Investors who primarily rely on screening tools to generate ideas end up missing such opportunities. If the leading stocks are falling sharply even after reporting solid earnings or going up even after bad earnings, the market is trying to tell you something important.
Fear of the unknown is one of the most potent kinds of fear, and the natural reaction is to get as far away as possible from what is feared. Unknown make most of us withdraw from the game. These, however, are also the circumstances in which extraordinary returns are possible.
Based on the author's personal investing experiences over the years, He had found that buying a good company in a significant sector is better than buying a great company in a bad sector.
The author advises to not fight the trends, especially the long-term, inevitable ones.
In other words, invest in companies with tailwinds, not headwinds.
The author uses his portfolio holdings to demonstrate this important investing principle:
- Aavas Financiers, CreditAccess Grameen, Bandhan Bank, AU Small Finance Bank, and Ujjivan Small Finance Bank are examples of India's secular growth in the housing finance, microfinance, and private banking industries.
- Vinati Organics: a gradual shift in chemical manufacturing away from China and toward India.
- Long-term structural urbanisation and financialization of savings in India: PSP Projects, HDFC Life, and HDFC Asset Management Company.
- The Food and Agriculture Organization of the United Nations has planned to spend $7.6 billion over the next 15 years to eradicate PPR disease: Hester Biosciences.
- Bajaj Finance, Dixon Technologies, and SBI Cards are examples of secular growth in aspirational India's discretionary consumption.