Do it yourself

It is a normal practice of market analysts (especially buy side analysts) to extrapolate historical data for validating their pre-drawn conclusions. For example, there are numerous research reports and messages which rely on “low per capita consumption” and “moat” in India to make a strong case for buying a particular stock or sector. Based on this, many “new businesses” (and some established businesses) are given astronomical valuations. In this context, I find it pertinent to note the following: ·           In the early 1990s, the number of Indian citizens using air transport for travelling purposes was extremely low. There was only one civil airline, viz., Indian Airlines. Then the civil aviation business was opened to private competition. Within a span of 2yr several private airlines started business, e.g., Sahara, NEPC, Damania, East West, Modiluft etc. All these ended as bankrupt in less than a decade. In the second tranche, some more p...

  A stroll through the social media timelines of several self-claimed extremely successful investors and traders (popularly known as finfluencers) would indicate that there are thousands of people who have made extraordinary returns from stock markets in India. Everyone seems to have identified several successful businesses at a very early stage and earned exponential returns by holding it for decades. Everyone seems to have unlimited money to buy more stocks at every market correction, while they would hold on along with their existing positions till eternity. The narrative presented by these so-called finfluencers is clearly oblivious of the fact that there are not more than a hundred companies in India that have operationally performed consistently for more than a decade. Number of companies that become redundant in each business and market cycle is very high. There are numerous research reports and messages which rely on “low per capita consumption in India” and “moat” in I...