'The single biggest moat in India has actually been the management'

The dot-com crash at the turn of the century; the ghastly 9/11 terrorist attacks; a once-in-decades global financial crisis; a decade plus of persistent deflation, even in the wake of unconventional monetary measures that eventually culminated in negative crude oil prices; demonetisation; and of course, the once-in-a-century pandemic in COVID-19 - the so-called black swans have occurred with high regularity in financial markets. And while this underscores the need for robust risk management as being integral to the investment process, it also suggests that the fascination with market timing is futile. On the latter point, who would have imagined the Nifty, which was languishing near 7,600 when there were 500 COVID-19 cases in India, to be at 10,000 as the cases shot up to 3.2 lakh? In our view, the more sustainable and largely controllable source of alpha creation is identifying good businesses.

This article was originally published on August 17, 2020.