Thinking Through What Growth is It seems that the disruptive environment is also changing the investment rules. The new rule of investment is to buy high and sell even higher.
By Ritu Marya
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The investment landscape has changed drastically in the last few years. Often in business forums and direct interactions, a lot of people ask me how they should become a retail investor.
I feel that in a world where business valuations are becoming a mainstay and the stock market is making a comeback – the "buy low, sell high" aspect, which has been the most reasonable approach to investing till date, is becoming redundant.
It seems that the disruptive environment is also changing the investment rules. In fact, the new rule of investment is to buy high and sell even higher.
From the stock market point of view, buying stocks which are at yearly lows may actually add risk to your portfolio, rather than reduce it. Similarly, business valuations could really become worthless if as an angel investor or seed fund buys it at a discounted value.
The different spin to investment says that you look for such businesses or stocks that are near their highs and operating in the current or future strong industry. While there are many things that need to fall in place for making the right investment including the industry you choose, stage at which you look to invest in but I would say the one golden rule is that there is no point in making a big investment in a shrinking company, no matter how large it is.
One should look at a smaller share in a growing company, irrespective of the fact that how expensive it is. Our issue focus for the month of July 2017 has been to find such CEOs who were daring to take bold decisions and are entrepreneurial in their approach to business growth.
While interacting with leading CEOs, I realized that there are really two types of CEOs that are today successful in Thinking Through What Growth is Indian context. Indian origin companies would prefer to have CEOs who bring in great executional capabilities that actually lead to high performance and growth in the brand or vertical they lead.
On the other hand, in the global companies, the CEO in India would effectively be a business leader who would also strategize and further empower his teams to bring super execution and target achievement.
On the whole, we felt that CEO tenures are getting shorter in comparison to board's expectations which is getting higher. Another elephant in the house is the GST regime and right now it is looking much cumbersome. But not so much, when you see it through the lens of how the rest of world is looking at India.
I was recently at the Master Franchise Show in New Delhi where I had met some 30 global brand owners, who are gearing up to establish their brands in India in 2017-2018 and they were really excited about the new tax law. Since they start with a clean slate, it would give them an advantage for ease of doing business in India but most importantly it would give them an established basis for product pricing.
I would also like to warmly invite you to our annual "Entrepreneur Convention' on July 18-19 in New Delhi to discover the next and new of building an enterprise.
(This article was first published in the July issue of Entrepreneur Magazine. To subscribe, click here)