Daijiworld Media Network - Mumbai

Mumbai, Dec 26: DSP Asset Managers Pvt Ltd managing director and chief executive officer Kalpen Parekh has described wealth creation as a “minority game”, stressing that long-term success in investing is far rarer than most people realise.

In a social media post on Friday, Parekh pointed out that an after-tax annual income of Rs 25 lakh in India places a family of two adults and one child among the richest 4% of the global population, meaning 96% of humanity is poorer. However, he said that even at this level, getting rich remains difficult and staying rich is even harder.

Parekh observed that investors often lose out to inflation, currency depreciation and their own behavioural mistakes. Drawing a parallel with evolution, he noted that while the Earth is about 4.5 billion years old, nearly 99.9% of all species that ever existed are now extinct, underlining how rare long-term survival truly is. Markets, he said, function in much the same way.

Referring to market history, Parekh said that over the last 30 to 50 years, fewer than 15% of global stocks managed to deliver returns of more than 12% compound annual growth rate. Citing research by Henrik Bessembinder, he added that since 1926, less than 4% of stocks accounted for all the wealth created above bond returns. If those few winners are excluded, the remaining stocks collectively delivered bond-like performance.

“In essence, very few species survive, very few companies compound, and very few investors succeed,” he said.

Against this backdrop, Parekh highlighted the exceptional case of legendary investor Warren Buffett, who has generated roughly 55,00,000% returns since 1965, a feat he described as “almost unreal” and “almost impossible”.

Concluding his message, Parekh urged investors to “learn to play the minority game” to improve their chances of success. “Don’t quit. Survive first, and growth will follow,” he said.