Even in the USA Value investing is under great pressure, and Growth Investing has outperformed Value Investing over a decade. Remember this is not how it was – in fact the numbers over the century still favor Value and not Growth.

I love value investing just because it forces you to follow a process. I could still pick up Indigo and say “50% market share is just awesome” or even pick a “Gillette” simply because of its huge market share. However, I know that I am going outside my frame work. At least Value forces us to have a frame work. I still have to answer myself whether Indigo is worth 10X of Spice Jet or am I paying too much for market domination. How I answer does not matter, but the question has to be asked. V.I. Surely gives us the framework.

There are reasons why Growth investing is popular. First is the POISON pill called “EBIDTA” – shit this is an impostor for FCF – Free Cash Flow. I love FCF which we used and HATE “E…A”.

Also remember that about 7 Trillion US $ is floating at zero cost, when corporate profitability is at an all time high. This is the equivalent of saying “for the next decades salaries will be zero”. I mean one major input in the business has been reduced to zero. How can this be?

OPM – managers handling other people’s money (Opium) is another big worry. When I see fund managers handling assets – Debt and Equity – it looks like they would do anything to be at the top of the pile. The dirty tricks department – including pumping the group money and other manipulations is too long to be listed here. Most so called asset managers are actually asset gatherers and do all the tricks necessary for being at the top. Remember corporate India (like others perhaps) does a Google search and finds “best performing liquid fund” and puts in its share of cash. So obviously, the dirty trick department can do anything to nudge the yield by a decimal or two and attract big money.

I do not think that Value investing is dead, but VI is being tested with such variables. When an equity fund manager says “yes Subra Governance is an issue that is why I am putting only 3% of my money into that company” you know you are past your prime.

I have another worry. Man is a social animal and he keeps looking right and left and over his shoulder. So if everybody keeps buying the index, what happens to the price of HUL? You can’t buy HUL worth Rs.4000 crore a YEAR and hope that prices do not change. HUL is held by people who will never ever sell. Tell them it is over-priced and they will scoff at you saying…”so you want me to sell HuL and invest in Yes Bank” or “keep my money in PMC”. They are right. Over a 4 year period this share may NEVER ever have gone down. Indexing is a big problem in a country like India where we have a poorly constructed index.

I do not understand today’s valuation. For me to comment “it is over-priced” or any such comment is stupid. I do not know is the only answer that I can (should) give.

I know only one thing – from 2009 to 2019 we have seen a 5X in the market. This can’t go on. Either the slope becomes flat or it falls dramatically. Or the index goes from 42000 to 43000 in 3 years. That is a nice thing.

However, like all bull markets, this too is more likely to end in a bad shape with a lot of tears. Get your hand-kerchiefs ready. OOps I am showing my age. Get your tissues ready.