From a top-down perspective (starting with the macroeconomic picture before looking for individual companies), paying attention to what investing legend Warren Buffett has been doing can pay huge dividends. While it’s a horrible idea to follow his stock picks, as you’re likely to get a far inferior cost basis than the Oracle, Buffett’s moves could potentially point you in the right direction from a big-picture, macro perspective.
As a retail investor, you’re likely more inclined to adopt a bottom-up approach to stock selection, where you look to individual companies that you know and love, then proceed to analyze the broader peer group, the industry as a whole, and the state of the macroeconomic environment. There’s certainly nothing wrong with a bottom-up approach; in fact, I believe it’s a more effective strategy since not all firms within the same industry are created equal, and more emphasis should be placed on individual ratios, rather than the broader picture.
Some beginner investors may start with a bottom-up approach, but they may stop at the sector or industry level, completely neglecting the macroeconomic data and market cycle analysis, which would be invaluable information that would only serve to strengthen a long-term investment thesis further.
In an age where technological disruption is prominent, a careful consideration of the bigger picture has never been more critical. While most attention should be given to individual companies themselves, big-picture events can help guide you in the right direction, offering you food for thought, so you maximize the chances of returns over the course of the long haul.
Now, back to Buffett and the remarkable move he’s made recently. He recently announced his intent to invest between $285.4 million and $356.7 million in One97 Communications, the Indian company behind Paytm, an e-commerce payment system and digital wallet firm. This marks the Oracle of Omaha’s first direct bet on a firm within the rapidly emerging market in India. And if I had to guess, it’s probably not the last.
Now at the seasoned age of 88, Buffett has shown he’s still sharper than serpent’s tooth by implementing subtle changes to his old-fashioned strategy. One can’t but help but notice that his and Berkshire Hathaway’s circle of competence how grown to include previously “taboo” tech names like Apple. And with his many comments on “missing out” on other big U.S. tech players, it looks like Buffett has the desire to understand the tech sector, so he won’t miss out on the next big tech boom, which is likely going to happen within the rapidly modernizing Indian market.
I don’t think investors should brush off Buffett’s Indian bet, as he and the Canadian Warren Buffett, Prem Watsa, have both signaled to the world that the next big macro opportunity will lie within India.
How can Canadian investors participate in the next-level growth within the Indian market?
Fairfax India Holdings (TSX:FIH.U) is your one-stop shop for next-level opportunities within the Indian market. And with Prem Watsa at the helm, there’s no question that investors will be granted a front-row seat to jaw-dropping growth opportunities.
The company has a stake in Bangalore International Airport (BIAL) and National Stock Exchange of India, two fool-proof (lower case ‘f’) that will surge in value as the Indian economy takes off under the leadership of PM Narendra Modi, who’s all about rapid modernization and growth that’s difficult for many of us to fathom.
Fairfax India is a simple way for Canadians to bet on the Indian market. You don’t need to play the “forex” game, and you’ve got Canada’s Warren Buffett standing in your corner.
Over the long term, Fairfax India has a desirable risk/reward trade-off, so if you’re serious about bringing your gains to the next level, both Buffett and Watsa are pointing investors towards India: the next big growth frontier.
Stay hungry. Stay Foolish.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette owns shares of Apple. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple.