Suvi Investing Journey


(The Confused Consultant) #1

Sun rises from East

Though I shy away from discussing specific stocks, the intent behind such motive is to stop people from getting carried away suggestions which has a thin line of demarcation with a dangerous concept called tips. I may pick up some stock name and their rationale behind selection, but primarily I want to reach out to the inquisitive and eager investors who can take a cue from experience leaves if they feel appropriate. This is pure flame of what I saw all across these years, may not include ideal solution for any one.

My objective is to cover:

  • Evolving investing philosophy and changes as the hair started becoming grey
  • Beliefs, broken beliefs and role of emotions in shaping investment execution and strategy
  • What made me turn to full time investor?
  • Importance of writing (I try to do a lots of them-15-20 pages on an average a day), reading and meeting diverse people.
  • The pivotal points which one has to create as you go on. E.g. wandering mind, experimentations etc.
  • The difference between decision made and decision to be taken.
  • All the tools, checklists, books and other resources that helped me to survive till now.
  • How music, reading about speculators etc pump up your life to do more.

I always believe in tell all, this thread will reveal all that I learnt, did mistake over the years except personal information. I am going to cross reference a bit here and there with my other threads. Hope you enjoy the same as I am by writing, thanks in advance.

A summary on date

A qualified accountant (CA) and lawyer (LLB) ; backed up few more certifications and degrees, ironically never practiced any of these qualifications and certifications perhaps in true spirit. I used a couple of these certifications for capital allocation via salary and free lance consulting.

Total Experience- 21 years continuing
Full time investor since Jan 2016, after serving 17 years faithfully with different corporate.
Net worth days- 53 years 3 months (as on 31 August 2016)
Indirect Income/Direct Income- irrelevant as salary doesn’t flow (at the time of leaving job dividend was equal to take home salary). I am not including capital appreciation/gains as indirect income.
Indirect Income/Direct Expenses- irrelevant as salary doesn’t flow (at the time of leaving job indirect income was 2.9 times higher than direct expenses.)
CAGR-24.7% (as on 31 August 2016) with reinvestment.
Current Base investment philosophy- value, growth and active trader now
Mode of capital formation and allocation- trading profit, target based profit booking when required
Philanthropy- involved, may be not to the extent what I want.

Note- I covered a detail note on all the terms such as indirect income, net worth days earlier. Here is the link.

How the day looks like for this consultant?

  1. I get up diligently at 7 O clock in morning. Post morning rituals I open my trading tracker and review the decisions taken for yesterday. I will write more about trading in due time, for now I don’t do day trading normally; more of a swing and position trader.
  2. If I get some time, a lot of days I don’t have any trading or investing decisions; I read few pages of self development related books.
  3. Once the market opens if there are some actions needs to be taken (buy, sell) either for trading or investing I execute post 10 AM thinking initial opening emotions settle down.
  4. Till lunch I start focussing a stock screener, even if I don’t get one I keep trying. Sometimes if time permits I start documenting a stock.
  5. Post lunch I start documenting a stock analysis (either new stock or refresh for holding stock).
  6. After markets closed I update trading tracker, change the stop loss required and conclude decisions of exiting, adding further positions.
  7. Again during evening I devote time following books either on trader/investor profiles, investment or business strategy/economics books. Try to hit bed early.

Apart from this I keep myself engaged in special projects, currently I have 1 project in hand , I have opened a thread for this project here called “The Jewels of India”. Just completed two projects on growth trends and quasi investment philosophy.

Working hours -10-12, Stock Documentation- 4-5 hours (annual report, valuation, business model etc). Stock Screener- 1 Hr, Reading books- 2 hours every alternate day, all others- 2 hours.

I take off all Sundays and half of Saturday. In addition 5 leave in every quarter with one 15 days annual leave (coming next month). :slight_smile:

Don’t get bored, lots more to come. I will move next to how it all began in 1992 (no investing only inquisitiveness and excitement), actual investment (1996, first year of article ship) and of course of lots of failures and a bit of successes. Like many others I managed few 200 baggers even a 446 bagger stock. At the same time colossal losses of 90-95% and subsequent learnings and un-learnings. Continue to fire questions if you have, happy to provide a reply if I can.

