Are you tracking growth or Media noise about economy, Recession and elections etc ?

Yesterday we discussed about US and Indian stocks in a zoom meeting. One of our senior member in the group asked when US is in recession how can India grow especially during the election year?

Remember most US companies (exceptions are there) are struggling to post good results, whereas very many India companies are posting great results.

For example  LIC India yesterday posted standalone net profit of Rs 13,428 crore for the quarter ended March. The profit grew 466% from Rs 2,371 crore in the same quarter of last year.

Another company,  Cummins india  reported consolidated profit after tax at Rs 349 crore in the quarter ended March 31, 2023, compared to Rs 216 crore in the year-ago period. These are not a rare occurrence but companies after companies are posting good results. It clearly shows that we are in good wicket. Prices go up on earning not on political reasons.

Besides we can’t time the market. RVNL was offering great value at around ₹50.

ROE of the company was 20% but it was trading at a price earning of  5. Price to sales was incredibly low. We repeatedly informed about it at ₹50 and even at ₹60.  Many would have given it a pass owing to  an election year. We can’t expect it to come back to the levels of ₹50 again unless we have a Time Machine.

Another good example is som distilleries. We repeatedly informed about promoter buying the stock at ₹105 and also about company reducing their debt and promoters removing their pledged shares besides the incredible future growth. Many would have missed it thinking about bear market conditions and volatility. Today it’s flying at ₹215 with no looking back.

Let me take another example from US markets - Nvdia. This was repeatedly discussed at $120-140.Yesterday,  Nvdia added a quarter trillion dollar in market cap in one session owing to  ‘surging demand’ for it’s GPU chips (read it as AI chips). It beat on both revenue as well as earnings this quarter. It will eventually become the 5th largest company in the US as it’s market cap is set to swell past one trillion dollar. Many retail investors will now be chasing it at $400 sighting growth.

As retailers we should learn to buy GARP and hold them. Traders look at the price and get confused. Moreover, they like to hop from one stocks to another at regular intervals. Traders, as you know, can’t create wealth as they know nothing about investing.

As a small investor, we should have a secret or edge to win the markets. We are in a treasure hunt in the market. What’s known to everyone is discounted by the market and hence should be discarded by sensible investors. For example, recession (what happened to Nvdia?), election year (think of som distilleries or RVNL) can be neglected.  What matters a lot is the secret information known to you. Go for the edge and forget the newsfeeds.

Hope I explained reasonably well, why we should not bother about the weakness of the market and keep on buying GARP companies. These examples would explain the logic behind winning millions in stocks. To borrow Warren Buffett's quote “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”  Let’s learn to be a sensible investor.