Basantjee & the groups: Would like to have your view and a discussion started on the following point of overvaluation.

As the companies we invest in get recognized it appreciates in prices such that it becomes relatively expensive –either via PE-rerating or simply because of getting positively identified as high potential e.g TV18, nucleus, educomp etc.

As long term holders it’s akin to instant gratification followed by months of potential underperformance. Where the stock is priced for perfection and a small hiccup can create huge volatility or capital loss. We may have bought at reasonable prices so we are happy to hold but most likely we are more fearful (rightfully) of buying at expensive multiples. The end result is that we end up with a concentrated portfolio of good companies which are all expensive.

We cannot sell because we are in it for the long term.

We cannot buy as the stock is trading expensive.

How does one reconcile this dynamic of portfolio overvaluation with long term goal of investing in multi-baggers?

 

Also I suffer from a rather acute problem. All this while when NW18 was not performing I used to add and then break my head as to when will value be discovered but no sooner has it risen the gains have kind of taken away the excitement because it is no longer value and once it gets up a bit more from here it will be a pur high growth company - the cream getting taken off the milk. 

 

Exactly - while NW18 was cheap and held the potential it was great because we could invest our surplus cash. Then while we all excited by the 40% rise - its difficult to make a case of investing solid amounts at this rate - making our whole portfolio expensive - and with difficulty to do much.