About 250 stocks that were available at prices below Rs 25 on April 1 have surged between 100 per cent and 1,600 per cent in just five months. This price surge made a quick buck for a lot of investors over the past five months.
“The ongoing hyper-liquidity situation and easy money-making opportunities will correct soon,” says Kedia. “Making money in such a market is neither a certificate of your intelligence, nor a guarantee of your success. Investors should not always trust what they see in a bull market.”
The Mumbai-based investor, however, says the situation in the Indian economy is not entirely bleak. “On the brighter side, Covid-19 has opened up new investment opportunities. One just needs to have the ability to identify undervalued and ignored stocks that are still trading at cheaper valuations,” he says.
BSE benchmark Sensex and NSE’s Nifty have rallied more than 50 per cent from their respective 52-week lows hit on March 23, as abundant liquidity from central banks and governments has led to asset prices inflation globally.
Kedia says liquidity is as essential for markets as blood pressure to the human body, but it is not good either on the higher or lower side. It should be balanced.
“At present, liquidity in the market is on the higher side, which will certainly balance itself. Only God and a liar would know the top and bottom of the market,” says he.
Recalling his own mistakes in his long investing career, Kedia says not holding shares for long was one of his biggest mistakes. Now he has been holding some of the multibaggers in his portfolio for more than 15 years.
The renowned value investor says he lost a lot of money early into his investing journey, as his propensity to hold a bagful of ‘Bhangaar’ stocks along with blue chips ultimately took away the overall portfolio returns. “Trading in derivatives with the aim of becoming a crorepati (millionaire) quickly further eroded my wealth,” he recalls.
“The desire to become a crorepati overnight is often the root cause of failure in the stock market,” he says.
Kedia thinks a bull market is like the sunlight, which always stays somewhere. “You need to be observant and unbiased. We will see new leaders and new multibaggers in the ruins of the Covid disruption,” says he.
Kedia advised new investors, who entered the market during the lockdown, to buy a stock like a bull and sit (with patience) like a bear and watch like an eagle.
“Making money is always good. But simultaneously one should also keep on learning how to make better investment decisions. Otherwise, it won’t take even hours to lose money made over the years,” he counsels.