It's our job as disciplined, long term, value investors to assess the risks of managements and valuations.
Our challenge remains: to understand and analyze the businesses; to decipher the valuations ascribed to these businesses in the stock market; and to understand the ability of the management to guide these businesses in challenging times; the question of leadership is crucial.
Who leads the company?
And under what principles?
What are their motives?
Are their motives aligned with ours as long term investors or are they siphoning out money to get an extra share of profit for the same risk?
Is expansion a part of an ego trip?
Is the appointment of a son, daughter, or wife as CEO or Chairperson an inherent birthright – or based on merit?
Yes, you can make money in India over the next decade. But the smartest investors, blinded by greed, may not see their fair share of profits for the identical risk taken by them as co-shareholders with India’s creative founding families.
There was a time when a Ford, a Morgan, or a Rockfeller sat on the board of their “owned” companies. Now, you don’t have that issue any longer in the USA. India, in that sense, is where the US was in the early 1900’s. It will change in the next decade.
In the meantime, as you make the “risky” decision to invest in the volatile stock markets of India, it is our job as disciplined, long term, value investors to assess the risks of managements and valuations. To reduce your risks so that you can get your fair share of profits as the growth of the Indian economy generates significant investment returns over the next decade.