Equity Investing as a full time career?


(Raj) #146

As a FT investor you are entitled to have your own view/way of life and your own investment philosophy. You need not worry about how others view it. You have done it and are happy with it is more important than the views others have.

I think most people still trying to figure out how someone without a regular 9-5 job can survive, hence questions are there.

Disc: I am retired (won’t use the word FT investor :grinning:) and manage my expenses from my savings/investments.


(Chirag) #147

I am sorry if you felt that way. I was just taking about the rental agreements in Bangalore. I am sure there are places where rents grow 10% CAGR.


(Peabody) #148

Dear Yogesh,

You kept mentioning margin of safety when you are dealing with your investments.Can you please give an example for me to better understand. Do you consider 200 EMA or major support areas to dive in etc Sorry if this is not the thread for the question


(Yogesh Sane) #149

Margin of safety is simply the difference between market price and intrinsic value. Intrinsic value is the value calculated using a valuation model typically a discounted cashflow model. Intrinsic value is the present value of future cashflow discounted at an appropriate discount rate.


(Bheeshma Sanghani) #150

This is an area where you can use your value investing skills to arrive at a decision. Take your yearly expenses, add some growth factor and project them till you think you are going to live and discount them with the inflation rate (dont forget to add marriage, kids etc in the equation). If your networth is more than that number then you can think putting this plan into action otherwise you would be doing this for reasons that are not completely rational. Be rational.

A full time or a part-time investor both have equal chances of finding a Symphony or an Eicher . You dont gain any kind of edge over others if you are in this business “full-time”. It is an extremely rational plan to be drawing a salary while doing investing on the side unless your dividend income is going to take care of your lifelong expenses. Quitting your job and getting into investing full-time would be useful if the time you save by not working is going to fetch you some extra returns from some great stock ideas that for some reason you cant acquire while working. Even one hour a day spent in researching an idea is sufficient and compounds knowledge if done over a long period of time and most of us here do more than an hr a day!

IMHO, a better plan would be to switch your job to a one that you like, or which involves researching stocks that way you get paid to do what you would anyways do if you quit. Better still, if you can find a job in the teaching profession that would pay you a monthly salary and allow you to teach a related subject it would be fantastic.

If i was you ( and i am aware i am not ) - i would NOT leave a regular monthly income. Its too risky until you are established financially.


(Yogesh Sane) #151

Anyone who is thinking of making equity as a full-time activity and capital gains as a primary source of income should consider possibility that government may at a future date impose a tax on long term capital gains. Just yesterday PM hinted at raising tax revenue from financial markets but today FM clarified that there is no plan to tax LTCG. However such possibility cannot be ruled out in future.
In 2005 STT was introduced to replace LTCG on securities traded on exchanges. It was a bonanza for long term investors as STT will be much lower than LTCG tax on long term holdings. But there is every possibility that govt will impose both (STT and Tax on LTCG).
It’s safe to assume a 20% tax on LTCG while calculating income from LTCG. Essentially your 25% return will be equivalent to 20% after paying 20% LTCG.


#152

Ongoing correction morphing into a bear market will test many hypothesis on full time investing.


(Raj) #153

Ongoing correction morphing into a bear market will test many hypothesis on full time investing.

Those who have taken a plunge will not worry much as they have factored in all these small events. Market movement always affect those sitting on the fences and debating the pros and cons. :smiley:


(zygo23554) #154

“Everyone wants to be a bodybuilder but nobody wants to lift heavy ass weights” - Ronnie Coleman, multi year Mr Olympia

Unless one is willing to do heavy lifting in the markets one should stay away from even entertaining this thought. Heavy lifting in the markets means -

  1. Ability to stay generally inactive but yet be very productive with nobody setting short term targets for you
  2. Ability to stay calm and focused during periods of sharp drawdown like the one’s we saw in Aug 2015, Feb 2016 and the more recent one
  3. Persisting with the ground work even when you have no certainty of results in the near to medium term
  4. Starting with enough capital to boot

I need to continue to work on (4) and convince myself that (1) is something I can deal with in the long run. Till then I am happy trading my time for a regular paycheck

Hope to move closer to (4) in 2017


(Shailesh) #155

Right Ho …

Interesting Read for Budding Full Time Investors .

Podcast :


(The Confused Consultant) #156

Interestingly I was just having discussions with few folks of a MBA college
(with few ex students who are working now) who are fascinated about wealth
which can be created through stocks but how much is required, yield, etc to
even kickstart your system. And interestingly 3 of them have same question
since last 4 years we are interacting.

Yes this sounds philosophical, stereotype preaching but you ask any full
time investor or any other job, capital is not factor for considerations
nor expenses. Let me share you few scenario plans which I never envisaged
when I started off.

