“When experienced investors frown on gambling with price fluctuations in the stock market it is not because they don’t like money but both experience and history have convinced them that enduring fortunes are not built that way.”- Thomas Phelps
I always tell you not to look at 3 or 5 years but preferably 20 years. In the medium term, you may make decent profits. Whereas in the long run you would be able to build a fortune. Let us be long term greedy; to build an enduring fortune over next 20 years.
I was going through a tweet from Motilal Oswal AMC. An institutional investor, Natwest markets bought shares of HDFC Bank in 1995 for Rs.40 crores. Few years down the line, in 1999, they sold the same for Rs.400 crores. Money multiplied by 10 times in 5 years. Natwest might have patted themselves on their back for such a wise decision. It’s a rarity to make 10X money in 5 years.
Instead of selling the same in 1999, had Natwest kept those shares, the value of the same early this year (27th January 2015) is Rs.21,480 crores. Money multiplied by 537 times over 20 years. Had Natwest been long term greedy, they would be sitting on billions of dollars today. Think about how many hundreds of crore they would get every year as dividend. One year dividend may cover their 1999 selling price.
India has an enormous potential and future. We’re growing from a low base and hence would grow at a high rate. If you stay invested in quality stocks or good equity funds for next 20 years, enduring fortune is all yours.
Disclosure: I’m a shareholder of HDFC Bank.