Analyst encourages long-term investing

By Don Worthington
Aijit Dayal said he would return to his native India when he fell prey to American consumerism.

As he left his New York City office one day in the summer of 1984, he wanted to make a long-distance call to India and bill it to a different number. The operator told him the phone company no longer offered that service.

“I was angry,” Dayal said. “‘What do you mean I can’t do this? It’s my birthright.’”

He realized it was time to move back to India or forever stay in America.

He returned to a country that lacked a consumer economy. Buying a car or getting telephone service was a three-year process.

“It was a time warp,” he said.

Twenty-four years later, India is one of the world’s emerging economies, one ripe with investment opportunities. Cell phones are selling at a rate of 8million per month.

Dayal spoke at Tuesday’s Stock Market Symposium sponsored by The Center for Entrepreneurship at Methodist University.

He holds a master’s degree in business administration from the University of North Carolina at Chapel Hill. He has analyzed the Indian equity market since his return — he is possibly India’s first equity analyst. He is the founder of Quantum Advisors, an Indian firm that deals with institutional investors.

He talked about risk and benefits in investing, as well as investing for the long term.

“The wisest thing to do is buy something and hold onto it — just like a marriage. Stocks are very, very similar,” he said.

Dayal said investing is not as simple as putting a formula in a spreadsheet and dragging the mouse to the right. It requires the right mix of assets and the “right time horizon” — investor-speak for patience.

He cited the rise and fall of technology firms in the United States. People rushed to invest in those firms rather than investing in emerging firms overseas.

Had investors put a portion of their money into India’s emerging economy, they would have seen a 15 percent return on their investment.

He cautioned people against investing in “frontier” markets, areas of the world that lack a financial network such as North Africa, Mongolia and Vietnam. The risk is tremendous in those countries, he said.

Emerging markets that have successfully proven themselves include India, Mexico, Brazil and China, he said.

Dayal said people’s fears that the outsourcing of jobs to India hurts the American economy are overstated. The growth in the Indian economy will come from its own consumer focus.

The American economy, Dayal added, “has the ability to re-engineer itself” when resolving crises.

The secret, Dayal said, to surviving the bubbles and the burst is “keeping your head” and investing for the long term.

Business editor Don Worthington can be reached at worthingtond@fayobserver.com or 486-3511.