As both India and US stock markets are firing on all cylinders, so is my portfolio. “Double Engine” growth is still intact as both are under the grip of razing hot bull markets. On top of that I got lucky to identify the trend (AI and Cloud technology) of the US bull market way before it started. Though I am using the same long term investment strategy in both markets, interestingly money is being made from completely two different sets of stocks. In the India portfolio I am making money consistently from compounders having low volatility whereas in the US market money is being made from disruptors with very high volatility.
In the India portfolio I sold Polycab with 5X gain (held it for less than 4 yrs) immediately after noticing tax dispute news. I had to sell it as my past experience with companies with similar disputes was not pleasant. It’s very well possible that Polycab won’t get affected at all and continue to march higher. But I took a call as I was suffering from once bitten twice shy syndrome:). I went ahead and invested the entire proceeding (excluding tax outgo) in Trent which is already up more than 20% after declaring stellar results in last quarter. I only find price wise competitive fresh vegetable/grocery items from Start Bazaar in my area. My bad that I did not know the Star Bazaar franchise belonging to Trent. Did not think twice about investing in Trent as soon as I discovered it:) Need to see if I can make 10X of my original investment made on Polycab and Trent in the next 3 years.
In my India portfolio, long time winners like Bajaj Finance/Asian Paints/Pidilite are underperforming big time but other stocks like Granules India (new 5X entrant in my portfolio)/Varun Beverage/Ethos/TCS/Zomato are more than making it up for them and helping me to outperform the market. 5 yrs portfolio CAGR now stands at 23.8%. Among 22 companies in my portfolio I am super bullish on Ethos which has all ingredients to become another 5Xer within the next couple of years.
The US portfolio is all about AI and its related technologies. Latest Nvidia result has firmly established the fact that AI is not a fad and in fact is capable of making long term transformations like the Internet. When I was making an investment on Nvidia during the 2022 bear market then my expectation was to make at most 2X in the next 3 yrs. Never dreamed about making 6X(and counting) in a couple of yrs, unbelievable.
Interestingly bubbles/speculation starts during a low interest rate environment and ends with a high interest rate. But this time the so-called AI frenzy has started when the global interest rate is in decadal high and not much free money is sloshing around the world. Companies are saving money from elsewhere and falling in line to make investment on AI big time. It proves that tech is real, deflationary and has a long runway for growth. If anything else is in the firing line then I would argue that this time it’s EVs and clean/green energy companies whose products/services are inflationary and have high probability to go under if the rate remains higher for longer.
Another observation is that being predominantly a hardware mega cap company (75% gross margin) if Nvidia can appreciate so much in a short period of time then what will happen to AI software winners that command gross margins more than 85%. Given that such companies are still in their infancy and US small/mid caps are still in bear market I can guess (no guarantee though) that such companies will go parabolic when the interest rate cut cycle begins. If the Nvidia stock price appreciates 10X in 3 years (from trough to peak in recent cycle) then one can imagine the scale of price appreciation of such AI software winners. I see that such a journey has already begun by looking at the price action of my portfolio companies such as Confluent/Palantir/Cloudflare/Snowflake/MongoDB/UIPath etc… Few more may emerge as big winners in this space.
Thanks to internet technology, novice investors like me can buy/sell stocks in any market sitting in the comfort of my home in India with a click of a button. Hopefully AI technology can take it to the next level to prevent us from doing crazy things with our own money and hence make us better investors:)
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