A lot of investors believe that in order to succeed in investing they need to find some small or micro cap stocks that are not known to many investors. In this process, however, they miss some of the fundamentally sound and stable large cap stocks that have the potential to become mega cap companies with steady economic growth, feels Anoop Bhaskar, Head- Equities, IDFC MF.
Anoop said, “There is a belief that you cannot generate alpha in the large cap space. However, it is a myth. There is enough money to be made with less volatility and low probability of capital loss in the large cap compared to small and micro cap,” says Anoop.
At the Cafemutual Confluence 2020 Investment Marathon, Anoop shared some of the lessons that he wished he had learnt from the 30 years since he entered the markets.
Another lesson for Anoop has been on the holding period of a stock. Anoop said that many investors feel 3-5 years of investment in a stock is a good long-term period to yield good returns from it. However, investors should stay invested for at least 10 years if they want to see a stock become a multi bagger.
“Even one of the most successful investors in the world, Warren Buffett, made his first billion dollars after the age of 50. It took him 20-25 years to earn that capital from investing,” said Anoop.
In order to thrive in the long run, Anoop advised investors that they should stay patient and tread cautiously when the tide is against them. “At the end of the day, investors need to realise that they cannot make money in all market cycles. In some market cycles, one can make good money but in some it is wise to protect capital rather than taking aggressive bets,” said Anoop.
When asked about how luck can be a factor in investment, Anoop said that luck is definitely a crucial factor but it cannot be the most important aspect of investment. “Like Michael Jordan, a famous American professional basketball player once said, ‘I practice more and therefore I am more lucky’. So if you stay in the game for a longer period of time and work hard at it, luck will be on your side,” said Anoop.
