How many times have people told you “you should invest like Warren Buffett” or ‘You should invest like Peter Lynch’.
Let us face it. You are Parag. NOT Warren Buffett or Peter Lynch. So you cannot invest like them.
Let me tell you what one promoter told me once. He had controlling stake in a listed company, and the company was not doing too well.
The company’s shares were not doing too well, but the company was doing well (according to the promoter at least). The company needed some money….when I met him. He said
“i can act in the shareholder’s interest or in MY own interest – and had not decided which option to take’. Amusing I thought.
He said let us say the company needs Rs. 30 crores. If I go to a bank, I will end up paying 13% interest, since I am not a AAA borrower. Instead of that I can use my own money lying elsewhere and give it to the company @ 18% p.a. I straight away make an extra 5% – without anybody in any part of the world realizing what I have done.
Now if you can control the fortunes of a group, and have a group turn over of Rs. 1000 crores…and have tons of surplus..the way you invest HAS TO BE DIFFERENT. You can get sweet heart deals – when the interest rates in the market are 12%, you can get a 15% interest, 1% fee on keeping money on call, 2% bank guarantee fee, an illegal kick back for keeping a bank fixed deposit, ……if you are a common man, invest in equities and suck your thumb when the company behaves badly.
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