Good Investing is Catching the Whiff of Wealth

If you were to listen to the pros, you will learn that following the rules blindly can limit your upside

Jun 27, 2014, 06:56 IST2 min

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Allah meherban to gadha pehelwan, goes one pithy saying. Loosely translated, it means if luck (Allah’s benevolence) is on your side, even a fool can be a champion. In the current bouncy stock market, it would take a particularly foolish investor to lose money. Which is why this is the right time to bring sanity to how we invest. Forbes India brings you this issue of Wealth Wizards—people who have learnt how to make their money grow over a very long period of time—to share their timeless wisdom in bullish times. In the following pages, you will meet many iconic investors, including the likes of Raamdeo Agrawal, Samir Arora, Ramesh Damani, S Naganath, and many others. At the core of any investing philosophy are simple everyday truths: Buy low, sell high save regularly and let your money compound don’t put all your eggs in one basket develop patience when investing in stocks don’t depend on tips to invest buy a business, not a share don’t try to time the market invest through SIPs (systematic investment plans) look at fundamentals, not just market momentum, etc. But if you were to listen to the pros, you will also learn that following the rules blindly can limit your upside. As Chaitanya Dalmia, CIO of Renaissance Group, told Forbes India: “In a bull market, the fair value of a stock makes little sense. Let us say a stock is worth Rs 100 and I buy it at Rs 70 and sell when it hits Rs 100. But, in a bull market, this stock can go up to Rs 150 or more. We lose out on the gains if we stick to fundamentals alone.” In short, fundamentals are important, but being nimble-footed can add unexpected gains to your portfolio.

But fast-footwork alone is not enough. The buy-low-sell-high philosophy calls on you to be a contrarian investor, and being contrarian comes with a risk. As S Naren, CIO (Equities) at ICICI Pru Mutual Fund, told us, “When you are contrarian, you need to do more research to succeed.” Being contrarian is a lot of hard work as you have to go against the wisdom of the herd. It can be scary.

The oldest investment intellect we tapped was Chandrakant Sampat, who at 86 is probably India’s original Warren Buffett, even though many wealth wizards now swear by the Buffett philosophy. Sampat looks for companies which return at least 25 percent on capital employed, and which do not have to invest too much in future. His advice is against investing in too many shares. Just six or seven are enough to make you wealthy if you pick right. In short, he says put your best eggs in the basket, and watch them hatch.

Forbes India invites you to a veritable feast of great thoughts from people who have the smell of money sticking to them. Breathe deeply and prosper.

Best,R JagannathanEditor-in-Chief, Forbes IndiaEmail: r.jagannathan@network18online.com Twitter id: @TheJaggi

ICICI Pru Mutual Fund Raamdeo Agrawal

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Good Investing is Catching the Whiff of Wealth

If you were to listen to the pros, you will learn that following the rules blindly can limit your upside

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