In a recent interview, Nidhi Sinha, Editor of Outlook Money, had an engaging conversation with Shankar Sharma, Founder, GQuant, also known as the Big Bear of Dalal Street. During the conversation, Shankar discussed his investment philosophy and experiences.
Shankar highlighted the need of diversity and encouraged investors to avoid taking concentrated investments in a few high-risk stocks. His motto is simple, investors should not have concentrated positions. He believes that spreading investments across 30 to 40 speculative companies minimizes risk while still allowing for potential outsized gains. He explained that if investors buy a bunch of 40 high-risk companies they will likely do very well. His approach acknowledges that while some investments may fail, the successful ones can deliver significant returns.
Reflecting on his 35-year investment journey, Shankar noted a substantial evolution in his strategy. Initially, he focused on concentrated investments, believing it was the way to make money. However, he later recognized the inherent risks associated with this approach. Today, he prioritizes diversification and expresses a strong interest in small-cap stocks that exhibit considerable growth potential.
When asked about his most successful investment, Shankar highlighted Amazon which yielded approximately 200 times his initial investment. He attributed much of this success to luck, stating that a large part comes from luck. He emphasized that successful investing often involves an element of chance.
Shankar Sharma's insights offer significant lessons for investors seeking to understand the market's complexities. Investors can achieve long-term success by concentrating on diversity and learning from previous experiences.
