'One will always commit mistakes in the market'

In the first part of the story, we got to know about the investment journey of Raamdeo Agrawal. Let us now continue further. Who are your role models in the world of investing? What do you like about them? I learnt about the power of compounding from late Shri Chandrakantji Sampat. Though I knew the concept of compounding, I didn't know about the connection between that and the stock market. This is the only maths which connects. People write 'CAGR' but they are not aware of it and how it works. Something doubles in five years if it compounds by 15 per cent per annum. At 25 per cent, it doubles in three years. In 10 years, it would be 10 times at the rate of 25 per cent per annum. In 20 years, it would be 100 times. In 30 years, it would be 1,000 times. People don't know this fact, though this is simple maths. I learnt this from Chandrakantji in 1991. So, it was a big breakthrough for me. From Buffett, I learnt not to focus on the EPS but on ROE; to focus on quality franchises. Businesses are of two types: good and bad. Managements are two types: good and bad. So, you will have to sort out these two first because compounding doesn't happen in all the businesses. In fact, there are more failures than successes. So, the real logic is to figure out where money is going to compound - a good business run by a good management. People worry about valuations but before that, one must assess the business and the management. The market is very smart in valuing. A company doesn't get a P/E of five and another gets a P/E of 100 in the same field. Year after year, Buffett has been talking abo