How Opportunity is En-cashed in Investing

 

The COVID-19 pandemic changed our life style a lot. Our way of thinking is changed a lot. If you are not agree ask following questions to yourself.

1.       Do you need hand wash at each basin at your home?

2.       How many times are you washing your hands?

3.       Are you going to watch movies in theater or OTT platforms?

4.       Do you prefer to go the retail shop, to buy branded fabrics or prefer to buy from their websites or AMAZON, FLIPKART?

5.       Do you prefer to travel by Bus, Train or your own car ?

6.       Considering current Pandemic situation are you considering to buy a car for your family?

Above all are opportunity to invest.

We will discuss a case.

Example

Considering Current Pandemic situation are you considering to buy a car for your family?

                      Monthly sells data filed by Maruti Suzuki in the BSE (Bombay Stock Exchange) tells a whole different story. It shows that Maruti sold 44% more passenger cars in September-2020 than it had sold in September-2019.

                      What you got from the data ? Consumer behavior is changing. And definitely more cars will be sold in India.

                     Now you are thinking like an investor and want to grab this wealth creation opportunity by investing in listed Passenger car stocks like Maruti, TATA motors

                     Hold on!!! You know Cars will be sold .Fine!!! But how do you know that only cars of Maruti and TATA will be sold. Why not HONDA , TOYOTA, HUNDAI etc. Also KIA, MG Hector are entering Indian market. How do you know that who will win? In the race of gaining market share they will fight among themselves by compromising quality, lowering their margins i.e. offering lower prices. And the result will be only sells growth and nobody will make money.

                      Why would it happen? Because there is no entry barrier in Auto Sector .In fact there was never any entry barrier ever in the Indian auto sector.

                      Maruti is selling more cars because there is low per capita income in India and its cars are affordable. And other Car companies do not want to scale their business in India due to low per capita income in India. As India’s per capita income and credit facility is rising, India’s auto market becoming lucrative and now every company wants to enter it.

             Remember “No body gains in WAR” perfectly applies to investing in stocks.

                 Now we know that cars will be sold definitely .If there is no entry barrier in Auto sector then how would we make money in this journey.

             There is another way to catch this opportunity.

It does not matter which company sells more cars, But definitely most of the cars will be bought on Loans .Here Banks come into picture .Banking is high entry barrier business in India.

                Now we know where to invest.

Remember we got the “segment” only. Now the task is to find stock with entry barrier in that segment.