Saurabh Mukherjea’s coffee can and tortoise strategies for surviving a downturn

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Subscribe to enjoy similar stories. The latest quarterly earnings of Indian companies point to an economy that appears to be entering a cyclical downturn. On the other hand, large companies are now more reasonably valued than they were in the past four years, says Saurabh Mukherjea, founder and chief investment officer at Marcellus Investment Managers.

Mukherjea, who has a Master of Science degree in economics from the London School of Economics and Political Science, was among a few experts who predicted the 2007-08 financial crisis that originated in the US. While he believes in prioritising quality, covid presented him with a unique learning: overpaying for quality can backfire. “To find companies like HDFC Bank or Asian Paints at these valuations, you would have to look back quite a while," he said in an interview with Mint, adding: “While the broader market is likely to correct, I expect large caps to face smaller declines compared to small caps." Edited excerpts: Throughout my 20-plus-year career, each stage has brought its lessons.

I’ve learned, applied, succeeded, made mistakes, and used those missteps to refine my approach. In my UK years covering small caps, I followed Peter Lynch’s principles of growth at a reasonable price, which served me well and even led to my 2007 prediction of the financial crisis. But as markets crashed, I realized valuations can be misleading—only true quality endures in crises.

After moving to India, I embraced the ‘coffee can’ investing philosophy: prioritizing quality, especially in markets where corporate governance and institutions might be shaky. Paying a premium for quality helps weather tough times. (The ‘coffee can’ investment strategy involves buying and holding a portfolio