Vijay Kedia on cutting noise, patience, and finding tomorrow’s market winners

Synopsis

Veteran investor Vijay Kedia shares his stock market strategy. He differentiates traders from investors, stating noise matters only for traders. Investors should focus on earnings, not daily news. Kedia likens investing to a marathon, emphasizing patience. He uses the SMILE framework to spot opportunities in sunrise sectors. Kedia waits for companies to reach inflection points before investing.

Veteran investor Vijay Kedia shared his philosophy on how to navigate the stock market amid the daily barrage of news, headlines, and market updates. He explained that the stock market comprises two types of participants: traders and investors. "It is very simple. As you know, in the stock market, there are two kinds of animals you can call it—one is like a trader and one is like an investor. So, all this noise you are talking about, this is only for the traders. For investors, all these news actually does not matter. For them, the only thing that matters is earnings, and earnings do not come on a daily basis. Every day you face all kinds of news, so if you keep reacting to every piece of news, ultimately you will end up holding nothing in this market. And it is applicable at all times, at any given time."

Kedia likened investing to running a marathon: "For me, it is like a scoreboard. I am a marathoner, running 42 kilometres. It does not matter where I am at the 1st kilometre or the 5th kilometre. As long as I am running, continuing my journey, I am okay. That is why the biggest thing is to cut off all this noise."

He emphasized that patience is a critical quality for investors. "That is why it is difficult to make money also. You have to win over yourself. If you are not patient enough, at any given time you will be out of this market. These are the qualities of a good investor: knowledge, courage, and patience. Patience is very important to ultimately win in this market. If you do not have patience, you are out of the race. So, enjoy."

When it comes to spotting long-term investment opportunities, Kedia shared his "SMILE" framework. "S stands for small in size, MI stands for medium in experience, L stands for large in aspiration, and E stands for extra-large market potential. I like to invest in a company that is small in its sector, has management with a clean track record and 15–20 years of experience, and management that is ambitious. The market potential should be extra-large so that the company remains small relative to the sector’s potential. These factors together help me identify companies."

Kedia also emphasized investing in sunrise sectors and waiting for companies to reach inflection points. "Earlier, I bought a few companies that were losing money but had cash in their books. The sector completely changed. As per my quote, always remain invested in a sunrise sector at any cost and stay out of a sunset industry at any cost. I put stories on my radar and wait for the right time to invest. Sometimes, I wait five years, sometimes ten. When the company turns around and the sector is growing, I invest. That is my business."

Ultimately, patience remains the core of Kedia’s approach. In a market dominated by instant news and volatility, his advice is simple yet timeless: ignore the noise, focus on fundamentals, and let patience do the heavy lifting.

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