Moneycontrol
Feb 13, 2018 12:02 PM IST | Source: Moneycontrol.com

Follow Warren Buffett mantra of investing? Here's your chance to make your crorepati portfolio

As emphasised by a pioneer of value investing, Warren Buffett underlined the basic fundamental of staying invested for a longer duration and keeping heads away from the short-term market fluctuation.


Dinesh Rohira

5nance.com

After a prolonged uptrend momentum in the Indian market and across the globe, it sharply felt into correction territory in current month plunging 6 percent each on major market headlines from initial highs.

The global concern revolved around the spike in the bond yields coupled with fear of rising inflation across the developed economies.

The interest rate hike by central bank around the world on the backdrop of rising inflation and higher yields has put the equities market under uncertainties.

However, the global sell-off and its slipover into Indian equity market presented an opportunity for the investors to hunt for value proposition across the segment of scrips.

As emphasised by a pioneer of value investing, Warren Buffett underlined the basic fundamental of staying invested for a longer duration and keeping heads away from the short-term market fluctuation.

His basic principle of investment revolved around buying stocks at a cheaper level and holding them till it unfolds the objective.

Thus, with the fundamental of Indian economy appropriately positioned and robust structural reforms, the short-term volatility enables to operate fundamental of buying quality stocks at a cheaper level for the investors in India.

The fall of the market in 2008 post-financial crisis and its replica during 2011, wiped out billions of wealth across the global, and similar magnitude can be seen in the current phase.

However, a historical trend has shown a glimpse of market recovering over a period of time despite a prolonged turmoil.

Therefore, it turns out to investment principle of Warren Buffett, where it is emphasised to keep away from the investment portfolio and to stay invested as long as it is appropriately invested for goals.

However, it will be prudent for an investor to re-balance the investment portfolio if the market drop continues to prolong than the threshold.

Given the fact that our Indian market is poised for the bull regime from a long-term perspective which is supported by earnings recovery, and fundamental soundness as seen in the current quarter after a sluggish growth for past 3 years, it facilitates to trade-off Warren Buffett’s theory of value investing.

Therefore, sticking to a basic principle of investment and holding a strong fundamental conviction, the Indian investor has a larger propensity to create an overwhelming wealth in millions to billions from equity market despite a short-term turmoil.

It narrow downs to screening a quality company despite facing a downtrend but has the edge to deliver multi-fold returns over a period of time which comes from a humble strategy like Buffett.

And more importantly, every short-term consolidation can be used as buying opportunity which also brings down the average cost of investment and thus munificent profit margin at the hand of the investor.

Disclaimer: The author is Founder & CEO, 5nance.com. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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