The work week ended for me on Friday,like it normally does, as I hate working weekends,unless it’s a Training Workshop that I have to conduct…..and Training is not work for me …it’s a passion !
Friday night I attended the second anniversary celebrations of a popular Investment Magazine at a 5 Star in South Mumbai…..Editor had personally called more than once and I had committed to be there…..reached a bit late at 9.15 pm and was there for an hour…turned out to be the cream hour……as the anchors were moving around asking questions of the Invited ‘Market Minds’…. they appear on Stock Channels quite frequently
When queried,most of them picked on the usual Luck,Discipline,Conviction,Temperament,Hard Work,Passion,Research as being the one virtue required to succeed in Equity Investments…..I would have said ‘ Insider Trading’ !
….a few good insights did come out,which I simply ‘touche’…. my comments are highlighted in Blue
Ramdeo Agarwal spoke of how Research is often done after the stock has been purchased !…Conviction has to be there….Buy if you find the Price offers you good ‘Value’.he sold Compucom at Rs 20 which he had purchased for Rs 400!….it is yet at Rs 20….A Classical and Common Investor Mistake is to ‘get even’ with a falling market by selling off the stocks where you have made some profit and remaining married to scrips that have a loss in the hope you can recover them when the scrip bounces back…dangerously one even averages in them !….In 2008,I took a critical call on my clients portfolios…this was backed by a conviction..many clients were reluctant….I sold off Real Estate Scrips like HDIL,Bombay Dyeing,DLF at a loss…they crashed even further later…I reinvested the proceeds largely in cum bonus and cum split Sesa Goa…portfolio exposures were as high as 50% in just this one scrip…this was a tactical strategy ….cost was Rs 165 ex bonus,ex split….In October end 2008 and early March 2009,Sesa Goa reacted to Rs 60!…Clients were exceptionally worried…I had to hand hold them with my conviction,urging them to buy more of Sesa Goa…Today Sesa Goa is Rs 450 + and Clients are simply delighted that the 50% portfolio erosion witnessed in 2008 was more than recovered in 2009 and 2010 !…..also ‘Price’ v/s ‘Value’ is the one singular message that I ensure goes out to all at my training sessions…A litre of Milk costs Rs 30-Rs 35…you will not pay Rs 100/litre even if a Swiss Cow is giving it !…at the same time if the Price falls to Rs 5/litre,most of us Indians will say ‘Doodh main kuch kaala hain’ ! and not buy it!…Extrapolate this to Stocks….you need strong conviction to buy the Milk at Rs 5/litre !…but this is how real Wealth is created…to take such cheap opportunities as they arise,even if you’re playing a contrarion or are the only buyer in that stock….but be careful…generally your conviction should not be more than that even the Promoters hold in their Company !….In the 1980s and 1990s there were plenty of such cheap opportunities…In this Century,such great opportunities have come in 2001,when I held my first ‘Repairing,Reconstructing,Revitalising and Repositioning your Equity Portfolio’ Workshop at the World Trade Center in Mumbai…2003,2004,2008,2009 threw up some great opportunities too
Madhu Kela spoke of having the discipline not to sell too early !…absolutely…I have committed this blunder in my continuing learning process..bought ICSA at Rs 36 and sold out at Rs 110 and see the scrip climb to Rs 2500 inside a few years !…..So I say if you’re catching a Train from Mumbai Central to go to Ahmedabad,don’t get off at Borivali!…This experience helped me when I allowed Mercator and Matrix Labs to run their brilliant course in Client’s Portfolios to give over 1000% returns in a three year time frame…and believing in the Concentration of Stocks,I had packed Portfolios with strong exposure in these scrips…this leveraged the returns brilliantly
Shankar Sharma spoke of his Belief in the Momentum and interestingly opined that this is not a young man’s game…and the best years are after one turns 45…whether it was Warren Buffett or George Soros or Grantham…and most of us are over 45!….Stay with your Investment Style if you’re succeeding at it…the Market gives opportunities for all Styles to Flourish…I specially loved his observation that the best years are after one turns 45…I’ll be 48 this year!….he differs in his Investing approach to Ramdeo,in that he will not buy the stock at when it has sunk to 3 from 10,but will buy into the momentum at 8…his funda is that at 3,the stock has a big probability of sinking further…but on reviving to 8,it has a better probability of climbing further on momentum…this explains why he loves Tech Satyam as the Stock for 2010 !
