Why Bharat Shah thinks the weariness around midcaps and smallcaps is outdated

livemint.com:

Mint. “It is tethered to reality. It is tethered to the fundamentals, and that is where the market is deriving its energy from." India’s stock market is finally at a vantage point and will be vastly superior in the coming decade, Shah added.

ASK Group, which was founded in 1983, manages assets worth over ₹82,700 crore. In recent years, India has seen a remarkable proliferation of startups and private equity-backed businesses, with unprecedented opportunities for growth and ease of doing business, the veteran investor said, adding that the diversity of choices in India’s stock markets has never been better. Edited excerpts: My basic philosophy of investing has not dramatically altered over the years.

My core principles—buying quality businesses, good management, and valuing growth—have remained constant. In a nutshell, these fundamental building blocks that were in place from the beginning have laid the foundation for my investment approach. Some have refined materially, some fairly, but the fundamental building blocks have been there.

Just that, 35 years ago, I made mistakes which I have since refined and matured over time. Quality is a very real issue. The quality of a business allows it to prevail and deal with the challenges or exigencies of the environment much better.

Such a business becomes more predictable, durable, solid, and resilient, and all these are very important ideas for value-creation. In the absence of quality, businesses become happenstance or chances, or they become very short-term phenomena, and that, again, is not investing. Besides, a good management goes beyond governance to include execution, adaptability, and capital allocation.