Does that make me “uncreditworthy” as well? NO, absolutely not! But does it make you “creditworthy?” just read few lines and hope it will clarify what you or any other analyst are trying to do: “The hindsight bias is one of the most prevailing fallacies of all. We can aptly describe it as the ‘I told you so’ phenomenon: in retrospect, everything seems clear and inevitable. If a CEO becomes successful due to fortunate circumstances he will, looking back, rate the probability of his success a lot higher than it actually was.
Please don’t use this kind of offensive language while discussion, “You only have to use a little bit of common sense to determine what a declining ROIC means.” How you have concluded that nobody knows these kiddies things like ROCE? Do you understand that these are lag indicators and not lead indicators? Whereas, most of the returns in the market are front ended. Infosys, Lupin and most of the Pharma companies ROCE has declined in past 3 years: so, they all are bad companies or going to die? ROCE is a fluctuating thing! People have made fortune out of declining ROCE in cyclical. According to you, “all professors of finance should be great investor and historians will be in place of Buffet, Soros and Lynch.” These all ratios and numbers are helping verb and acting as guidepost in dark; in investing, actually main verb is missing and everybody is searching for it- ha ha.
Regarding your example of Kirana store: just answer one question- First Kirana shop owner use to put money to build the business and draw customers, or he use to get money in the galla? Even Kirana shops use to take 3-5 years to break even and here you are talking about such a big business. If you are not comfortable with growth investing then put your money in any of the blue chip companies. Apne apne funde hae bhai! Don’t ridicule other. You are free to put your contradictory ideas and it will be great help for everybody on this forum including me, but come up with solid numbers- as boasted by you that numbers are everything. Do you think there is rocket science involved in finding out that Manpasand is not having positive cash flow? Don’t try to create authority bias by quoting Amit or anybody; if I will quote Ramdeo or Navneet Munot: will I become more correct? I will be happiest person if you will prove me wrong, but not like this.
It is not unfortunate fact that people like stories more than numbers: Even HDFC bank or Infosys were stories when it has started. It is just post facto rationalization that you or anybody has envisaged the future based on the numbers and when your great numbers are there prices will be nonsensical. Most of the money in the market has been made by stories and with numbers you can make 10%-12% return. So, please don’t try to be sarcastic and too much pedantic as even Rakesh bhai don’t use to claim that he knows at the time of investment that it will be a great investment or not. Here, you are suffering from Survivorship Bias: Survivorship bias can become especially pernicious when you become a member of the ‘winning’ team. Even if your success stems from pure coincidence, you’ll discover similarities with other winners and be tempted to mark these as ‘success factors’. However, if you ever visit the graveyard of failed individuals and companies, you will realize that its tenants possessed many of the same traits that characterize your success.
Yes, you don’t suffer from commitment bias, but you are suffering from the father of all fallacies, the confirmation bias. Astrologers and economists operate on the same principle. They utter prophecies so vague that any event can substantiate them: ‘In the coming weeks you will experience sadness,’ or ‘in the medium term, the pressure on the dollar will increase.’ But what is the medium term? What will cause the dollar to depreciate? And, depreciation measured against what – gold, yen, pesos, wheat, residential property in Manhattan, the average price of a hot dog?
Discuss and find out mistakes: nobody can be a greater friend than people who use to criticise. Discuss as good friend respecting other forum members don’t try to become authority on the subject because market is a very harsh place and even Harvard graduate use to get failed here and Dhotiwalas use to make hell out of money!
Thanks! You can write me in my message box as I will not reply anything regarding this post because this discussion will simply waste everybody time and effort.