I appreciate your view point that we must be flexible and open rather than clinging to a particular approach. But in the same breath, I would like to add that if one is investing with long term horizon in mind with an objective of generating above average returns, the odds have to be in favour of investors to achieve this objective. In my opinion, for long term above average returns, quality of management is absolutely critical unless one is buying the business at extremely cheap valuation. Alternatively, there should be some triggers in place which can change the business environment significantly.
If I understand correctly, our hypothesis is that post election if the strong government comes to power, there will be such triggers in place which will change the business environment significantly. Even if we assume that there is strong and decisive government in place (Which itself is a big assumption) there are some distinct possibilites
)- Even if there is a strong and decisive government at the centre, there may not be any short term solution to long standing issues in some of these sectors (power, oil & gas etc) as many of these problems emanate from structural/regulatory factors and will require stakeholder consultation/regulatory approvals/legislative changes etc
-Alternatively,the government may take steps which actually removes the monopoly in sectors where there is inherent inefficiency built in by the monopolistic behaviour of PSUs thus exposing PSU to competitive environment. If this happen, the whole paradigm for comapnies like Coal India, PGCIL, EIL (to some extent) will change and companies will be exposed to unchartered territory and historical performance/record will hardly have any relevance
So given these number of "if"s involved in the equation,isn’t premature to make an investment decision just because the company is a PSU and there may be a change in government in the next election? Doesn’t it more resemble to trading than “bottoms up” approach? Won’t it be more prudent to wait till actual policy/approach of the new government is known and then make investment decision? Even though, you may sacrifice some upside, but won’t you minimize the loss of capital? Moreover, if we are expecting to buy into highly undervalued PSUs where structural change will make them very attractive, even after paying slightly higher price, investor will still be able to make good money.
So on the lighter side, I personally feel, that to ride different stock differently,things have to be different in the first place! Especially when we know that we are partnering with a management that does not have shareholder value creation as the top priority!
I would like to qualify here that my views are based more from longer term investing perspective and I have no clue about trading in the market/timing the market. Hence, it may be entirely possible that I am missing the larger point!
** But time. ** too.Personally Bankin