To look at this problem in the Charlie Munger way (by way of inversion), let me see what I would NOT do.
- I would not invest in any company with the following characteristics:-
- Commodity producer
- Capital intensive (one which requires a lot of incremental capital)
- Large debt on its balance sheet
- Company with poor scalability of its core business
- Free cash flow is negligible or negative consistently
- Questionable management
- An insignificant player in its sector
The more I think about this from a top-down approach, the more I get driven towards FMCG, Pharma/Healthcare or Financial sectors. The main aspect for this investment would be that I would not want to lose much of the money. Here are some stocks I would shortlist:-
- HDFC Bank
- Apollo Hospitals
- Godrej Industries
The specific pick can vary but I think over time the probability that all these stocks will beat inflation (and fixed deposits) is high.