There are times when the markets reward excellence and punish under performance. The economy will usually be buoyant at such times. There are also times when the markets look for consistency and pay a premium even for consistency. These are times when finding consistent performers are truly a challenge for funds and global investors. The sharp rise in Infy on friday is not a leg up for excellence. It is a leg up for consistency and represents the sharp shift in investor perception towards the company. It also reflects the choppy markets we are learning to live with. The markets will continue to look for and reward consistency as the results arrive. The reward metric of the market is set to change. The story of our market and the good news lies in this expectation shift.
When growth slows, consistency is deemed to become excellence.
If someone told you in 2003 that a Rs.150 crore revenue pressure cooker company will grow tenfold in a decade, you would have laughed. Excel sheets and number crunching would not have told you the story. Ditto with a luxury goods business model that combined watches, jewellery, sunglasses and much more. The story of great investing lies in ideating. A visualization of the future that is a creative, constructive and crisp. Imagining how people will change the way they consume isn’t easy. One can easily get over imaginative. The crux is that one must maintain the right balance. But some things are no brainers. We are an under-banked country, we drink far less milk and tea, we need much power, our solar power needs will zoom and there is so much that we will need. Then, why do investors not see the obvious? Investors believe that there is some magic formula to intelligent investing. Years of bear markets are wasted hunting for right moments, investment methods and esoteric theories. Actually, that brings one back to the simple thing that unfailingly works. Simply observe people around us and the way lives are changing. Finding a dozen ideas is hardly difficult. What we drink & eat, how our middle class lifestyles are evolving, the products that people will consume as more of them enter the middle class are all solid leads. A small tip – Keep your business TV switched off while you think.
Buy companies with their dividends. Insure returns.