Devina Sharma,Shankar’s wife,observed that there were very few women present…and hoped many will enter the field…..there are quite a few women already storming this field of Capital Markets…in most of my training sessions,nearly half of them are women…and they are smarter than men !….just recently it was a woman who out of 40 + participating,won the best participant award at one of my workshops for IFAs of a leading Mutual Fund…and Devina,you forgot! the Chief Editor of the magazine celebrating it’s second anniversary and hosting the evening is a Woman!
Ramesh Damani spoke of telling his son to ‘Dream Big’ as this market will give you whatever you want !…you’re inspiring my son too,Ramesh !…he says he needs to continue Sleeping to continue Dreaming !
Tushar of HSBC invoked the ‘Bhagvad Geeta’ and spoke of Promoters as being ‘Acche Log’ and ‘Burre Log’! and the need for you to be in ‘Satsang’ and having a Mentor or Guru to guide you in Equities and the need to keep an Open Mind….in sync with you completely,Tushar….Even if one great idea emerges from a Book,it was worth reading it….it’s like playing an individual sport,like Table Tennis,Squash,Tennis or Badminton with someone better than you so you sweat it and learn and evolve better…a Mentor will guide you not to make the Mistakes he or she did….Problem remains in the good fortune to being guided in person to such a Mentor or Guru and be guided by them in return !…I’ve missed brilliant Opportunities in Pantaloon and Sanghvi Movers because when I met them in their early days,I carried a premeditated bias against them as they were not tested promoters…and while they spoke of a promising future,I initially treated these as just ‘Future Promises’…In context of Promoters,remember my blog tag ”In India,Companies may fall sick,but Promoters rarely do!” ….I must keep more of an Open Mind !
Abhay Aima of HDFC concluded that in the end what matters is that you are a ‘Good Human Being’…inspired perhaps by the People that he’s had to deal with in our Capital Markets!…’What’s Integrity to an Opportunity !’ is the Mantra of Many !
Prashant spoke of knowing your limitations and competencies and having the discipline to operate within them…he confessed he has been unsuccessful at stock picking like Ramdeo or Madhu…when asked abiout how he cuts out ‘Noise’,he stated the discipline helps do this….I would have said ‘Switch off viewing Stock Channels on your TV sets’ to cut out the Noise !
Samir Arora spoke of how a Canadian asked him his Views on Canada markets to which he replied he does not even half know Indian markets….The Canadian yet gave him Monies for Investment……this is the reality…those who say they called the 2008 crash correctly and then the fabulous rebound of 2009 are in all probability relying on hindsight
Nandan Chakravarthy of Enam confessed how his wife educated him on making atleast the minimal allocation to assets classes other than Equity! …you need an understanding wife to succeed….she asked him how can you invest in an Equity Stock for 15 years when you find it difficult to even see two years ahead for that stock!?..he spoke of being emotionally and financially stable to succeed in Investments…he spoke of the need to form mental constructions in your mind and run stock ideas through these…..Nandan,my wife has ordered that I agree with you here!….but seriously,it’s been because of our Indian Women that India has such an envious Savings to GDP % of over 35% and we are emerging enviously and relatively unscathed from the Global Financial Gloom that has enveloped our Planet and epicentered in USA and Europe
Bhat felt that Conviction is a Lonely place to be….Most often than not it is….been there several times….it’s a test of Temperament too……Market Minds also have conflicting views….and a year like 2008 can shake you