For stock market investors, here are three takeaways from Shark Tank India
“Meri expertise nahi nahi hai.” “I’m leaving!” Namita Thapar, a Shark Tank India judge, said it so many times on the TV fact show that it sparked a meme frenzy on social media. The phrase “expertise Nahi hai” may appear naive to some. Still, it is nothing less than a critical mental model in the investing business propagated by none other than Warren Buffett also Charlie Munger.
Although the show is intended to provide a platform for aspiring entrepreneurs to high funds, new investors in the stock market can realize a lot from the sharks’ investing strategies. Here are five examples:
1) Take your knowledge seriously.
When Thapar, the Executive Director of Emcure Pharmaceuticals, rejects an investment proposal due to a lack of expertise, she knowingly or unknowingly follows the Buffett-Munger circle of competence theory.
“You do not have to be an ace in every, or even many, industries. You only need to evaluate businesses within your area of expertise. The size of that circle is unimportant; knowing its boundaries, on the other hand, is critical. “Buffett stated this in a letter to Berkshire Hathaway shareholders in 1996.
Stock investors, like Thapar, should avoid getting into a business they don’t understand.
2) Bhagwan Che Bhav Bhagwan Che
When Delhi-based businessman Gaurav Goyal, who runs the Delhi-based ice cream company Gopal’s 56, walked onto the Shark Tank India set seeking an astronomical valuation of Rs 1,200 crore against annual sales of just Rs 4.5 crore, he learned the hard way about valuations.
“If you make Rs 4.5 crore in sales per year, it will take you 70 years to make Rs 300 crore from one shop.” And you’re asking us for Rs 300 crore for a 25% stake. This makes us think you’re being silly. There is no profit in this.
3) Don’t be a clone.
Several times during the show, one judge found the business opportunity appealing while the shark sitting next to this person rejected it.
It is critical to have your mind when it comes to investing. You don’t buy a stock because Rakesh Jhunjhunwala or Radhakishan Damani owns it. What works for a celebrity investor may not work for you, and vice versa.