Meanwhile I got some interesting trends on my project working with Top performers of India. I will update them this week end.

Every time I write here it become an obligation to finish my work as most of things I write here is currently what I am doing. That’s a big help from valuepickr. :slight_smile:

Good wishes and happy investing.


(sriG) #2

Well.Jewwls of india was amazing.can u suggest future jewels for next 10 year.....Thanks n stay blessed


(The Confused Consultant) #3

Thanks for wishes and the most difficult question in shortest word.:slight_smile: I
haven't started the analysis for Jewels of India, we need to hunt down
these 115 from all angles be it business, promoter or any other thing that
can be used for future. And the best part is these are all historical
significance, after all the hard work they may not come handy and we may
discard all of them. I am not worried for backlash after receiving too many
of them. Watch that space.

Regarding future jewels keep doing research, you will hit them definitely.
But I can tell you the only thing with confidence is this:
Finding a jewel is not the toughest part but keeping them. Focus on holding
and selling method will create jewels. This includes how to add positions
when price is going up, how not to loose all your capital with market
gyrations. Speculators (traders) can help you a lot with their experience.
Recently I covered a post for Jesse Livermore under investor profile
series, personally his words hits me to the core. Of course this doesn't
take away anything from basic work of business model or valuation.


(The Confused Consultant) #4

Wild swings and desperate dreams

Some of the views are my personal opinions. In case you feel it need counter then don't hesitate please :slight_smile:. At the end of day everything is right or wrong given a context.

I was just approaching teenage, internet was not in sight. Television yes DD and types of Zee making waves. Action always happened in Mumbai, stories told in Calcutta and Delhi. That was investing duniya for me back in 1992/1994. And here I had an uncle (my Mother’s brother) who was an army man happens to be acquainted with stock market as well. On several of his visits I used to listen intently (may be he was the rare ones where I paid attention, not even my teachers) about the booms and busts of prices. The likes of ACC, Ambuja, TISCO where prices just moves up and up within no time, give a damn phone call and lo; money is yours. Money more than you can earn by working 26 days a month (Saturday working was common then). Perhaps I was a brat who wanted to make money by not doing anything. Fantasy was never ending for me, I started feeling money is mine. It’s only question of time and place I just have to make phone calls and mint gunny bags of cash. Chandrakant Sampat said to being an investor all you have to do is dream. The problem I was not dreaming about investor but money, wanted to be rich. A strong desire which somehow I was convinced wont be possible by becoming an engineer or doctor then. Rather following my highly academic siblings I thought of going to a place where I can be close to action. Calcutta was something I knew my parents wont make a fuss, but I needed an excuse. And Chartered Accountancy fits the bill. There I go, a mediocre non interested student decided to pursue one of toughest course of India. But my objective was to see action in stock market, meet some/few who can unlock the next steps. And it was 1996 I was right there in Kolkata.

I wasn't aware of even how to buy share, what is investing etc. For me a phone call to make lots of cash.

History I would like to review always

(These are few things we learn which we don't want to forget for good or bad reasons)

  • today I realise that it was madness for money which pushed me to a first door or place. It is weird to dream about rich always without doing anything but what I emphasise till date is strong addiction for something unlock the doors.
  • stock market or equity investment can make you rich, sometimes very very rich. Though I agree I wasn't sure about definition of richness.
  • working 26 days or 365 days doesn't necessarily mean you will do wonders.
  • one has to go out of comfort zone to do well. I knew moving from my comforted parent’s home to a single life in Kolkata won’t be fun yet that was the utmost thing required then.
  • It’s very easy to reconcile success with events, now I find very easy writing all these stories by going back to past. When these things were happening I was clueless about what was going to happen ultimately.
  • need not start in best place always. Mumbai was an is always epicentre of investing world. Now although technology has closed the gaps to some extent, then no other city was a comparison to Mumbai. I didn’t have a choice for Mumbai, don't select between nothing or everything. There is a middle path always. Till today for me every city bring it’s unique charm on table, it gives you an option and choice to fulfil your dream.

