Observations @ Morning Star

I had been to the Morningstar Investor Conference in Mumbai, had the opportunity to hear thoughts of some prominent names in the industry, fund managers, Economists alike. Thoughts that were shared by economists were too negative, at a time when the markets are down with lots of pain in the minds of investors, these negative thoughts did not feel like it is right.

Maybe these people do not want to take responsibility for their views if what they say goes to be wrong and are always taking sides of what is the prevailing situation. Thoughts that our

  • Crude oil buying problem is increasing
  • Trade deficit is equivalent to those in the 90’s
  • The picture now is more bad that what it is experienced.
  • India is spending more on Coal, which is a surprise.
  • We are importing more electronics.

Why should they voice concern now and have not done earlier when markets were going up? If all these were true, it cannot happen all of a sudden in a day or two. People who are tracking these should have known them early and should have actually informed people to take right decisions. Instead all that these so called big names including media are doing is, to come after the event and support the situation.

I have been holding position in Jubilant Foodworks, the owners of Domino’s Pizza. Till last quarter for 5 quarters this company had good growth on its sales and profits. In the September 18 quarter growth has slowed down & because of bonus announcement its earnings got dropped. After the results were announced, analysts are giving information about the challenges the company will face like.

  • Due to food aggregators, they will have labour problems.
  • Competition is eating into their business.
  • Increase in Fuel cost as well as other inputs is not getting passed on and will be a burden.

How come all these showed up the day results were announced? Now that the company is showing signs of slowdown, all these people are giving supporting thoughts to strengthen the actual condition.

And this brings more clarity that all the media as well as big names should not be believed or should just brush aside and we continue with our beliefs. The other day there was a thought shared in a video that big money is made in the markets only when there is more fear and blood bath in there. And when fear gets bread through media it becomes more pain and that is where right opportunities come.

In 2008 everything around us was talking negative, joblessness, crude oil at peak, businesses defaulting and media was only giving negative news. From there market went up 157%. Even now news papers are full of negative news.

  • Agriculture growth is underwhelming
  • Mid & Small cap in Bear hug.
  • 1 year sip’s in Red
  • Valuation still above average

All these means that, there is the next big opportunity just about to come. Only that, one needs to invest into quality stocks. Just because stocks are available at a discount, one should not pick up junk stocks

Stick to quality and the next rally will help you make handsome gains.