Since I started financial advisory services, one question that I have been asked umpteen times is
- What do you think about the markets?
And my standard reply has been
- I don't look at the markets.
Problem with following the Sensex or Nifty levels and then concluding that markets are doing good or bad is Wrong Focus. It does not give the correct picture.
Let's take one simple example.
As we all know, in Jan 2008, Sensex reached its peak of 21,000 levels. Then all the drama of global financial crisis unfolded. And today 5 years later the market is still to hit 21,000 again. It is nowadays struggling at 19,500 (In fact, in the interim it even went down to below 9000). So people normally conclude that markets have performed badly in last 5 years.
Now let's look at some individual stories.
- HDFC Bank has almost doubled from Rs.350 to Rs.675 since Jan 2008
- Shree Cements has more than tripled from Rs.1345 to Rs.4375
- Asian Paints is up 3.75 times from Rs.1200 to Rs.4496
- Infosys is up 1.7 times from Rs.1655 to Rs.2785
- TCS is up nearly 3 times from Rs.497 to Rs.1441
- ITC is up 2.63 times from Rs.114 to Rs.300
- M&M is up 2.2 times from Rs.404 to Rs.891
- Cipla is up 1.8 times from Rs.209 to Rs.380
(This is, of course, just a small sample...and that too of the companies with proven track record and diverse sectors. So you don't even need to do some real and deep research.)
So when we look at companies, we get a totally different picture.
This is the reason, I don't look at markets - I look at stocks -
No sorry, I ONLY look at good managements and good businesses.
- What do you think about the markets?
And my standard reply has been
- I don't look at the markets.
Problem with following the Sensex or Nifty levels and then concluding that markets are doing good or bad is Wrong Focus. It does not give the correct picture.
Let's take one simple example.
As we all know, in Jan 2008, Sensex reached its peak of 21,000 levels. Then all the drama of global financial crisis unfolded. And today 5 years later the market is still to hit 21,000 again. It is nowadays struggling at 19,500 (In fact, in the interim it even went down to below 9000). So people normally conclude that markets have performed badly in last 5 years.
Now let's look at some individual stories.
- HDFC Bank has almost doubled from Rs.350 to Rs.675 since Jan 2008
- Shree Cements has more than tripled from Rs.1345 to Rs.4375
- Asian Paints is up 3.75 times from Rs.1200 to Rs.4496
- Infosys is up 1.7 times from Rs.1655 to Rs.2785
- TCS is up nearly 3 times from Rs.497 to Rs.1441
- ITC is up 2.63 times from Rs.114 to Rs.300
- M&M is up 2.2 times from Rs.404 to Rs.891
- Cipla is up 1.8 times from Rs.209 to Rs.380
(This is, of course, just a small sample...and that too of the companies with proven track record and diverse sectors. So you don't even need to do some real and deep research.)
So when we look at companies, we get a totally different picture.
This is the reason, I don't look at markets - I look at stocks -
No sorry, I ONLY look at good managements and good businesses.