, uh, even long-term, uh, under-performance till now is because of the systemic risks, like COVID or, um, or some misunderstanding between the position management position.
Not because of any thought of like company potentially is good. That is what, yes, please. I can tell you the difference between, uh, yes. Bank kind of loans.
it doesn’t take six years of able blending of loans to realize after it, in the 70 year old,
it’s take six months to one year. That’s how simple you have to declare it. You cannot hide it. You get new snap when summit and the others have come back. They have every incentive to declare everything. They want to live in detention for all the wrong things that have happened. Right. They don’t want to later now suffering the problem.
The problem is right now, they want to declare everything in CRA . Whether. So Dave, they have full incentive to declare all the bad things they must have been in September courting, micro finance business. If credit costs are low is extremely profitable business, 20% are we
in good times and visa or other in normal times. So you look at that NDAs in 2013, 14, 15, 16, 17, 17, 1800 16th of November 16 was demonetization. Look at those three, four years. Look at 2018 and 19, and be as I like putting running 1%.
okay. Um, uh, one more question. I mean, so for the kind of portfolio, is it better to like, uh, do for kind of investments or the one time let’s say I get some one time bonus or some big money. So which method you suggest? So sorry. I’m not able to understand who is speaking here. Yeah. Was already a subscriber to
Yes, yes, yes. So you, uh, if you have more questions, really talk to me on email and we can also speak on the phone. Okay. Let me give you a short answer. This is the time to do. Okay. So I would rather suggest to you do kind of a set for the next six to 12 months. This is not the time to be full into the markets or full outside the markets.
guys. Yeah. regarding what the, so commit the current scenario. Do you think it’s still in the standing of water management skills? Do they have any workloads now? I have not looked at this business in the last three years, so I had returned this article long back. I didn’t find the company very good. Okay.
So I just kind of ignored it, but it’s a decent business. If they are able to, you know, kind of, um, get their ship together back then, I think it should do. Okay. But it’s not some, some points biting kind of a company. You see? I want to be odd, but I want to invest. I don’t want to invest in good opportunities.
I want to source for great apartments.
Yeah. Dan speaking, you guys, uh, yeah, unless there is one last question I think we should in this session. Uh, yeah, yeah. Uh, question, um, in terms of the way you approach this particular investment philosophy by your own submission, your country stocks, that you choose six, seven stocks, whatever you choose, they’re all continuing.
Is it any other factor that comes into picture? Okay. Point number two. Is that how comfortable are you with, uh, you know, having a contrarian view completely contained in view versus I, and at the same time having to sell, we say, um, having this, uh, have, have the, you know, you have to also look at the people who have invested with you.
Uh, how comfortable are you with those, uh, contradicting factors? I see the first thing I tell all my investors is minimum five years ago, to invest with ups and downs. Whenever I got
plus I clearly tell them like you are, you have invested me for the last six, seven months, I think, or more for if you don’t have. I tell the same thing to everybody. I don’t do trading. I rule the way, if I know we want to make big money, we want to make it slowly. We want to make it consistent. So 80, 90%, more or less, um, people are.
So my investors are aligned to the fact that we are willing to make money slowly, consistently, and with a little more, um, uh, conviction type site. certainly quick, rich type sneaker who skipped out. I’m just saying, you know, reading bull market like this, uh, you know, I’m kind of, I think I’m not in a, if I look at myself, I’m a little, I like to be a little more contrarian, go deeper, look at stuff, which others are not enjoying or don’t want.
If I find value, I I’m. Okay. I am okay. Being wrong for two, three years. I’m okay. Making money in the third, fourth, fifth year. That’s the kind of stuff I am every off my stock is like that. I don’t have not analyzed it from that looks to you that way then maybe it is. No, I know. I didn’t have any opinion. I just wanted to check with it when I see you, it might look to an outside party like that.
Yeah. But that is not my conscious choice when I do that choice. I’m just saying it’s not easy investing in an icon at this moment. Right? It’s not that obvious. Or it would be a 25% CTR. It will keep going for the next 20 years. That’s the only thing I’m saying. The third thing is yes. Uh, there, uh, see the, the very fact that investors have come to me and, you know, they are willing to pay me a profit share and a certain fee is they are willing to take guidance from, okay.
Uh, so, but naturally they will put things, uh, they will not completely align with what my thought process has multiple points of light. So I’ll tell my clients I will be wrong and you have to be okay with me being wrong. At least some of the things. So, yeah, that, that, that happens, you know, there will be mistakes that will happen and it will look very bad and stupid to the investor, but it will all, if you have made money, I think investors are able to ignore the domestics, what these smaller mistakes, right?
How contrarian can you get to me? I mean, you, you, you knew this is going to be torn in stocks and, you know, market to photons and stocks listed stocks 400, but that’s the point I’m trying to make is that it is going to be difficult for you to pick up a contrarian stock or anything that, you know, you think will make money given the fact that your universe is small.
So do you also think about diversifying or worried about stocks per se?
Any other commodities, many commodities work at a knee? I don’t plan to do that. I’m a might add us some us stocks in the future, maybe, maybe, right. I think we’ll keep it. 25% of my funds in one single company. I just didn’t have it. So happened. Yeah. Investor 25% in the exit. You only did valid change. A lot of things for me, it gave me a different confidence and whatever XYZ.
And it also gives me a lot of money mangoes. And it turned out to be like, but literally three years back, I did not have the guts to do that for any single company, a contrarian, the cry or whatever. And I don’t know, it’s not a conscious thing automatically. You know what I’m saying?
Opportunistic is, uh, which will describe, you know, if the abortion risk reward premium kind of stuff is good, then yeah. I buy, if the opportunity attractive, the downside is lower and just seeing I’m a little more patient than most others, right?
Stock market is just one asset. The point is we have to make money. Whatever makes us money with lesser risk and more certainty. We are willing to go right now. The university’s Indian stocks.
So y’all guys wrap it up. Thank you. Thank you so much, everybody for waiting and patiently listening. I think this was good. And maybe we’ll do it again sometime. Thanks so much. Bye. Thank you guys. Bye.