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Investing in the Era of Demonetization, Buffett's U-Turn and more... - Views on News from Equitymaster

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The Equitymaster Research Digest

Investing in the Era of Demonetization, Buffett's U-Turn and more...
Nov 18, 2016

  • Why we welcome the market pessimism over demonetization
  • Buffett's U-turn on airline stocks
  • Radhika's departure

Demonetisation continues to steamroll the markets. The Sensex is down 5% since the move was announced. The small cap index has fared worse, losing 9%. And a lot of mid and small-caps have lost 25-30% in a matter of days.

Make no mistake, demonetisation will certainly leave some destruction in its wake. Especially for companies that are competitively weak and highly leveraged.

That said, pessimism regarding the country's many sound businesses makes no sense. There could well be an earnings disruption in the near term. But we still see most of these companies creating new profit records five to ten years from now.

So let others turn pessimistic. As far as Richa, Tanushree, Rohan, and I are concerned, we love to do business in a pessimistic environment. Not because we like pessimism per se, but we do like the prices it produces.

Unfortunately, the stock prices on our respective watch lists haven't yet fallen enough make them actionable recommendation. But you never know - a few more sessions of pessimism and we could be there. So do keep an eye out for updates from us in this regard.

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