Raamdeo Agrawal is a successful investor and the Chairman of Motilal Oswal Financial Services. He was born into a middle-class family in Chhattisgarh. As a qualified Chartered Accountant, he has always had a deep interest in analysing balance sheets and understanding businesses. He co-founded a brokerage firm with his buddy Mr Motilal Oswal in 1987 and began offering equity advice vertical and portfolio management services in the mid-1990s. He rapidly climbed to popularity as one of India’s most sought-after investors, dubbed “India’s Warren Buffet.” His investment theory has gained a significant following among all investors, with a net worth of over INR 13,000 crores, largely due to his successful investments.
“Price is what you pay, Value is what you perceive!” is a well-defined idea that is a golden rule of investment. Prices are the result of market players’ psychological reactions to information and news, which change on a daily basis. The basic basis of every stock, however, is the business in which it works. In the long term, the value of that business is what counts to your portfolio. Because the stock market is a battle between Greed and Fear, the market tends to over-react in a negative market, i.e. the market corrects more than predicted due to psychological considerations among market participants during a recession.
Under such circumstances, Value Investing principles are most likely to be applied. To determine whether a company is worth investing in, it is always prudent to examine its fundamentals and recent history. These companies have provided exponential returns in the years following a recession, resulting in long-term gains for investors. These are also referred to as bargain purchases.
Mr Ramdeo Agarwal’s investment strategy is to invest in assets that will appreciate over time. He believes that surplus funds should be invested and sold only when absolutely necessary. One of the most difficult issues for every investor is market volatility. Purchasing high-quality business stocks at a fair price is critical. Long-term investments also have the advantage of compounding profits. The long-term investment thought process enables the investor to weather short-term volatility and psychological reactions to stock price movements.
3Ds of investing
Mr Raamdeo Agarwal believes that equities investment success may be attained by the three D’s of investing: discipline, diversification, and differentiating between value and pricing.
Mr. Agrawal believes that discipline is vital for any successful investor, regardless of market conditions. Throughout his 30-year investment career, he has been quite rigorous in his investing technique. Discipline develops consistency and a winning habit. You get very good at something by doing it over and over again.
It is critical not to put all of your eggs in one basket. Diversification is a risk-reduction strategy that involves investing in various industries, financial instruments, and so on. It is a risk management method that involves investing in many areas that have a disproportionate association to one another. Defending against a certain company’s adverse risk. “Diversification within a portfolio can address all of the market challenges,” he says. While diversification does not guarantee against loss, it is an important component of attaining long-term financial goals while limiting risk. Diversification is essential for reducing company-specific risk, also known as idiosyncratic risk.