Nothing beats equity in the long run?

Praveen S
Wednesday, April 28, 2021

Like many, I also manage a stock portfolio. Since, I do not want to struggle with updating with knowledge of my companies, I follow advice given in platforms. Yes, like majority of the human population I would like to reduce my cognitive overload and think less.

Last a week, I happened to have a discussion with a finance professor. He seems to be a big player investing 100s  of times of money I have invested in stocks. He advised me that the best strategy in investing is to just buy shares and do not touch it ever . He told me stories of successful shareholders. Those who bought the shares of Maruti, HDFC when the prices were small and have crores worth of shares now. He told that nothing beats equity over the long term. I also believed and vowed to invest the same. I had heard that this is the best strategy to invest in shared before also.

Next day morning while brushing the teeth, I was thinking about the child hood. Apart from the good old Umikkari, were are the other important toothpastes I used to use? Babool, anchor etc. If I had invested in them as shareholders what would have happened to me? Suddenly, I realized that most of the companies which were dominant 30 years ago are non-existent now. What would have happened to those who believed in the principle, “ nothing beats equity over long run”. I do not know. As a researcher, I would just say, I need to refer to the literature on the subject.