Imagination is step one…….
If you had subscribed in 100 shares of Wipro company with a face value of Rs. 100 in 1980…you would have had….
Ø1981 1:1 bonus = you have 200shares
Ø1985 1:1 bonus = you have 400shares
Ø1986 split the share to Rs. 10 = you have 4,000shares
Ø1987 1:1 bonus = you have 8,000shares
Ø1989 1:1 bonus = you have 16,000shares
Ø1992 1:1 bonus = you have 32,000shares
Ø1995 1:1 bonus = you have 64,000shares
Ø1997 1:2 bonus = you have 1,92,000shares
Ø1999 split the share to Rs. 2 = you have 9,60,000shares
Ø2004 1:2 bonus = you have 28,80,000shares
Ø2005 1:1 bonus = you have 57,60,000shares
2010 2:3 bonus = you have 96,00,000shares
Its valuation ?
You have 96,00,000 shares of the company
Any guess about the present valuation ?
Power of compounding!
The present valuation is about more than Rs. 525 crores
ØAnd this is ignoring the “reward” for waiting called dividend
There are many Other such examples…
CIPLA – Investment of Rs. 10,000 in 1979 will fetch more than Rs. 125 cr.
INFOSYS: Investment of Rs. 10,000 in 1992 will fetch Rs. 5.5 cr.
RANBAXY: Investment of Rs. 10000 in 1980 will fetch Rs. 19 cr.
The question to ask is
Could I have spotted those shares?
Would I have had the PATIENCE to hold?
Would I have listened to x, y and z and sold “after all booking profits did not hurt anybody” theory?
Would I have sold to buy a house – after all “real estate never falls” theory
The question to ask is
What if I had bought Silverline, DSQ, Lml, Shaan interval, Patheja Forging – I would have been taken to the cleaners?
ØWould have I sold “to rebalance my portfolio” after all 90% of my portfolio cannot be one share?!
Am I so lucky to have bought this?
What to ask
The question to NOT ask is “do I need to look for the next Wipro”
The best approach is to create a great portfolio
Betting on all potential winners is better than trying to pick the winner
It is important to work on probability rather than “that one share”
The answers are simple
To have bought these shares you may have needed guts, luck,…whatever but you could have bought the SENSEX in 1978-79 after all that has grown from 100 to 30000 in 2015 (and again at 28000 now)
Today betting on all means creating a portfolio
A winning portfolio
To make money you….
ØLearn about money
Need to choose a good portfolio…
Have a good portfolio manager….
Invest regularly and protect your assets.
Over a long period of time….
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