The year in perspective Part 2

Hi,

making the most of a light period at work and just before I take my winter break, here’s part 2.

rarely do you have a year in the market when you feel bad about stock corrections but good about he impact that could have brought to your way ahead. Corrections are a friend of an investor and afford some rare opportunities when you are able to assess things at attractive prices big outside i.e. In the market and within your own portfolio. There are two currencies that work for me.

One is infusion of fresh money and the other if you don’t have fresh money to infuse is using existing stocks as currency to buy what you perceive as better.

today mr porinju, a fund manager in mid and small caps posted if you are an investor in mid or small caps and they correct you should not change course. He equated his example to a local train ticket vs a rajdhani. My own assessment and with due respect is anyone will go for a rajdhani is the ticket of the train falls in line. In other words, value is a guiding factor not price. Hence the debate on a large or mid or small cap is meaningless in isolation to potential gains.

of course it is possible that a small or mid cap does better than a large cap and so is vice versa as 2018 demonstrated. While I continue personally to be a mid cap investor I won’t shy from buying beaten down large caps if I feel the growth will compensate for my purchase.

this example is best explained by the recent trillion dollar market cap of Apple and by Bezos becoming he world’s richest man. Who wouldn’t like to own Apple, Amazon or Disney if the price is attractive to growth.

2018 has given us lots of time to strengthen the portfolio. When you have benefit of several quarters of time to assess the results of comonaies with no price upmove, the ability to phase out and keep adding is at its best. It’s like picking mangoes from a tree at leesure with no fear of missing the right ones in a sense of rush.

periods of downturn are also interesting to observe what managements of companies do to keep their competitive advantage alive, in a sense a moat is truly tested in such environment together with management competence vs in bouyancy when the wave carries all to the shores.

a lot of money in 2018 was accordingly made in highest quality managements in the organized sector that used their skills to the best to adjust for demon, GST, inventory, packaging to deliver more at same cost (economies of scale), buy outs (depressed stock prices) or acquisitions of cheaper assets. Or capex. Many of them should be better placed to ride 2019.

i think there is a lot of adaptation also at work. Cos like Abb took to automation in a big way, while others organized retail network to enhance distribution efficiencies. There were cos like motherson that worked to reduce client dependency, geographical dependency and product dependency to move towards a better future. Many cos increased client satisfaction and others like Bata and Britannia moved up value chain by enhanced product offerings.

I think india has some really smart entrepreneurs who can drive cos to a larger scale. Oyo, Ola were examples from the unlisted space and there are many in the listed space too.

investing is always a journey and pit stops are necessary to keep the car in the race.

 

more to follow….

 

ps: no spell check, article authored in a state of mobility. Not a professional advisor, views are personal. (So is my dream of returns). Co names are illustrative and not advisory. I may or may not own the cos named from time to time.

Cheers

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2 thoughts on “The year in perspective Part 2

  1. Kau says:

    I enjoyed reading your blogs and twitter comments and WhatsApp messages! Wish you a Happy New Year 2019 and all the success you rightly deserve!

    – Kau
    http://ekoshapu.in/

  2. Manish says:

    nice read

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