Wish you all HAPPY DIWALI AND A PROSPEROUS NEW YEAR!!!
In last 10 months, Mr.Markets have tought me lot of things. I have been in this field investing my own money for last 4 years, but the most i have learned is in this Bear phase. It has been a great learning curve for me and i feel that without such days and months, it would have been difficult for me to understand and differentiate between "what is quality" and "what is junk". Period between Jun 07 and Dec 07, everything in the market was looking Quality. But its only in the tough times the difference between the two is realised.
The story so far...
In last 10 months i saw the best of companies available at mouth watering prices. Though could not grab on to all of it, but yes, could take the opportunity to invest in couple of good businesses. What i saw in last 4 months was that my money doubled and in few cases easily went 3- 4 times. Mind blowing money in short span!! But if it was so easy to make money so fast, i would not have been in the business of Investment. Before Diwali we have seen Indian markets giving great returns to Investors and has revived the lost confidence among the Domestic and International investors. Lot of ideas(businesses) were floating at their bottom 8-9 months back, and Mr. Market was offering it at dirt cheap levels, but perception of the people investing was different. Nothing dynamic has happened except the Goverment coming with full majority. But that has just changed the perception not the real Business fundamentals from day 1.
What i am trying to draw the point is that we were not at such bad condition at that point of time than what we had perceived and the same is again at current situation. People perception has changed and PE's are at times driven by perception.
The returns that I have capped right now are just "reversion to the mean". But now the real battle begins when the difference between " Man and Boys" will be realised and will see few Boys getting matured to become Man, and real Mans taking up further to next leap.
I am not smart enough to predict the market, but what i have learned in Value Investing is that 'buy' when you find it at a discount to its real value or what we call intrinsic value and the Indian markets in my view are not available at a discounted value at current point of time. I dont call it a 'Sell' just because there is no value, but avoid buying at this point of time. We have to be alert to spot the Right Boys and Hold onto the Mans for our Portoflios to excel on 3 year period.
I am confident that we will be able to spot the Right Mans and the Right boys, in this market. The key to be succesful in it, would be to focus what "Graham tought years back, Buy it when the price we find is at a discount to its value" We will need to have patience for buying,holding it would be a second stage.
Happy Investing in the New year!!!
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