Interview of an Anonymous but Insightful Investor 1. Tell us your story. Your background, your influences, how and where did it all start? My grandma’s brother used to be a stockbroker on the bse. He initiated me to the world of stocks. He forced me to buy 300 tata chem @ 90 in 1991, a stock which i sold at 450 in 1993. I immediately went to Yamaha showroom and got myself a rx100. From that moment, i fell in love with equity 2. What do u like the most about what you do for a living ? What drives you ? Stock picking is a special talent. It can be compared to being like an expert jeweller who can spot a gem amongst many duds. It's the kick of finding the next blockbuster that keeps me going. People who think being a full time investor is about having lots of money have got it totally wrong. Money is a byproduct of what I do. 3. What is that one most important lesson about stock picking that you learned the hard way ? In stocks, each transaction is a earning trade or a learning trade. The key is to lose small and not repeat the same mistake twice. The lesson that i learnt after losing big in one pick was to stay away from sectors within the ambit of government control. 4. What is the most important advise that you would give to any new investor starting his/her investing journey ? Don't watch any TV. Don't follow any star stockpicker. Catch hold of 2 or 3 cos which u understand and know them better than anyone on the street. Ideally, these should be within your circle of competence.
5. Do you think your childhood, your upbringing, and various life experiences have affected the kind of stock picker you are ? How? I have reached where I am by taking calculated risks. I firmly believe that not placing bets is the biggest risk to me. Thus, I never shy away from taking outsized positions on stocks I like. 6. How do you differentiate between familiarity bias and circle of competence ? don’t they overlap ? All these are jargon. I have kept my investing simple...like Sehwag’s batting. If the ball is there to be hit...hit it with full force!! 7. How do you decide when to sell ? I sell when i need the money. Otherwise I am a long only investor who basically bets on the promoter. If the guy is good..he will continue to make money for you 8. What is the most recurring error that you have committed in hindsight ? Not averaging up. I have now changed and only average up, never down. 9. What is risk for you and how do you mitigate it ? Full time investors have to manage risk more stringently than others. Because we are fully invested at most times in the market. There is only one risk which I fear - “over leverage.” 10. Which books/ blogs will u recommend to someone who wants to be a stock picker ? Only valuepicks.blogspot This one blog itself is enough to teach you all that you need about stock investing. 11. Do u have a thumb rule to differentiate between “paying up” for quality and “over- paying” If i am convinced about the long term performance of the company...i don't miss it for 30% here or there. For me , the cost of missing the stock altogether is more than the cost of over paying
12. How would you define a great business vs a good business ? A great business is one where you do not need to keep putting more capital to make more money. 13. If you had a chance to start your stock picking journey afresh, what would u do differently? I missed out 10 years in between when i was away from the markets due to work pressures. Given a chance,I would have never been away. 14. Do u believe markets are getting increasingly efficient ? If so, do u see active funds diminishing in prominence ? Because of the amount of data available to today's investors, information edge doesn't exist anymore. The edge now comes from gut feel, and whose art of stock picking works at a given point in time. 15. What is your opinion on the relevance of checklists. Is it liberating or limiting ? I don't follow checklists. If screeners could make money, every Bcom in India would be a millionaire. 16. What do u have to say about the role of luck in investing ? How relevant is it ? There is no such thing as luck. It's something underperforming investors use to pacify themselves. 17. Are you a pattern seeker ? What patterns do you seek or avoid when hunting for businesses No i am not. 18. Do you believe that price is its own catalyst or are you actively looking for some catalysts in a business ? Price is a function of where the business is going to be 2 years down the line. You have to anticipate that and build positions accordingly. 19. What are some of the key valuation metrics that you use generally ? None
20. Do u have a "not to do list" regarding sectors, or types of stocks u won't touch ? All PSUs, All large conglomerate companies, anyone who has cheated investors in the past, any business dependant on government subsidy, Any business which I don't understand within 3 minutes 21. How would you summarize your investment philosophy ? Buy loads of stocks of business you understand, run by simple people like you and me
An interview by Pranjal Kamra Also, Watch videos by Pranjal on Youtube Or connect with him on twitter or facebook
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