In chat with Zee Business Managing Editor Anil Singhvi, Motilal Oswal Financial Services Chairman Raamdeo Agrawal spoke about his 25 years' experience in the stock market and guided investors about wealth creation.  

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Motilal Oswal Financial Services Chairman said one should not show greed in stock market and expect a share to double in one year. " Rationally, a share would double its price in 5 years with compounding effect of 14 to 15 per cent a year. It is also important to identify the right share and buy it at right value. One should discover shares with long-term potential and stay invested to get maximum return out of them," he responded to Zee Business Managing Editor when asked about how much time an investors should ideally devote in a share to see its value double.  

Drawing analogy to Indian Telecom sector, he said when there is a competition in a sector and there is a race to outdo each other, it will be difficult to make money.  He said one should keep an eye on five factors while selecting to invest in a company—incumbent, customer, supply, substitute and new entrant. These five forces decide the health of a company, he said.  

When the Market Guru asked if one stock could even multiply by 100 times, he said it is power of compounding." A 100 times growth appears a lot when we hear it, but when we need a share to grow by 100 per cent, all we need it is to grow by 25 per cent compound rate for the next 20 years and it could even well grow to 1,000 times in 30 years. It is how much time we give.  

He said to make sure that kind of return, one needs to ensure that they pick the right company and do not waste money on shares which could not generate this kind of return in 15 to 20 years. " One should have discipline and aim for better stocks and do not include stocks that give you 10- 20 times returns. One should always include those shares in their portfolio which could give 100x or 200x in 15, 20 years," said Raamdeo Agrawal.    

Talking of management checklist while picking a company, he said one should have three things in mind—competence, passion and integrity and of the three integrity is the most important factor to identify a company with right management.

For price checklist, quality of business, quality of management, growth and longevity. "It is very difficult to put a price to a product without understanding its real value," he said.  

Talking about risks, he said the checklist should have two things: business and management.