There are many things in which you invest. When a mother invests in her child’s food and upbringing she invests hoping that the investments are good for say a 100 years! She invests in good habits, good food, good education – does she look for a day to day return? No. She is not a bitcoin (or FnO trader) and hence she is investing for the long run.

When a ‘long-term investing is good’ fund salesman asks you to invest he means ONE year. When your relationship manager in a brokerage house asks you to invest, at best it is one week.

When you invest in your education – you expect a payback in say a decade, but you expect it to be with you for the next 70 years at least.

When you invest your money for the long run, what should you look at? Remember we are talking of multi-generational wealth creation for the family. It can go beyond your life-time. In fact it should.

So what all do you invest for in the long run (how we will see soon)…

  1. Invest in writing down what you are doing – when you are dead your family will thank you.
  2. Invest in explaining to your family what you are doing.
  3. Keep boring them…one day they will learn.
  4. Stop saying “they are not interested” see “how you can make it relevant and understanding. Send them this link.
  5. If you are a small investor invest in an index fund
  6. If you are willing to learn invest in direct equity
  7. If you are big enough invest in a PMS – I can’t name the managers please.
  8. Private equity investing in start ups is for the people bigger than that.

Did I know that the market would be 60,000 (TRI Sensex) in 1979? of course NOT. You got to be kidding. However today if I buy a share at say Rs. 300, I hope to sell it at say Rs. 3000 about 12 years from now. Does it always happen? I am not sure, but most of the shares that I have is almost like “permanent” even if it is a commodity player like Eid Parry, Coromandel International, Cholamandalam finance.

Do I think that the asset management business will grow over the next 30 years? the answer is yes.

Do I expect Nippon to hang around for the next 30 years? Yes.

Do I think it will grow its ebidta by a rate greater than inflation? Yes.

Do I have a 40 year view on the industry? Yes.

Do I have a 40 year view on this company?

You are joking, right? of course I do not. However, I know that I will keep looking at the quarterly results. I will be seeing the growth, the profitability, the fund manager performance, the ability to attract and retain talent, ……blah, blah blah. My 40 year view, as always is the sigma of 160 quarterly views.

How do you choose companies in a country like India? Well see what impact these companies are having on the economy. See the continuance improvements in standard of living. Asset acquisition – like washing machines, cars, fancy motorcycles, ….it is just going on and on. Car ownership is at 6% of the population. It is the 94% who will provide growth. Apollo Hospitals. Fortis. Banks. Power companies, pharma companies,…..they will all grow. The best will gallop, the worst will die by the wayside…

Even with a veteran like Col pal with such penetration, oral care in India is still fairly under-serviced. Do I think (assuming same CAGR as past 40 years) that Col Pal will reach a price of Rs. 900,000 in the year 2059? Frankly it does not matter, but I will not be surprised if it does. So when I buy a Col Pal at Rs. 1456 today, I am not asking whether it can sell it on the next Monday for 1476 Rs. What i am asking myself is “is this the best that my money can do” over my daughter’s life time of investing. I of course expect to be pushing the flowers. Go Google.

It is customary to put a caveat saying “this is for academic purpose”. If you are stupid enough to buy Nippon (aka Rnam) or Colpal JUST BECAUSE I HAVE MENTIONED IT, its your call. If you lose money, its your money, if you earn well, you will pay capital gains tax. Either way it does not matter to me. I may change my mind in 2021 or 2057.

 

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