Importance of Long-Term Investing

All of us have often read the Wipro story on our social media or messengers (or similar stories for stocks like Dr. Reddy. MRF, Infosys, and a few others) ending with a mind-numbing number like “how INR 10,000 invested in 1980 is worth INR 540 crore today” and so on.

And then we often look at our portfolios and ask the advisor to recommend multi-baggers with a 1-year horizon!

No one knows which stock may be next in this list of glory achievers. But one thing is certain – one needs to be patient and understand the story deeply enough to avoid panicking at the wrong moment when one is buying for the long term.

For timely, research-backed calls and customised advisory, consult PL’s qualified experts.

Importance of Long-Term Investing

Look at the chart below for Wipro: The two bands in the chart demonstrate that the stock has had a tendency to fluctuate within a INR 120-140 band historically – which in the early 2000s would have meant the stock fluctuated by almost 50% (30% currently) on a frequent basis. If one had panicked each time the stock didn’t do well over a 2-year period, the INR 540 crore wouldn’t have happened.

Similar stories may be unfolding currently in front of us all the time. And yet price performance or simply lethargy in understanding the story sometimes keeps us from following these simple principles of long-term investing.

For instance, PL maintains very strong and sometimes anti-consensus long term views on stocks like BEPL, JK Tyres, etc which have recently dropped from their 1-year highs. But they deserve to be understood fully to appreciate value potential. As do our large cap research in stocks like Thyrocare or Sadbhav for that matter.

More than patience, it is engagement with the idea and understanding what the story is and how aligned to the long-term development of the Indian growth story.

If you do not have the patience or are worried about capital market fluctuations, you may choose to participate via mutual funds. Good Midcap or Multicap funds have been generating a CAGR of 18% –22% over a period of 15–20 years. This can easily create the multi-bagger situation for your portfolio with lower volatility and stress!

Note that INR 10,000 monthly SIP done for 35 years at a CAGR of 18% will give you almost INR 24 crore against your invested amount of INR 42 lakh!

For personalised investment advisory, backed by solid research, open a demat account LINK DEMAT PAGE with PL today. You can also write to us at advisory@plindia.com if you need any advice.