You get paid to buy wonderful businesses at decent valuations.
I’ve known far more people buy into fancy businesses, like recent IPO like Mamaearth, only to make losses later on.
Mamaearth is a commodity business. It’s not a tech platform like PayTM or Zomato. Mamaearth doesn’t have that scalable business & large TAM. Hence, it doesn’t deserves the valuations (₹10k crores) at which it listed. Max to max, it should have got Price to Sales of 1x (₹2k crores) for the commodity business it is (After all that sales they generated from overpaid influencer marketing).
I won’t be surprised to see it trade at half of what it trades right now, a year later (already 10% down in a week after listing).
A lot of investors bought into it thinking they’re ‘New Age’ bold investors.
There’s a saying. There are old pilots & there are bold pilots. But there are no bold old pilot.
Buy business which are sustainable, scalable, has earnings longevity.
In short, you need more buyers to buy from you at higher prices for you to make money.
That’s how you make money in stock market.
