Market veteran and value stock picker Ramesh Damani describes compounding — or the act of reinvesting the income from existing investments to maximise the return — as the eighth wonder of the world. In a candid interaction with CNBC-TV18, Shared his mantra for success on Dalal Street, he said: "Be a pig when conviction is high." A pig in market parlance refers to a high-risk — often impatient — kind of investor.

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"The trick for me has always been to push myself to buy bigger positions. There is a saying on Wall Street that the bulls make money, the bears make money, but the pigs get slaughtered. But that's not quite true. Because sometimes you need to be a pig in the market,” said Damani, whose popular holdings include Garden Reach Shipbuilders & Engineers, Goldiam International and Panama Petrochem.

The biggest learning that you take from the market is how to compound your money, he said. "You learn that when the iron is hot, you have to strike it and then go in for the kill."

His bullish remarks come at a time when the Indian market is few steps away from all-time highs after a gap of a little more than a year. As of November 14, the Sensex and the Nifty50 are 1-1.5 percent below their lifetime highs, scaled on October 19, 2021.

“I think it will be 20,000 first on Nifty and then 16,000,” said Damani, a proponent of the Warren Buffett style of value investing. He is bullish on the next 30 years — a period he believes will be even more exciting as the great past 30 years.

Hear out market veteran Ramesh Damani's piece of advice for young investors followed by a sweet surprise @nimeshscnbc @_soniashenoy #ChildrensDay2022 pic.twitter.com/nxZcQmfdrv

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It is important to have good mentors in life, he said. Speaking about late legendary investor Rakesh Jhunjhunwala, Damani said his "fire was much bigger than mine".

“The first Wizard I interviewed in 2005 was Rakesh Jhunjhunwala. Since he was such an important voice for the financial markets, I felt that I should give him an all-star tribute. We will look back and reflect on his learnings and his legacy over 30 years in the financial markets,” said Damani, remembering the series of interviews conducted by him under CNBC-TV18's special segment, Wizards of the Street.

Damani likes IT and PSU stocks at the current juncture in the market. "Right now, I am more invested in PSU stocks,” he said.

He cited the example of Bharat Electronics, a he discussed under Wizards of Dalal Street.

"It was a Rs 20 stock with a Rs 2 dividend built in and Rs 160 crore marketcap. Now it has Rs 60,000 crore marketcap and it could double from these prices too. So it has created long term wealth. The mistake people make often is to bunch FMCG stocks versus all PSU stocks," said the market expert.

Catch highlights of the November 14 session with CNBCTV18.com's blog

(Edited by : Sandeep Singh)

First Published:Nov 14, 2022 8:06 PM IST