Since time immemorial we have been advised by all the eminent Gurus that equities have to be held for long periods of time for compounding to work its magic and catapult us to great riches.
Warren Buffett, the World’s greatest investor, encapsulated the entire wisdom in his pithy quote “Our favourite holding period is forever”.
Mohnish Pabrai enlarged on this theme by explaining that the best investors in the World are “dead people” because they do not tinker with their investments. “Investors shoot themselves in the foot by being active” Mohnish Pabrai said in his trademark drawl.
Raamdeo Agrawal drew from his rich experience in preparing the Wealth Creation Studies to explain with practical examples how stocks turn into magnificent 100-baggers by the sheer passage of time.
We also saw the fascinating story of Sharad Banavadikar, a lay investor like us, who bought stock in MRF and held on to it through thick and thin. Today, his paltry investment has grown 2000x and transformed into a magnificent fortune.
Now, Motilal Oswal has done a lot of number crunching to predict where the Sensex will be in 2030, just 15 years from today.
First, he points out that in the last 36 years (since the Sensex’s launch in 1979), the Sensex has grown a mind-boggling 380 times. A paltry investment of Rs. 1 lakh in 1979 is worth Rs. 3.80 crore today. The surprising part is that these magnificent gains have been achieved even though the Sensex has grown at a relatively modest CAGR of 18%. This shows the power of compounding over long periods of time!
Next, Motilal Oswal draws from a number of authoritative data sources to make the point that the future is very bright for the Indian economy and that it will soon be a powerhouse juggernaut.
By 2030, India will be a 6.6 trillion dollar economy and will be the third largest economy in the World, Motilal Oswal opines. He explains that even if we assume that the Sensex will grow at a modest CAGR of 14-15%, it will be at a stratospheric 1,50,000 by the year 2030.
This means that our money will grow 7x in 15 years i.e. an investment of Rs. 100,000 today will be worth Rs. 8,13,706 over 15 years at a modest CAGR of 15%!
It goes without saying that if the Sensex (which is packed with a number of junkyard stocks) is to compound at 14-15% and soar to 1,50,000, individual stocks will compound at a much faster rate and do far, far better.
On the all-important question as to the stocks that will take to this path of riches, we can peep into the portfolio of the MOSt Focused Midcap 30 Mutual Fund. The portfolio is packed with 20 powerhouse mid-cap stocks. Each stock boats of top-quality management, proven track record and dominance in the market place. These stocks are well placed to withstand the vagaries of the market place and emerge winners over the long-term.
Good to know this. I am already all in..
Agree that Sensex is destined to go higher. However jerks will be there in the journey for sure. One got to use those bumps on the way to buy into value. Then there is no looking back.
How much is all in? You need to share what you have invested so we can know how serious you are. Give us a range.
I had already started thread in Stock talk that Sensex will be 100000 in 12 years or minus 2 for aggression .
.So naturaly if we increase time frame it will be 2033 minus 3 for aggression,Sensex will be 150000.That call was given when Sensex was bleeding.This is based on 7% inflation plus ,7 to 8 % GDP growth.So it is aprox 15 CAGR .If any body remain invested in Sensex or Nifty Minus Metals commodities,utilities and airlines CAGR may be 18%.This is just for discussion.
I beleive after every 8 years sensex corrects by 40 – 50 pc. On avg. So it will be better to wait for this correction in near future and than start investing on sip once sensex corrects around 15000 level
past doesn’t repeat always in stock market, 15000 levels? stop dreaming, india is growing economy, our sensex should be above 30 to 32k this year itself
Hey. Hey yo. Everyone just relax and calm down. And to those people who just buy today and sell in a week, you are wasting your time. You will never make money or become rich. And if you cannot do that, then like buffet said, you guys should be charged 100% withdrawal fee. Invest and then let the business use the money ok. Stop complaining and whining everyday. If you don’t know how to invest then don’t. Traders are just useless. And if you dont like what Buffet says about traders, then just meet him down there.
investing in indian markets need time, trading is dangerous at this point in time…
Hi Motilal Oswal, What about all you multibagger stocks which been suggested in your 2015 wealth creation studies. All stock are almost down 50%. DCB, Granules, Atul auto. Aarti Drugs. This year due to scary and choppy market conditions, they haven’t disclose any stocks for 2016.
One should have a very long time view for these stocks to turn 100 baggers. Time to accumulate if not holding already.
in 1979 1 lakh was not a paltry sum. Assuming 6-7% inflation , that 1 lakh was equivalent to today’s 10 lakh.
How many retail investors(excluding HNIs) can boast of investing 10 lakh rupees in the stock market at one go.
Realy great question,present great middle class was irrelvent at that time.1 lac investment in stocks was out of question may be for 99% public .This is just my guess,I don’t have data to support this.
Rajay, now more global economies are in recession and slowly moving towards deflation indian exports will get affected due to low demand fpi are selling in indian mkt. Why is l&t, trading at its 52 wk. Low ? I beleive due to slow down
Motilal’s 2016 stocks are also down by 20%-50% just in a months time .Lincoln Pharma,Indigo,Alkem Lab,Dfm foods …all are bleeding.
It would help if you could publish the date of reporting below the headings on the home page as well.