Vijay Kedia, the self-made millionaire, can be trusted to put things in perspective. He rubbished the present nervousness in the market over the China slowdown. “I have seen several such crises in my career of 25 years” he said dismissively. He pointed out that just six months ago, everyone was gung-ho that China was growing at a surging pace of 7% and was merrily buying Chinese stocks. Just six months later, the same investors are dumping Chinese stocks in the fear that China will undergo a severe slowdown.
Kedia also pointed out that the market keeps worrying about some issue or the other – Whether it be the FED taper, or Greece’s insolvency, or Spain’s disintegration, or China’s slowdown or whatever. The China issue would soon be forgotten and the markets would find something new to obsess about, he said.
Vijay Kedia advised investors not to worry about what is happening to the entire market. Instead, they should focus only on the handful of stocks in their portfolio and ask whether these companies are growing at 15-20% CAGR and will continue to do so for the foreseeable future.
“An idea can change your life” Vijay Kedia said, emphasizing that just one stock can change an investor’s life. He cited the example of Cera Sanitaryware which he bought several years ago at the throw-away price of Rs. 30.
“Investors should look for the next Cera Sanitaryware” he added.
On his favourite stocks, Vijay Kedia made the surprising revelation that he has lost confidence in NBCC and sold it. Kedia explained that the reason for NBCC’s success, namely, the Government’s contracts, can also be the cause for its downfall, if the Government stops awarding contracts to it.
However, Kedia is still gung-ho about his other favourite stocks, Cera Sanitaryware, Sudarshan Chemicals, BEL, Repro and Apar Industries. He emphasized that each of these stocks has excellent quality of management and a long growth path ahead of it. Their valuations are also not unreasonable, he said.
Vijay Kedia’s other important bit of advice is that investors should have patience. “Rome was not built in a day” he emphasized. So, investors should buy top-quality stocks at reasonable valuations and hold them for a life-time without worrying about day-to-day fluctuations, he said.