Paraphrasing for a speech given by Charlie Munger
" Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns."
Let’s suppose one has Rs 100 to invest and the options that exist are investing in a single large cap company and the other option is that of momentum investing/techno funda (moving across multiple stocks)
Over the span of 10 years:
When one is sticking to a large cap - One is investing on the fundamentals of the company (let’s suppose a sales growth of roughly 11%)
When one is investing on multiple momentum stocks - One is is investing on his/her ability to find multiple momentum opportunities over the span of 10 years
While momentum investing offers better returns, the fundamentals of these businesses cannot deliver 11% sales growth over 10 years
So it becomes important to continuously find opportunities and not get off the carousel if one has to sustain momentum investing for 10 years. Honing technical skills and finding opportunities is the key to sustenance in this path
Is my thinking directionally correct?
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