  1. My major worry was to recover expenses for the year 2016-17 through some
    form of capital gains, interest income etc. As if market is there to pay me
    a salary, instead waiting till Mar 17, I got my number in Sep last week;
    what next? Should I sit idle till Mar 17?
  2. I never estimated it can be so nostalgic to do something which you like.
    In fact this puts me back to decision board whether I justify a work life
    balance now? Overdoing has become a perennial problem now. Every 4-5 tasks
    I complete another 10-15 gets added.
  3. If somebody has done short selling they know how quick money flows if
    you are on right side. Striking gains during December provoked me once
    again to go out of the way and celebrate new year one notch above. It was
    pain staking process to over rule the desire with sorry face of cute
    daughter ! Expenses management is very critical, I was amazed to see 4-5
    contracts of derivative brings in 5 months of expenses in 6-7 days. But
    people either over spent or in quest of making more money get over
    leveraged. But everyone gets a chance of winning.
  4. I am bit amazed to see few of ex companies where I worked keeps
    persisting at a personal level that I should still do a job because easily
    I can manage investing. I don’t deny the fact, except I need to realise and
    get convinced that 100% of working time is not required for investing. Now
    it’s 300% of time kind of range, the day it become less than even 100% I
    don’t mind to get back to job. But looking at mentors and seniors it’s an
    impossible feat , an investor just loves what he does…till last breath.
    I would be delighted to join their footsteps…

This also reminds me how we overplay of loosing a job as massive risk as if
no body will give a job again!

Good luck guys, have a plan and test it in unrestricted boundary.


(v4value) #157

Didnt get anything from this except that you made a lot of money last year :slight_smile: Great show mate! But what was the point for others (except learning that you killed it last year)?


(The Confused Consultant) #158

I guess I could have put it clearly may be, there is lots there:

Getting into full time investing has more to do with liking your work than
keeping money in hand, growing at fair speed etc. The more one discuss
about it, the more the process get prolonged.

Quitting a job is not d day for every one, any one can come back.

Expenses management is more important than income, the real test is when
you have surplus money not deficit. So I cited one example.

I am finding work life balance a bigger problem than money which I though
would be the only point before starting off. For same reason I cited even
short selling brings you money.

Not sure what you mean by I killed it last year. I dont think or not dream
of doing anything like that. :grin:
If you think market killing, that’s not lesson but outcome!


(nitin choudhary) #159

Excellent article l read almost all what you write.


(Praveen K) #160

@django

As some1 who has switched twice (hopefully permanently this time), I can say its not for every1. Started investing in 2002 or so, seriously as practitioner since 2004. First time I quit in June 2008 (after 8 years in IT). Then got back into corporate in Aug 2010. Married in 2011. Now finally, have quit again in Aug 2015. Wife’s on job & is career oriented, so that takes lot of pressure off on day to day expenses (have our own flat, bought early last year).

Considering your IIM-C background, it should be easier to switch careers into this field & gain experience. If post a proper bear run, full time equity investing still appeals to you then you make the choice :slight_smile:

Looking back, for anybody else aspiring to become full time & is young (less than 26 years age), I would strongly recommend an MBA degree, jump into this field of work in corporate fund house/PMS. Rest will automatically follow, if you can think independently. This approach gives you best of both personal & professional life.

ATB.


(Bheeshma Sanghani) #161

isn’t value investing all about picking good companies, putting some money into them at reasonable valuations, then sitting on your posterior for a considerable amount of time doing nothing. In my opinion, full time is actually counterproductive and in order to save yourself from yourself, you need to be involved in something else that uses up your time. What could be a more beneficial use of your time then a job (whether your like doing it or not ) that gives you a regular monthly income. I don’t see the benefits of full-time investing as clearly as the rest advocating it! Unless of course you are talking about managing a PMS or other peoples money. That would probably require you to devote considerable time


(us121) #162

Answer lies somewhere in between.
it may not be sitting idle, but more so to have choice of what work to do and with whome.
also ensuring what we do is meaningful and money is not the driving criteria.

in my view, full time investor for me means, having no compulsion to work which i do not like. it is more like having financial freedom provided by market.


(Marathondreams) #163

I agree with you over here. Any full time investor would have 2 challenges - money and time. How to generate money and how to spend time? I think both are equally important. Enough has been said about the first one. I would like to focus on 2nd one i.e time. I think if investing is only passion, it may get very boring (at least from my point of view) as you are sitting one corner analysing stocks for 24x7.

I think it would be much better if one has another passion - maybe social work, teaching, advisory/consulting, photography, music, trekking, running etc. This will help you to unwind and spend some time away from stock market, which I am sure would help you to become better investor, by getting more ideas from outside world.

Disclosure - Not yet there but thinking strongly about getting into full time investing in next year or so…


(Peabody) #164

Dear Yogesh

Is there any way in excel we can calculate the margin of safety e.g using Present value or NPV formula assuming discount rate and cash flow and growth numbers are known. I am trying to deeply understand the concept and try using it. Sorry for bothering.


(Vivek Gautam) #165

A very relevant interview with great Prof Sanjay Bakshi.

You started teaching around the same time you launched your fund, How long was it until you became financially independent and how did it effect you emotionally, psychologically when you hit this milestone?
ANSWER:
Actually, I started teaching in 1996.I became financially independent in 2001 when, to borrow Robert Kiyosaki’s words, I could say to myself that that I don’t work for money anymore, rather money works for me. It changed me profoundly because now I understood the importance of Upton Sinclair’s words:
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
That quote refers to what Charlie Munger calls as “incentive-caused bias” which is one of the key biases in human cognition. And anyone who is working for a salary is prone to fall under its influence. But becoming financially independent produces conditions that should enable people to escape from the clutches of this bias. That’s one of best things I learnt from Mr. Munger which is that when you are not dependent on someone else to pay for your bread and butter, then you can have to privilege of looking at the world as it really is.

Now, it’s very hard for a graduate student to understand what incentive-caused bias does to people who work in the tobacco industry or the banking industry or the credit rating industry or even the money management industry. But if you are financially independent, you are free to look at the world from a different point of view.