My eyes were stuck at a newspaper headline that read – “15 companies that can be the next Infosys”.
And then there was something I read online that said, “Find the next Infosys”.
Another suggested, “How to build a fortune with blue-chip stocks that don’t even exist yet!”
Bam! How do I invest now in stocks that don’t even exist yet?
You see, business media is replete with such claims that they know of the ways investors can find the next Infosys, or HDFC Bank, or L&T (or future blue chip stocks that don’t even exist now!).
But ask them whether they were able to identify the first Infosys (i.e., the real Infosys) when it came out with its IPO in 1993 or even after that, and you’ll stare at dumb looks.
The truth is that such a dream stock like Infosys looks like a dream only in hindsight.
But to be a successful investor, you don’t need hindsight…you need foresight.
You need the foresight to identify businesses that are doing well now and will continue to do well in the foreseeable future (no distant future).
Me, the next superstar?
My wife thinks I sometimes resemble Abhishek Bachchan, and sometimes Sunny Deol (of the yesteryears :-)).
But does that mean that I’m going to be the next Bollywood star and earn so much money for her as these guys have done?
No! I have my own life…my own interests…my own luck…my own income level…my own expenses…my own future.
In the same way, while a company that might ‘look like’ Infosys today, will also have a life cycle of its own, one that will be unlike Infosys’s.
Its revenues and profits will grow at a different pace than Infosys’s.
Its management will run the business differently than how Infosys’s management did.
It will face a different type and intensity of competition than what Infosys faced during the past 20 years.
In short, its business will have a life of its own, unlike Infosys’s.
So how can it be the next Infosys?
Well, the advisor recommending the next Infosys will argue, “I say it will be the next Infosys because it will give huge returns to investors like Infosys did.”
Ask him, “How do you know? If its business will move along a different path than Infosys, on what basis can you promise me returns like Infosys from this stock?”
Then wait for the advisor’s answer…and keep waiting!
You see, I have met many people – including some of my friends and relatives – who’ve lost money in stock markets just because they were chasing the next Infosys or a similar ‘dream stock’.
What they ended up with were small and unknown companies with no proven record, and which lost them a bundle in the subsequent market crash.
I believe this bias of advisors and investors towards the small and weak companies comes from the saying that ‘the meek shall inherit the earth’ and ‘he who is first shall be last, and he who is last shall be first’.
But, dear investor, this doesn’t happen in the stock markets.
Of course, there are very unique cases like Infosys that were once small and unknown and are now among the most respected companies out there.
But check out the probability of Infosys-like cases, and you will stay away from such companies…whatever your advisor tells you.
Always remember this…
If someone is guiding you to a stock or investment opportunity that ‘doesn’t exist now’ or that can give you ‘Infosys like returns’, you will be better off isolating that advisor and his advice. It’s a sheer waste of your time.
See it’s your money at stake…so avoid falling in this trap of finding the next Infosys.
Instead look for companies that have a history of good performance (maybe Infosys itself!), have visionary managements at helm, and are likely to sustain their growth and profitability long time into the future as well.
But if such stocks don’t exist yet, they must not exist in your portfolio as well.
Highly enlightening. Great advise for gullible inverters lead by market rumors and advisory forecasts
Dear Mr. Ramgoopal, thanks for your kind words! I hope I’ll be able to continue to help individual investors in making the right investment decisions, and independently. Regards, Vishal.
I am getting a feeling that this is going to be quite interesting , having joined the ” Safal Niveshak”. Have enjoyed every article I read , so far.
Dear Mr. Sanghvi, thanks for your feedback! It motivates me to continue to pursue my focus towards helping investors with relevant and interesting investing ideas. Regards, Vishal.
Hi Vishal;
Since i brought RIL Stocks, it is moving down and down, may i know the reason, may i keep this stock in my portfolio
Thanks;
Dev
Hi Dev,
Thanks for your query!
However, I express my inability to provide views on specific stocks.
If there’s any other way I can be of help to you, just let me know.
Regards,
Vishal
Dear Vishal, your view about investing are real and intresting. Your Thought of Ben graham way of analysing stock for investers is marvelous and highly appriciable. First time I have never seen such nutral and fundamental way of invester education before. once again thanks and congratulations for your wonderful work.
Regards,
jatin.
Dear Jatin,
Thanks a lot for your kind words!
I hope to continue this movement of educating investors for a long time and with the help of your support.
Regards,
Vishal.
Dear sir,
It is good to know that some one with a will to help exists. I have been investing in shares and losing. But recently I am doing more of study than investing/trading. can I trust and buy oversold stocks, i.e stocks which have been oversold during last fortnight/month? I refer only the regularly traded stocks in high volume. I only need tp trade for short term. Please advise.
Regards
Hi Daniel, thanks a lot for your comment! However, I’m to sorry to say that I won’t be able to guide you on stock trading. But if you have any doubts on long term investing, I’d be happy to help.
Dear Vishal,
Instead of searching in small and midcaps for next Infosys or L&T or also those blue chips that never exists, small investors should understand basics of investing and invest in existing Infosys, Larsen etc. (instead of RCOMs & DLFs) at a right price for a right investing period (long term) after knowing the reason for buying it. This should do lot good to thier financial well being.
If you cannot identify the right price for a individual stock, then better invest through some quality mutual funds. In this case, you need not bother about th stock price and its analysis. Only two things you should know is your investment time (i.e. Long term – 10/20 Years) and reason for buying it (financial well being and to achieve your finanical goals and keeping it up with inflation) which any one can estimate.
I second your views, Ajay. Thanks for the same!
Next infosys is INFOSYS itself. wait for next 5 years it will double or triple or more because of valuation.
This company has no debt, current slow down is compensated in the from of rupee depreciation so bottom line is more now too, With cash of Rs 36,000 cr and Rs10,000 cr addition every year they can go for 1-2 more acquisition
give more dividend + market is going to recover Hence the INFY business itself willrecover.
This will again make Infy a better player.