Wednesday 6 March 2013

The Most Important Thing: Learning from Buffett & Sachin

Ahh... what a catchy headline, you would say !!!
What's common between Buffett & Sachin & what is the most important thing that can be derived from that similarity, some others would wonder!!!

So, let me try to answer this. But first a few questions-

Who is the World's Best Batsman?
All sort of people will have different answers but most will say Sachin is the best.

The next question is for only those who say Sachin-
Why? His average is not the highest, his highest score is also not the highest in the world, his lowest score is also not the lowest either. So why Sachin?

Before you answer, here is another one-

Who is the World's best Investor?
There would be some arguments on this one also, but lesser than Sachin. Mostly will say Buffett.

The next question is for only those who say Buffett-
Why? His CAGR average (19.7% CAGR) is not the highest, his annual highest (59.3% in 1976) is also not the highest in the world {Even yours truly boasts of a better highest annual score than the world's best investor :-)}, his lowest annual (-9.6% in 2008) is also not the lowest either. So why Buffett?

The answer is because Sachin has the Highest runs, Max centuries, Max MOM.
And Buffett has the maximum growth of capital (some 586817%).

So, the common reason to both the WHY is Longevity; Durability; Time in the Game. If you haven't spend enough time in the game, you can't be Great. You may be a possible great, but to be a proven great you need to have decades of experience.

So, there can be neither 20 years old Sachin nor 20 years old Buffett.

And so this is the most important thing- The Longevity, The Time in the Game.

Also, you should be Good to succeed. Look at Sachin's technique & Buffett's process.
Too much of a good thing can be wonderful & too much of a bad thing can be disastrous.

So do a lot of something but do it WELL.
*******************************************************************************
Now a tough one- If you have to choose between being Sachin or Buffett, what would you pick?

Before answering, look at Sachin. Poor guy has been slightly out of form recently & had to retire because of that.
Now look at Buffett. He has underperformed S&P 3 times in last 4 years (This has happened only 9 times in 48 years). For the first time, he is expected to give a 5-year underperformance to S&P.
Still Nobody is asking for his Retirement!!!

So my vote goes to Buffett. What's your choice?


 

Friday 1 March 2013

I'm Lovin' It


If you haven't followed Markets closely this year, then you would only know that Nifty is a bit down in 2013. You would have missed the entire story that the following pic says-


Yes, there has been a carnage (ok one-third carnage) in Mid Caps & Small Caps.
A lot of stocks are down more than 20% this year without any conclusive reason.

Is this fall justified?
Some will say Yes.... Mid Caps & Small Caps are more risky. And even after this fall, they are commanding higher PEs than Sensex & Nifty.
Some will say No... since Mid & Small Caps provide better growth opportunities.

My Take?
I don't know whether the fall is justified or not.
However, I know that market is throwing out the baby with the bath water. Some stocks deserve the fall that they are getting but not all. This flight to safety is giving a good chance to accumulate some high quality mid & small & micro & nano caps.

A number of stocks are now offering more than half of FD retuns & are priced at such a valuation which assumes that they will either go out of business soon or their earnings will fall big time & will never recover from there!!!

MacD's punchline comes to mind- "I'm Lovin' It"