Buying dips is better strategy than selling rallies: Damani
What is your investment style or lesson? Do you look for corporates with good governance, or do you look for an underlying theme, such as a tailwind in a particular sector? What is your mantra?
It is a mix of all this as you would imagine. Of course, you look for sectors that are going to do well, you look for corporate governance, but at the end, all great businesses, all great investments, boil down to the same thing—that you want to buy things which are cheap, and you want to buy things which are run by people of integrity. A great business bought cheap is the best investment advice that I can still give. It has worked like a charm. You really don’t need to do much. As Warren Buffet has said this is not a very high IQ business. It is a business where you have to just think, read, understand and place your bet accordingly. So, it is very clear.
For example, in India, in the mid 90s, it was expected that IT was going to start doing well and subsequent events have proved it right. In 1990’s, we knew economic liberalization was going to be a dramatic change that took place.
So lot of themes kind of preannounced themselves and you have to have the faith and see where it takes us. There have been disappointments on the way, but that is part of the investment game. So, all we still look at is to find great businesses and valuations we understand.
This whole equity cult that we saw last year so much coming into mutual funds. If we had the kind of FII selling 5-6 years ago, the market would have collapsed, but this market stayed put because of the domestic buying support. Do you think this equity cult will be intact even through this volatility?
I hope so, and I think it will be. It seems to me that the Dow finally appears very tired, the leadership has been under pressure, the FANG stocks have been under pressure. The yield curve is getting inverted, and that suggest oncoming recession.
Besides, there is talk of a trade war, which could be very dampening for the US, and there is general fear that the economy is going to go into recession.
All this benefits us. So money moves out from developed markets to emerging markets. As interest rates rise in the US, trade war settles, I think we will be better placed. So, as long as oil remains around $60-70 per barrel, we will chug along.
I think the market’s fear of election uncertainty is perhaps over placed. There is good chance that state elections might disappoint the market, but I think people will vote differently between the state election and national elections. I think the market will overcome those sort of fears because the country itself is in a sweet spot in terms of consumption, growth and demographics.
So, I will not be particularly wary of this bull market ending. I would say that buying the dips is a better strategy, than selling the rallies. The first Wizard series that you did was 10 years ago, where you featured the likes of Rakesh Jhunjhunwala and Raamdeo Agrawal. Since then, you have come a long way. You are now not just the chairman of D-mart, you are also a grandfather. You have seen such a long journey. What is the one trait that you see in this new breed of successful fund managers that you have interviewed? What helps them wade through a lot of these murky times?
Just to put some perspective on what I am doing. You are right, the first series I started with a wonderful producer, Nandini, who used to be with CNBC. We did Wizards of Dalal Street. The people we profiled have all gone on to become giants in their field. I am very proud of the fact that we have got them at a fairly nascent stage in their career.
Couple of years back, with my producer Nimesh, we did a series called Wizard of Dalal Street, A Fresh Breeze. We tried to find some younger stalwarts who are going to make a name for themselves in the future.
What we thought was that two years after I did the initial show, let me go back and revisit them, how they are handling the turbulent time that 2018 was, what are the promises for 2019 onwards.
So, we are doing this contemporaneously. We have done one show, we will do another couple of shows over the next couple of weeks. We will see how the later interviewers speak of themselves.
However, generally, I find, like I found on my earlier shows, that what distinguishes this batch and the older batch is similar. It is the passion they have for the markets. I think they are all surprised that they get paid to invest in the market.
They would probably do it for free anyway. It has been a great privilege to actually have seen some of the best minds in India speak about something they all love so passionately. I am going to give a shout out to my grandson; as you mentioned, it has been the great pleasure of my life to play with him. So, thank you for mentioning him.
Are there any themes pre-announcing themselves now? Quick service restaurants?
That would be a good example of what I have been betting on. Some of the stocks are still fairly cheaply valued. The sin stocks will probably do well. The gaming stocks. PSU stocks.