All of us have often read the Wipro story on our social media or messengers (or similar stories for stocks like Dr. Reddy. MRF tyres, Infosys and a few others) ending with a mind-numbing number like “how Rs 10000 Invested in 1980 is worth Rs 540 crores” and so on.
And then we often look at our portfolios and ask the advisor to recommend multibaggers with a 1 year horizon!
No one knows which stock may be next in this list of glory achievers but one thing is certain – one needs to be patient and understand the story deeply enough to avoid panicking at the wrong moment when one is buying for the long term.
Look at the chart below for Wipro : The two bands in the chart demonstrate that the stock has had a tendency to fluctuate within a Rs 120-140 band historically – which in the early 2000s would have meant the stock fluctuated by almost 50% (30% currently) on a frequent basis. If one had panicked each time the stock didnt do well over a 2 year period, the Rs 540 crores wouldnt have happened!
Similar stories may be unfolding currently in front of us – and all the time – and yet price performance or simply lethargy in understanding the story sometimes keeps us from following these simple principles of long term investing. For instance, PL maintains (Visit Idea Research section at www.plindia.com/ ) very strong and sometimes anti consensus long term views on stocks like BEPL , JK Tyres etc which have recently dropped from their 1 year highs but deserve to be understood fully to appreciate value potential. Similary our largecap research in stocks like Thyrocare or Sadbhav for that matter.
More than patience, it is engagement with the idea and understanding what the story is and how aligned to the long term development of the Indian growth story.
If you do not have the patience or are worried about capital market fluctuations, you may choose to paricipate via mutual funds. Good Midcap or Multicap funds have been generating a CAGR of 18% –22% over a period of 15–20 years which can easily create the multibagger situation for your portfolio with lower volatility and stress! Note that a 10,000 Rs monthly SIP done for 35 years at a CAGR of 18% will give you almost Rs 24 Crore against your invested amount of Rs 42 Lakh!
Write to us at firstname.lastname@example.org if you need any advice.