Asian Paints: A 27-Year Journey and the Uncertainty of the Future
Asian Paints has been one of the best compounders in the Indian stock market over the past 27 years. If you look at its chart from 1998 to 2025, adjusted for dividends, the returns have been phenomenal. The stock has given a compounded annual growth rate (CAGR) of 24%. Apart from a small dip after 2008, the stock has moved up steadily, making it one of the most consistent performers. Investors who held it for decades have seen their wealth multiply several times. However, the real question now is—will this growth continue in the next 27 years?
Challenges in Predicting the Future of a Strong Stock
Asian Paints has already established itself as a market leader, but does that mean it will continue to dominate? The stock has not done much in the last four years despite the company growing its numbers. Perhaps the stock has already priced in its future growth. New competitors are entering the market, and the company is one of the most expensive consumption stocks in India. Changes in leadership, shifts in consumer preferences, and evolving industry trends could impact its ability to maintain market share. While the company has had a golden period, it does not guarantee that the same will happen in the next 25 years.
How Long Are You Willing to Wait?
Investors react differently to stocks that do not move for years. Some believe in holding on for the long term, thinking that even if a stock remains stagnant for 10 years, it will grow in the next decade. Others prefer to see their portfolio moving regularly and do not like their money being stuck in one place. It is important to ask yourself—are you okay with waiting for several years without seeing much growth, or would you rather move your money to stocks that are performing now? If the answer is the latter, then waiting for a decade in the hope of future growth may not be the best approach.
The Risk of Holding on Just for the Sake of It
The biggest risk in holding on to a stagnant stock is the opportunity cost. If a stock does not move for 10 years while the market itself grows at an average of 12%, then other investments could have doubled or tripled in that time. Even an index like Nifty would likely give better returns. Yet, some investors refuse to sell because they have convinced themselves that the stock will perform at some point. This is where emotions and ego come into play. Instead of logically analyzing the market, investors sometimes hold on just to prove themselves right, even if it costs them better returns elsewhere.
A Practical Approach: Trend Following and Momentum Investing
One way to avoid getting stuck in stagnant stocks is to follow a trend-based or momentum investing approach. If a stock stops performing and does not meet certain rules, it makes sense to exit and re-enter only when it starts showing strength again. The beauty of the stock market is that investors can move in and out of positions at a low transaction cost. There is no rule that says you must stay in a stock for decades just because it did well in the past. The focus should be on making money with logic rather than stubbornly holding on to a stock in the hope that it will eventually perform.
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