Elections are over and Modi-Shah led BJP has won with thumping majority. Many of us till results day thought that the fight was tight and unlike 2014, 2019 elections would be much closer. However, the results indicate a completely different story and (if at all) one can only argue that Modi Wave 2.0 has decimated even Modi Wave 1.0 !
As an investor, I thought there is a tremendous amount of learning that one can draw from this event. Summarizing hereunder 5 main things I have learnt:
What did BJP do?
#abkibaar300par – it seemed impossible but they have done it. One would remember, during every election in last 5 years, Amit Shah has been putting across these kind of targets and sometimes he succeeded and sometimes not but failures never deterred him of targeting big.
What can an investor learn and should do?
We should aim big and stretch ourselves to achieve big. We should target returns that should continuously keep us on our toes. Likewise when we are analysing companies to invest, we should keep an eye for promoters and businesses that are working towards disruptive products/ services having the potential to achieve significantly high growth and returns. E.g., Jio, Amazon, Google.
What did BJP do?
No one can deny the amount of planning and hard work BJP has put in to win 2019 elections. Booth level management, karyakartas, volunteers, election rallies, press interviews, merchandising, social media etc etc etc.
On some days Modi himself was addressing 3 rallies in 3 different states. Think about it how many people can pull this kind of a feat.
What can an investor learn and should do?
When one aims big, he has to put in equal amount of hardwork to achieve that aim. We should continuously work on improvising our strategy to achieve those aims. Investing is difficult but highly rewarding.
What did BJP do?
It never became complacent about the competition – strategized and attacked every move of theirs. Mahagathbandhan vs Mahamilavat, Naamdaar Vs Kaamdaar, Chowkidar chor hai vs Main bhi chawkidaar – all seems to have paid back BJP handsomely well.
What can an investor learn and should do?
Every business faces competition and how effectively the business keeps himself ahead of competition on a sustained basis differentiates a good business from bad. As an investor we should always look for businesses and promoters that are nimble, innovative and always looking to outmove the competition.
A promoter or business who is hesitant to evolve with time, undermines the competition, is overconfident or is a know it all kind of a specie should be avoided at all costs. E.g., Nokia, blackberry
What did BJP do?
BJP has mastered the art of What to communicate, whom to communicate and how to communicate. How to highlight the achievements (Awas Yojna, Swachh Bharat, Ujjawala Yojna, Ayushman Bharat etc), tell people what they want to listen (national security, corruption), whom to target (majority or minority, millennials or selective) – all has been handled with high effectiveness.
What can an investor learn and should do?
Mary Kay Ash quoted – “ideas are dime a dozen, people who implement them are priceless”. As an investor we should always look for businesses and promoters who can sell… sell well…. and better than the competition.
Look at Apple – they are masters of selling a product that might not be as differentiated from competition but commands a significant premium both in terms of tangible and intangible value. All this has translated in significantly high margins for the business and in turn significant wealth for investors.
What happened in the election?
As mentioned before, the sweeping results in favor of BJP was not predicted by many – whether someone accepts or not. Most were of the opinion that BJP will come back to power but with jugaad (i.e., alliances – old and new).
Many drew conclusions based on limited awareness, pre conceived notions and selective interactions (with like minded group) and in many cases ignored the silent voices of majority (people all around us including, drivers, maids, rural women, who might not be as vocal but may have got touched by atleast one of the govt schemes in last 5 years e.g. – gas cylinder, toilets, electricity, subsidised loan for building homes, mediclaim etc).
What can an investor learn and should do?
Having opinion is important as otherwise its impossible to make an investment. However, what is equally important is to be “Humble and Nimble”. No-one is, can or will know it all.
One makes an investment with some assumptions and presumptions. The key is to be always listening, reading and being on the top of the investments. If there is any reason to change the opinion about the investment – change it – don’t try to justify the old opinion.
It would be heartening to note here that even people like Warren Buffett or our own Rakesh Jhunjhunwala have been wrong many-a-times. The key is to accept, learn and move on!
I really hope that you liked what you read above and all of us learn, act and become better and more prosperous investors !
For any comments, please feel free to use the section below. I can be reached at nitin@candidcap.com