Good Companies are BAD & Bad Companies are Good Investments for Normal Investors.

14^th December 2022

 

Good Companies are BAD & Bad Companies are Good Investments for Normal Investors. 

 

Dear Fellow Investors,

 

Namaste! People often ask me about the Penny stocks idea so that they can mint money in tons. Their logic is simple – if the stock is around Rs.1 to Rs.2 or below Rs.1 then they want to buy lakhs of shares and sell them at 5X to 100X in the future. Another logic is – if the share is quoted at Rs.1 – then their maximum loss is Rs.1 only. If the stock becomes ZERO – they end up losing all the capital. But they are not ready to think in that way. 

 

What happens when you invest in a Good Company?

 

Colgate was around Rs.200 for a long time in late 90s before it got re-rated.

 

After 2008 January High, Reliance moved down one side. It moved only after 2017. In the last 5 years it gave fantastic returns. 

 

Infosys made Rs.16000 in 1999 and there after it took 15 years or so to match that price after N number of Bonuses.

 

Larsen and Toubro was around Rs.200 for a long time. It moved from Rs.200 in the year 2000 to Rs. 4400 by 2007.

 

I can share N number of examples. The point is – GOOD companies are not going to move in linear pattern. They will have their ups and downs and they will also have their product life cycle and they will take their own time to move up. 

Normal investors who have a typical salaried class mindset wants some return every year. The way they get BONUS in JOB, they want some bonus in their shares also. The way they want salary increase and fast promotions – they want their shares prices to move up likewise. 

 

When such normal mindset people comes to the market – he will get frustrated and blame the market, company management and the government or their luck. The point is Good Companies are BAD investments for these kinds of investors.

 

What is GOOD about BAD companies or BAD SPOUSES?

 

In recent months two incidences have taken the attentions of Media. A Man killed his live-in partner – cut the body in to multiple parts and threw it at various places for some days in Delhi. 

 

A Married woman in Mumbi having an affair with somebody – gave ARSENIC to Mother in Law and Husband and killed both of them.

 

Now, you may HATE the man and this woman. We have seen N number of incidences of the above kind where the person has hanged herself or himself due to the torture of the spouse or the live in partner.  

 

Such incidences are wrong legally, morally and ethically and legal actions are taken against the wrong doers for sure. But the good thing for the DEAD person is – he or she came out of the suffering immediately for the life time of toxic relationship with such a partner. 

 

The same way – BAD companies will move fast and fall fast. They will give the thrill to the normal people about doing something GREAT or achieving something GREAT in the short period of time. When they get delisted or becomes ZERO – the normal people losses their capital 100%. This is also wrong. But if you see the other side of the coin – they are relived to apply their mind to find some other investment opportunities as they have lost their capital. 

 

Traditional Marriage and Long Term investment goes hand in hand: - 

 

In a typical Indian culture – Marriage is not for one life time but for 7 life times. Normal people are 100% positive about MARRIAGE and they celebrate the marriage with lots of zeal and excitement. Over a long period of Marriage – they get the moments of ecstasy with their partner, moments of utter pains also. Many times they curse their luck for getting married to such a spouse. Many times they feel they should have killed the partner on the first night only. But they stay together for life time. In the process – they get tons of advantages of long term relationships and commitments. 

 

Smartest of the smart investor – may or may not get married for long time but they follow the concept of marriage while investing. They are ready to take the pain of long term investing  so that they can multiply their wealth with 100% surety. 

 

What NEXT?

Let me share the famous dialogue of KADER KHAN in the movie Muqaddar Ka Sikander.

“Sukh ko thokar maar or dukh ko apna. Sukh toh bewafa hai …..chand dino ke liye aata hai aur chala jaata hai. Dukh ko apana Ley, Takdeer Tere Kadmo Me Hogi Aur Tu Muqaddar Ka Badshah Hoga.”

All great investors have taken a huge pain during market volatility and kept their minds focused on the businesses of the company and not the price of the company shares.

If you love money making – follow the above path. 

Follow me on Twitter @hiteshmparikh /  WhatsApp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

 

Hitesh Parikh.