Good morning my dear readers,

Another Friday, another newsletter. This time, I am writing to you from Abu Dhabi.

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Whilst in flight, a wonderful topic came to my mind.

Is the Business 'Understantable'?

Sometimes my analyst tries to explain to me about chemicals and molecules ... and most times it becomes real hard work to understand what in the world is this guy saying.

For example, he might playfully suggest that "Tyrannosaurus Hexafluoride" would be a fearsome chemical compound, and I may end up nodding to him.

But it's not a real molecule 😡.

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I would say, 'Understanding' the business should be our number 1 priority as investors.

So while my analyst can make up molecule names, they surely cannot give my any more insight on the Wealth Management, Asset Management, the Food Space or teach me about Special Situations.

I have made it my personal mission to know as much as possible about the above few topics.

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But why, you may ask?

Many reasons, but I have earmarked a few important ones for you..

1- Conviction:

No matter what my analyst says, I won't be able to take but a tentative position on "Tyrannosaurus Hexafluoride" 😅.

And wealth is not created by taking tentative positions.

Real wealth in investing is made with pure conviction on your stock ideas, conviction as strong as your belief in God.

But for such conviction, it is an absolute MUST to know everything there is to know about a particular sector first.

For example: I just know it in my bones that as India's GDP grows, the Food business will see structural tailwinds. No one can tell me otherwise because I have studied this deeply and I know the addiction thay food can cause which results in incredible Moats for most Brands.

2- Staying Informed: When you're invested in a business you understand, you're more inclined to stay informed about industry developments, market trends, and company news. This ongoing education can further improve your investment decisions.

And again, as an extension to point number 1, if you are completely in sync with industry developments, market trends etc, it will become much easier to take high allocation and more importantly, it will give you the strength to hold through the very tough periods like Bearish markets.

(Even great markets end up going through cycles).

3- Long term perspective: Investing in what you totally understand often encourages Long term thinking.

Instead of chasing quick gains, we are likely to focus on our portfolio company's growth over the years, which I think can lead to more sustainable and consistent returns.

(For example, I won't sell any of my core holdings if the stock goes up 20% or if the stock market is expected to fall 20%).

Conclusion:

If we want to become a much better investor, we need to dedicate some serious time in learning about a few sectors where no one can coach us about it.

The latest thought I have is around the very striking trend about deterioration of health standards, world wide.

Lack of exercise, elevated stress levels, extremely poor lifestyle and extreme pollution in the soil and food chain, I am seeing this across the board.

(And unfortunately, this is a permanent trend 📉).

Unfortunately, the Hospital industry will end up becoming a good investment area for decades to come.

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That is all for me today folks.

Enjoy your weekend, SIP your coffee and also your portfolio regularly.

My Best,

Neil Bahal

Founder

Negen Capital

PS: I literally have no strength to go back up and do any spell checks 🥺🙏.

Disclaimer: This newsletter is for educational purposes only. While the newsletter discusses just general market insights and past case studies, still, the stock market is a very risky place which can result in losses.

Hence, always check with your financial advisor before acting on any contents of this newsletter.

No one has paid us to write this newsletter.

Negen Capital is a SEBI registered PMS & AIF.