Real threats are not obvious and almost never from full-frontal assaults. For Asian Paints, the threat is not going to be Berger Paints.
Think about what would make them irrelevant to their current market. The real threat will be buried in there somewhere.
Also, estimate the growth estimates embedded in current valuations. If the market doesn't grow, how much of it should they own to meet current expectations? What are the base rates for the market?
Can't really opine on individual stocks beyond this. Would encourage other readers to jump in :)
My point is that there are some companies in some industries where market leadership and returns have lasted decades! As investors our job is to assess whether the longevity can last and if you get it right, the returns can be mind boggling. Else, everyone can just go and buy index fund no?
*if* you get it right. And most of these stories of a few stocks being held because of conviction and having given outsized returns are mostly survivorship bias, I think. It's definitely possible to do it, but is it likely? And how do you go about assessing longevity? Shyam's point was (I think) that even for market dominant companies like Intel, with legendary CEO's at the helm (who wrote books about getting disrupted, etc.) - it's not obvious to see whether they are going to be good long term or not.
So, everyone should just go and buy an index fund. At least, most of us.
Asian Paints?
Real threats are not obvious and almost never from full-frontal assaults. For Asian Paints, the threat is not going to be Berger Paints.
Think about what would make them irrelevant to their current market. The real threat will be buried in there somewhere.
Also, estimate the growth estimates embedded in current valuations. If the market doesn't grow, how much of it should they own to meet current expectations? What are the base rates for the market?
Can't really opine on individual stocks beyond this. Would encourage other readers to jump in :)
My point is that there are some companies in some industries where market leadership and returns have lasted decades! As investors our job is to assess whether the longevity can last and if you get it right, the returns can be mind boggling. Else, everyone can just go and buy index fund no?
*if* you get it right. And most of these stories of a few stocks being held because of conviction and having given outsized returns are mostly survivorship bias, I think. It's definitely possible to do it, but is it likely? And how do you go about assessing longevity? Shyam's point was (I think) that even for market dominant companies like Intel, with legendary CEO's at the helm (who wrote books about getting disrupted, etc.) - it's not obvious to see whether they are going to be good long term or not.
So, everyone should just go and buy an index fund. At least, most of us.