A few weeks ago, Howard Marks came out with his brilliant Memo Titled "It's Not Easy".
In that Memo, he argued that it's not Easy to make super-normal returns from your investments.
You need second level thinking, probabilistic mind-set, understand risk, contrarian thinking & many such things to be a super-investor.
For full Memo- See here.
If I look back at my near 5 year investing experience, I don't agree with him. It was so easy to get super-normal returns from equities for the last 5 years. There were so many Near No-Brainer ideas available which had-
1) A Great Past - in terms of growth- both high growth as well as consistent growth, Low debt levels, high ROCE, Dividends, Promoter walking the talk etc
2) Great Outlook- Businesses were looking scalable, had decent opportunity size, were small compared to opportunity size, strong tail-winds to future growth.
3) Great Price- Yet these emerging moats were available at such a low valuation that market was assuming zero future growth for them.
You could buy Buffett kinda businesses at Graham's Prices!!
And there were not just a few of them but were plenty of them to choose from. Some names that come to my mind- Mayur, Cera, RS Soft, PI, Repco, Canfin, Ajanta, Amara Raja, Fluidomat, Kaveri, VMart, Symphony, Relaxo.
IT WAS EASY!!! REALLY EASY!!
Fast Forward to Nov 2015, The Bull Market-
Now with Bull market in full swing, you (this applies to Me, atleast) will very very rarely find a PERFECT THREE COMBO- Great Past, Great Outlook, Great Price.
We need to leave at least one of the three aspects- Either Past won't be great & we have to assume last 1/2 quarter to be the new norm going forward, Or (Near Term) Outlook won't be great, Or you will have to pay a high price for the business.
Some examples from my track-list-
Past Issues- Jubiliant Life, Indo Count, Cupid, Capital First, Intellect.
Outlook Not Great- Eclerx, Tata Motors, Accelya, Mayur, Dhanuka Agri.
Valuations Not Great- Ajanta, Canfin, PI, Repco, Cera.
NOW IT'S NOT EASY !!!!
At-least, I am not finding it Easy.
PS- If you have a Perfect Three Combo in any one stock in your portfolio & are finding it easy, please message me.
In that Memo, he argued that it's not Easy to make super-normal returns from your investments.
You need second level thinking, probabilistic mind-set, understand risk, contrarian thinking & many such things to be a super-investor.
For full Memo- See here.
If I look back at my near 5 year investing experience, I don't agree with him. It was so easy to get super-normal returns from equities for the last 5 years. There were so many Near No-Brainer ideas available which had-
1) A Great Past - in terms of growth- both high growth as well as consistent growth, Low debt levels, high ROCE, Dividends, Promoter walking the talk etc
2) Great Outlook- Businesses were looking scalable, had decent opportunity size, were small compared to opportunity size, strong tail-winds to future growth.
3) Great Price- Yet these emerging moats were available at such a low valuation that market was assuming zero future growth for them.
You could buy Buffett kinda businesses at Graham's Prices!!
And there were not just a few of them but were plenty of them to choose from. Some names that come to my mind- Mayur, Cera, RS Soft, PI, Repco, Canfin, Ajanta, Amara Raja, Fluidomat, Kaveri, VMart, Symphony, Relaxo.
IT WAS EASY!!! REALLY EASY!!
Fast Forward to Nov 2015, The Bull Market-
Now with Bull market in full swing, you (this applies to Me, atleast) will very very rarely find a PERFECT THREE COMBO- Great Past, Great Outlook, Great Price.
We need to leave at least one of the three aspects- Either Past won't be great & we have to assume last 1/2 quarter to be the new norm going forward, Or (Near Term) Outlook won't be great, Or you will have to pay a high price for the business.
Some examples from my track-list-
Past Issues- Jubiliant Life, Indo Count, Cupid, Capital First, Intellect.
Outlook Not Great- Eclerx, Tata Motors, Accelya, Mayur, Dhanuka Agri.
Valuations Not Great- Ajanta, Canfin, PI, Repco, Cera.
NOW IT'S NOT EASY !!!!
At-least, I am not finding it Easy.
PS- If you have a Perfect Three Combo in any one stock in your portfolio & are finding it easy, please message me.
Well Written.. In case you get some ideas from your readers, you have my number :)
ReplyDeleteGood insight :) Thoughtful..!
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ReplyDeleteThink of it this way: If the good sales growth,good track record,good outlook companies were still available at good valuations..it would've meant that you didn't make money.Or rather,didn't make as much money(as now)
ReplyDeleteBut since that has not happened(Relaxo,Eicher,Page,Ajanta,Mayur,etc. have created great wealth over past 4-5 years),can that be a sign to change investing strategy? Probably look for turnarounds,companies with some prior baggage,but moving in the right direction? And so on
Disc.: Comes from someone who is devoid of an investing style!
Well said. Makes sense :)
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ReplyDelete