Ace investor Ramesh Damani knows the stock market like the back of his hand. Over the past three decades, he has witnessed the frenzy of the 1992 Harshad Mehta-led bull market and the panic of the 2008 meltdown. Despite the extremes of the trading floor, he trusts its wisdom. Sitting in his compact office in the Bombay Stock Exchange building, Damani tells us that the return from equities is unmatched — the Sensex has delivered 16% CAGR over the past 30 years. Then why would he spare a penny for real estate or gold?
Around 85% of his assets is in equities and the remaining 15% is held as cash — to be deployed as and when opportunity arises. “Sometimes the market could turn bearish, so I keep a bit of cash to protect myself. Also, at times I wait for a superior investment opportunity,” he says.
Damani is known as a contrarian investor. “I look for bargains,” he says. For example, he had bet on public sector units (PSUs) in 2003, when the then-Union minister Arun Shourie divested PSU heavyweights such as Indo-Burma Petroleum Company, Hindustan Zinc and CMC. In two years, the PSU index more than quadrupled. Today, as the Modi-led government embarks on another round of divestment, Damani’s interest in the sector has been rekindled. Saddled with problems such as increase in float, weak earnings and misgovernance, PSUs have been neglected by investors. He believes that's a mistake. “With the kind of majority the BJP enjoys, they should be able to push some of the privatisation through. If privatised, PSU stocks will go from single to double-digit multiples,” he says.
Damani goes against the tide but does so with patience and a deep understanding of risk. Though clued in to the markets 24x7, he operates as a long-term investor. Damani hunts for businesses that tend to do well irrespective of the economic condition. As he puts it succinctly, it’s not about “timing the market”, but “time in the market”. It is about how long you are willing to stay invested.