A close to 300-point fall in the Nifty might appear to be a big one. But look at it differently – it is just a 1% decline. And that kind of move is common. The problem is that every market move tends to be amplified when valuations are high. This is because of the fear that a correction might spill over into the mid-cap segment – where the interest of a majority of retail investors is concentrated. Two more such sharp cuts and the street will be divided into two kinds of investors. The first will justify buying wrong stocks by billing themselves “long-term investors”. The rest, genuine long-term investors, will remain focused on buying the correct business. Now what is a “correct business”? Simple: One with a track record of growth; a company that does not require constant doses of capital; and where not only is income generated, it is shared with minority investors.
