Time for a cold shower

“Small is beautiful”. Or so most people believe after seeing how smaller and midsize stocks have delivered over the past year. Past performance always produces biases that one needs to understand closely. Scarcity and demand are a deadly combine. If the two combine with a grave sense of urgency, the outcome can be likened to a heady cocktail. The Indian markets are drunk on this cocktail. Everybody wants to find the next multi bagger small cap. At this point one must recognise that multi baggers have two dimensions. The first relates to growth and the clear visibility of lasting growth. The second relates to perception. When perception dominates decision making and even ignores the inadequacy of growth, we are running grave risks. Mere perception change is not a healthy thing. Supply of good paper will demolish valuations of weaker players.

Excuses are the nails used to build a house of failure.” — Jim Rohn

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