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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  1. If my father had 10k (100x 100) in 1980 he would have been the richest SOB in 4 generations of my family and there would be no need to invest in wipro

  2. True that @ajayrajaram. 10k INR was having value that time. Even my grandfather used to earn aeound Rs. 350/- per month inspite of being a fairly paid govt employee.
    The point is if one had invested whatever he/she can, the returns would have been phenomenal!

  3. Canot agree more. My father was earning between around 100-200 in those days per month. 10K would have almost netted him a home in those days. Things look rosy in hindsight.

  4. @kashi, Azim Premji is one such person who have styed put for such long time :).. So only he is in top 5 richest Indians.

  5. Hi Subra,

    Everybody can be perfect… in hindsight.

    WIPRO, Infosys, TCS and all other such examples are often quoted in every investment forum as the ideal examples for “everything”.

    I would like to know about the retail investors who “consciously” stayed invested in these stocks and are multi-millionaires now. Have not come across any such person so far. We all need just this one investment in our entire lifetime. How long does it take to find such a stick and how many retail investors have the insight to invest and stay invested in such companies – that would be a bigger challenge and a tougher question to answer.

  6. sorry..but other than Siva none of the other comments are worth commenting on 🙂 Yes Siva you are right. Amazing people seem to be telling me the following:

    Rs. 10,000 of 1980 is Rs. 350,000 of today. Well at 9% inflation..well it is about Rs. 1.6L. Not a small sum but not a king’s ransom either.

    People want to know whether somebody stayed on ‘consciously’. God please grant me financial unconsciousness.

    ‘I have not seen anybody…so nobody exists’ – exactly HOW the word black swan was coined. Seeing 5000 white swans is not enough to prove that black swans do not exist. Metaphysically.

  7. by the way…i know many people who got FIRM allotment in the Infy issue..and sold it to fund the buying of TCS…

    I know shareholders of Cipla, MnM, Tata group…..who have stayed on for being with a pro group…thats the class size…

  8. @Arun – thanks for providing real data instead of qualitative gas.
    @Tapas – you have a good sense of humor.

    I am unable to draw lessons from this person’s holding pattern except for solid faith in Mr Premji (which is completely justified now, but back in 1980??? – there were some opinions then on how he was taking undue risk in diversifying from oil/soaps to computers).

    Subra’s last para (under winning portfolio) makes the most sense – just the part about protecting assets – how does one do it in a buy & hold approach?

  9. Astronomical figures,this is all about ifs & buts. The fact is none of us have it & we want to accept it,although the mathematics is always true.
    Vijay

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