The most propagated investing mantra is buying into a great business, run by a good management at an attractive price and staying patient. But, neither is it easy to identify these qualities in a stock, nor is it common to have the rationality to stay the course or overcome ego and self-correct, if the situation so demands.
In this special edition, therefore, we chronicle the journey of some successful investors, right from the ideation process to the point of exit on their best and worst investment. As we know, once you have identified an investment idea, formulated your thesis and bought into the stock, your journey has only begun. You can never be sure that your hypothesis will follow the script since it’s only too common for stocks to go down after you have bought them. Now, when is it prudent to average and when is it not? How do you validate your theory, and when should you cut your losses? And if the stock acts the way you thought it might, how do you know for sure, that you have a winner on your hands?
There are several lessons that come across from investors that we have profiled here. S Naren beautifully articulates how bargains are actually a price for uncertainty with the example of Cadila Healthcare. So, when you take a long-term view on something that can be fixed, you have an opportunity to make money. With his experience in Visualsoft, Bharat Shah talks about the collateral damage that is inflicted if you are caught in a bubble and get carried away by the mood of the moment.
Ramesh Damani demonstrates how even a stock that seems like value on the strength of its assets, present market position and valuation can collapse and destroy value with the classic example of MTNL. And on the contrary, how even a company with poor corporate governance can create great value on the sheer strength of the business. Ajay Relan talks about both the benefit of having an ambitious promoter with fine foresight and the downside of unbridled optimism and ambition.
The varied investment lessons then point to the range of possibilities in the stock market. We have a precious few and we hope to get more investors to share their learning in the future.