Saurabh Mukherjea, the authority on the doctrine of ‘Coffee Can Investing‘, believes that it is better to trust stocks with a proven background and winning track record on their broad shoulders rather than risk capital by trusting newcomers. In his latest article in Forbes India, Saurabh has rightly pointed out that only a handful of stocks call the shots in the economy.
“India is already an economy with extraordinary levels of profit share concentration in key sectors, with one or two companies accounting for 80 percent of the profits generated in their sectors,” he has stated.
“Smaller players who don’t use technology optimally cannot build deep competitive moats, and cannot access funding at low cost will die,” Saurabh warned.
He added, “The rewards for the winners are huge: They get the profits of the entire sector and market cap in excess of $10 billion.”
Saurabh has advised that we should be one step ahead of the regulators and try to pre-guess the names of the companies which will be included into the Nifty.
“Had I been clever enough 10 years ago to predict the names of the 20 companies that have entered the Nifty in the interim period, my portfolio would have compounded at 40 percent per annum,” said Saurabh. According to Saurabh, the three trends that are likely to take place in the Indian economy are:
- Formalisation of the economy and concentration of profit share
- Financialisation of Savings
- Formalisation of retail and distribution channels.