Capitalistic world is mostly leaned towards profiting from consumption.
Someone spent money buying a car? You make money. How? Let’s say they buy a Maruti car. They’ll need CEAT/JK Tyres. They’ll need fuel from IOC. Batteries from Exide. They pay these companies for these products. You own these companies shares. You indirectly get benefited from someone spending money on a car because of shareholder of these particular companies.
Let’s say they’re stressed. They want a puff of cigarette. Or let’s say everyday they consume Aashirvaad Aata, or their kids used classmate book or on their vacation they stayed at luxury hotel. You own ITC shares & make money from their spending.
They ate biryani at restaurant or ordered from Zomato. Paid money thru mobile. You own LT Foods (Daawat), Zomato & PayTM shares. They ate biryani. You made money.
They consume electricity & gas everyday. You own CESC & ONGC shares. You end up making money on their every minute’s of electricity & gas consumption.
Let’s go one step ahead. They’re not spending. But investing their money. Here too you own shares of CAMS, Hdfc AMC, 5paisa, Aditya Birla AMC. They invest. But you earned money on their investing! Let that sink in for a moment.
Let’s go one step further. Remember the car they bought? Or let’s say bought a home. They took loan (finance) for the car/home. Here you own the sorts of like IndusInd Bank, Shriram Finance, Hdfc Bank, LIC Housing Finance, etc. They loaned money & you earned money on their loans. Isn’t that crazy? Someone’s loaning money & you making money of their loans without knowing them at all…
Let’s say they want to pledge their gold for a quick loan. You own Manappuram Finance. They got money on loan & you earned here too.
Smart people earn money from other’s spending & consumption. And what better way to own shares of corporations which are going to be benefited from these spendings.
And what better? All the hard work & complex decisions for these company’s growth is done by work force of these companies. Who gruel for hours & hours. Just for you. While you’re at comfort of your home & living a good life.
As a general disclosure. I & my clients own shares in all above mentioned businesses. And we’re already making 2-10x in many of these businesses. Just by buying & holding on to these quality businesses with patience.
