It is a simple concept… You create an income through and invest the income in further income or wealth generating asset. They say in AR,
“What is the bottom-line of all
of this? We need to understand
our double-engine business
model, where free cashflows from
operating businesses are ploughed
back into our treasury. Our treasury
book is 100% invested in equity
and equity products – all the time.
Over last 10 years, operating profits
compounded at the rate of 34%.”
Richard Wyckoff is regarded as a great trader. His book… How I Trade and Invest in Stocks and Bonds is a classic. He did some trading, and invested the trading income in long term income generating investments. In recent times, Ace Indian Investors Rakesh Jhunjhunwala used 5 percent of the capital in trading, and invested the trading income in long term security holdings.
Motilal Oswal is doing the same. They are investing it in 100 percent equity. They must be getting huge dividend income, and occasional capital gain. I don’t think they will be churning the portfolio much, and thus keeping the tax liability low while increasing the corpus and dividend income.
Motilal Oswal is a wealth compounding machine. On top of that it’s shares are cyclicals and thus easier to accumulate on market downturns. We must use Ramdeo Agrawal genius to create wealth for ourselves.
(Disc: Invested)
| Subscribe To Our Free Newsletter |
