Buy Right and Sit Tight to make Huge Money
Munger has very nicely explained his views on any financial companies. He says, “In stock investing – Consistently being not stupid is more important than being Intelligent enough“
Munger has very nicely explained his views on any financial companies. He says, “In stock investing – Consistently being not stupid is more important than being Intelligent enough“. True in the sense of banking companies as well where the business model is almost same but profitability is decided how well a finance business is being managed. Lot of investments done by Berkshire Hathaway on the simple law of nature: Simplicity. Their age old business practice of investing in to simple and easy to understand businesses, which have earned them large amounts of wealth.
One of the trait we love about Buffett is his religiously following his circle of competence. Circle of competence is nothing but investing in those companies which one understands. For example if a person has an hands on experience in retail industry and he pursue to invest in to retailing stocks. Like in case of Buffett, he has never invested in to IT stocks because he don’t understands the very basic economics of that industry.
Recently we have covered a very simple and easy to understand business Symphony Limited where in initially we didn’t bought stock due to high valuations but later on our team of analyst decided to buy, since great businesses are rarely available at cheap prices, we bought symphony @ 650 in March 2014 CMP 988. The company deals in Air coolers and it’s the world’s largest Air Cooler company. The concept of buy right and sit tight is famously followed by the legendry investor Buffett, he bought great businesses at bargain prices. His holding period is forever which means he rarely sell his investments. He enjoys the wealth creation process and earn lot of dividends which helps him to acquire wonderful businesses at bargain prices.
Although the current valuations now seems to be expensive in symphony but we are confident of the future growth prospects, brand recall, market leadership, product innovation and there vast distribution network which makes symphony a great company to own.