Stocks always go up. Stay with high quality businesses: Ramesh Damani

Discussion in 'Must-Read Interviews, Articles & News Items' started by Arjun, Nov 29, 2020.

  1. Arjun

    Arjun Chief Executive Officer (CEO) Staff Member

    Mar 19, 2015
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    Stocks always go up

    One of Ramesh Damani's pet themes is that stocks always go up in the long run and so investors should always stay invested, irrespective of the circumstances.

    In his latest interaction, the veteran pointed out that the Sensex has surged like a rocket from 800 in 1987-88 to 44,500 in 2020.

    This means that even the index has managed to deliver over 13 per cent CAGR return despite major calamities like the Kargil War, Global Financial Crisis and change in governments, etc.

    The said return of 13 percent CAGR is without counting dividends. If dividends are also included, the returns will be much more.

    Time spent with high quality businesses is more important than timing the market,” the stock market Guru emphasized.

    Damani explained that given India's aspiration to rise from a Third-World country into a First-World Country, there are lots of opportunities in every sector, including retail, cement and technologies.

    Investors who have stayed bullish on this country and invested in high quality businesses have made a fortune,” he pointed out.

    There is merit in Damani's assertion.

    According to the ET, over the past 20 years, stocks like Bajaj Finance have rallied 1,86,303 per cent. Titan, Kotak Mahindra Bank, Asian Paints, Axis Bank, HDFC Bank and L&T have gained between 5,500 per cent and 52,500 per cent during this period.

    Other stocks like HDFC, IndusInd Bank, M&M, Sun Pharma, Nestle India, RIL, ICICI Bank, SBI, HUL and ITC also gained between 1,000 per cent and 4,500 per cent since November 2020.

    Buy good business with some margin of safety

    Ramesh Damani advised that similar returns can be made even now.

    To pick the right stock, you have to buy good business with some margin of safety. Investors should also invest with a long-term view and pay less than what you expect a few years from now. These principles will never change,” he said.

    He also highlighted the fact that the market moves between fear and greed and this pendulum keeps on swinging. Therefore, the concept of buying with a margin of safety is never going to change.

    Compounding is the surest thing to make you rich

    Another of Ramesh Damani's pet themes is the magic of compounding.

    He advised investors to understand the value of compounding and start early.

    Compounding is the surest thing to make you rich. The earlier you start, the better off you are,” he advised.

    Last edited: Nov 29, 2020
    Mohit Chauhan likes this.