@KrishnaA What I currently hold - Cera, Amara Raja, Kajaria, Mayur, Sanghvi Movers, Greenply, AIA Engineering, APL Apollo, Garware Wall ropes, Lg Balakrishnan, TCPL Packaging
I make it a point to hold stocks that are at various stages in the rerating/discovery process, the last 4 names above are recent buys (post 2014), all other are pre 2013 buys
@gautham1 I would generally agree to what your RM's said. Success in other aspects of life does not translate to smartness in personal finance/markets, I deal with some people who are CEO's but just don't understand how money works, these folks are smart in pockets but very average otherwise. There are some customers though who are damn smart and know how compounding works, these are people who score very high on worldly widsom.
The average customer gets taken for a ride by their RM's who in turn aren't the smartest lot you will find. The average RM hardly inspires confidence since beyond a threshold knowledge doesn't really help you as an RM. As long as you can find customers who are dumber than you are the game continues
Reason being investing ain't a simple function like engineering where if the inputs are known and the function is designed well, output can be predicted with a fair degree of certainty. In markets I can do everything right by the book and concepts and still get hammered, very few people (even those with high IQ) can grasp the concepts of range of outcomes and likelihood of events happening and fixing your buy price based on that
@bsahni When I moved to wealth management I took a pay cut and moved to a firm most people wouldn't have heard of from a bluechip name in IT. Whenever I mention this to people (even today) they look at me like I am an idiot. In fact those who do not know my net worth would probably think I am a big loser especially with the tech and startup noise all around in India.For the average guy this ain't easy to deal with, it does help that I am a bit aloof by nature and don't get influenced easily. I also almost got fired in my first stint in wealth management, it's only now that I am more settled in this field.
Coming to how compounding has worked for me -
I finished an MBA in 2008 and started with 0 after settling my edu loan
In 2010 I had 10L in my SB account when a phone banking guy mocked me on a call and said I was being too generous to my banker. Then started reading on investments etc
Did the usual nonsense in the first 2 years where I picked genuine losers like Bartronics, MIC Electronics, Edserv, Hanung Toys and Alok Industries
By 2011 I figured I hated my then career and quit my job without an alternative in hand - very brave but potentially stupid decision when I look back. Got lucky to land a break in wealth management
2011 - 2013 is where my life started centering around stock picking, all I would do was read and analyse businesses. Social life became nil and still continues to be minimal
By 2013 I knew I had something good going, figured out areas of improvement and started addressing them in a structured manner. I also developed a macro world view by reading various sources on bonds, commodities across the world
2014 onward has been a purple patch. Bulk of my net worth has been created from 2013 onward. First 3 years was all hard work with no great results to show for, I was reading 5-6 hrs a day while others of my age were busy getting married and starting a family
Like all things in life investing has been a step function for me, I believe one needs to put in 2-3 years of good effort to even get to a decent base, there on knowledge and wisdom are cumulative and results can accrue in a non linear fashion.
Conviction - I have seen days where the MTM in my portfolio in one day (Aug 24, 2015) set me back by more than 1 year's salary. On a volatile day my portfolio swings by an amount more than my one month salary. The only way I have dealt with this is to know my businesses well and understand my own temperament better, without conviction it is tough to hold fort during testing times
Role of Luck - First 3 stock picks that worked out were more due to luck than any great analysis. Vikram Somany, Jayadev Galla & Ashok Kajaria have done more for me than all my bosses, colleagues and relatives put together. Once I saw initial success I started putting in more effort and the virtuous cycle started. It is very tough to be passionate about something that you do not see success at, I persevered through the bad stock picks before I got my approach and focus right
I am still single and continue to make my weekends miserable in the search for the next multibagger. I still do not have an answer to "what did you do over the weekend?", people have stopped asking me that question. If this is what it takes to become a $ millionaire by 40 and become even better at what I do, so be it - this is a price I am willing to pay
Guess that was long post but I had to put this out here. Very valid point raised by @bsahni, the behind the scenes story needs to be laid out objectively lest people think it's easy. It's simple, but not easy