Imagine you’re standing in a vast market, full of shops with blinking signs, each promising the next big thing. Some stalls sell glittery trinkets that look amazing, while others offer goods that may not look as flashy but are well-made and stand the test of time. The stock market is a lot like that market: you’ll find businesses that shine like new toys, drawing attention, and others that may look less glamorous but carry real value.
In my journey, I’ve seen countless people buy into the latest trend, the sparkly new Initial Public Offerings (IPOs) like Mamaearth, hoping for a quick return on investment. But the truth is, when it comes to making money in the stock market, it’s not about grabbing the latest shiny object. It’s about buying into wonderful businesses at reasonable valuations. Let me tell you why.
The Allure of Fancy Businesses — And the Pitfall
A year ago, Mamaearth’s IPO hit the market with much fanfare. People were buzzing, and investors rushed to buy shares of this rising personal care brand. But here’s the kicker: Mamaearth is, at its core, a commodity business. It’s not like PayTM or Zomato with a scalable tech platform and a huge total addressable market (TAM).
A business like Mamaearth doesn’t have the exponential growth potential that tech giants do, yet it is listed with a valuation of ₹10,000 crores. Just think about that — ₹10,000 crores for a business primarily built on influencer marketing. In reality, it should have been valued at closer to ₹2,000 crores — that’s a Price-to-Sales ratio of 1x. A business like this doesn’t deserve the lofty numbers it was aiming for.
And here’s the twist: just a week after listing, Mamaearth’s stock was already down by 10%. Fast forward to now, and I wouldn’t be surprised if, a year later, it’s trading at half its current value.
The Lesson: Don’t Buy Into the Hype
There’s an old saying:
“There are old pilots, and there are bold pilots, but there are no bold old pilots.”
In the stock market, this saying rings true. It’s easy to get swept up in the excitement, to feel like a bold investor chasing the next big IPO or hot stock. But the ones who stand the test of time are those who invest thoughtfully. They’re the ones who recognize that a true gem isn’t in the flash; it’s in the substance.
When I look for a business to invest in, I ask myself a few key questions:
- Is it sustainable? Will it thrive for years, or is it a passing trend?
- Is it scalable? Can it grow and reach a larger market?
- Does it have earnings longevity? Will its profits continue to grow?
Businesses that check these boxes are the ones you want to own. They’re the ones that give you the best chance of making money, not because they’re hot right now, but because they’re built to last.
The Real Way to Make Money: Patience and Quality
The stock market is a place where, to make money, you need someone to buy your shares at a higher price than what you paid. And the only way you’ll get that is if the business you invested in continues to perform well over time. High-quality companies tend to attract more buyers because they’re reliable and have proven growth.
Buying wonderful businesses at decent valuations gives you the advantage of owning something valuable at a fair price. These are the businesses that keep growing, steadily building value — and as they grow, so does the price of your stock.
A Personal Example: The Difference Quality Makes
Years back, I invested in a seemingly modest company. It wasn’t flashy, didn’t make headlines, and certainly didn’t have an IPO that everyone was raving about. But it had a strong foundation, a scalable business model, and a consistent track record of growth. Over time, I watched as its value increased, little by little, year after year. This business might never make headlines, but it has made me more money than any fancy IPO ever could.
Every time I considered selling, I thought back to that old pilot adage. I stayed patient, allowing the business to grow and develop. And that’s where the magic happens — in the patience and belief in the quality of what you own.
The Takeaway: Don’t Just Be a Bold Investor — Be a Wise One
Investing in the stock market is not about betting on what’s hot; it’s about finding true value. I encourage you to look beyond the glitter and hype. Buy businesses that are built to last, that are scalable, and have a sustainable edge. In doing so, you’ll give yourself the best shot at making real money.
As you start your journey, keep this quote close to heart:
“The stock market is designed to transfer money from the active to the patient.” — Warren Buffett
Ready to Start? Take Action Today
If you’re ready to step into the stock market, start by researching businesses with strong fundamentals. Look for quality and think long-term. The next time you feel tempted by a flashy IPO, remember that true wealth comes from owning wonderful businesses, not from jumping into the latest trend.
With every thoughtful investment, you’re building a brighter financial future. Let’s begin today — because the journey to wealth is made one wise decision at a time.
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