Stock Story 1: Shree Cements

Let’s start with a positive one! This is one stock which went on to define the finer moments of life. Has been a rock steady company, phenomenal performer. Today I owe my independent life (not rich) to some stock like Shree Cement.

Acquisition Period: 1997 to 2001.

Average Cost Price: 41 Rupees

Current Market Price: 16980 Rupees

Performance: 414 times/bagger

Holding Period: 19 years plus (still holding)

Pyramid- Yes (all those years between 1997-2001)
buy when prices going up

Averaging down- Initially

Panic Selling- partial selling during 2002

Role of luck- plenty (right from buying to holding even, I just hang on to some shares out of expectations thinking I did a good research).

Investment Rationale

The purchase of the stock was not due a large amount research what I do these days but:

  1. Excessive related party transactions and lower margin there of : I was hopeful as company reduce dependency of group company sale the margin will expand. The margin expanded almost by 8-12 basis points over the years.This expanded ROE by more 10 times.
  2. Capex hold in abeyance: a good chunk of capital expenditure spend without production utilisation. One due to I guess family feud, second secular demand played a large role. ROA jumped more than 10 times all these years.
  3. Conservative management, rumour mongering- constant negative news for sometime, tight lipped management helps the price to be subdued for sometime.

Of course I went through margin analysis, cash flow all that was in my CA text book.

As the price plunges I got panic and sold some shares. It was painful to loose your bonus money in a whisker (you get by working a full year and loose in few days).

Yes, Shree Cements expanded heavily with demographic in mind. Managed their Capex beautifully these years, never allowed the stock to be split. Not saying stock split is a bad thing but then I was looking for someone who focus on business only. BG Bangur went on to become a billionaire, in process smallies like me also benefitted.

Unwinding: The word unwinding i am choosing as these are few things I saw across and seeing which others have strong views (both positive and negative). The reason for spelling them out here is to unwind yourself and think one more time are our action plan needs amendment?

Unwinding 1

Big research equal to big money?

This is one area I have struggled always and struggling now as well. The pivotal points I faced are:

  1. what is exactly big research means?
  2. how do you do these research? (all areas including valuation, special situations)
  3. does research makes a lot of money?
  4. can any one survive in investing without doing research?
  5. is research only thing required?

On question 1 it’s been swinging over the years. If I discuss something, I know the expected answer. Learning curve is gradual, expect amendments as you go on…..change is eternal part of life. Lot of time I felt meaningless to discuss with others. My key noting for big research would be:

what is exactly big research means?

  • read books and articles. make an action plan and put into plan. For example Pat Dorsey wrote about moat, list a table and hunt down attributes of moat for company.
  • a checklist which keeps evolving as you progress.
  • readiness to document (write, number crunching)

Second question is one of toughest for me. My key noting would be:

how do you do these research? (all areas including valuation, special situations)

  • understanding of a business and edge of company is not vocabulary. You cant get away by using word art, philosophy. Understanding a company is not as easy as it looks. I will point you to something, every company you are working runs and spend billions on training, quality etc. If they have a clear edge and strategy no point in spending. A lot of these spending are used not only to enhance or sustain capabilities but creating capabilities. If insiders are not sure who are managing day to day what makes you to jump the gun?
  • where is the confidence boozing? You ask any investor including self, do you understand the business? without at blink of eye they will say yes- now the deliverables can be an abstract, a canvas or some even prepare industry study. Confidence comes from success, if stock works well for you, immediately you will reconcile your understanding to sweet spots. If it doesn't work then reluctantly accept some understanding has gone wrong. I don't think I understand Shree Cements a lot than some of the research I am doing these days.
  • if a company’s competitive advantage is embedded to value chain (key activities creating value) then imperative to understand the value chain of company. While understanding we give our best shot and accept there are lots of unanswered questions. These unanswered questions are the ones which creates the biggest problem.
  • Spending a lot of reading annual report helps but that’s not the only thing for me. Try to draw canvas, build value chain yourself and see the edge if there is one. Then justify through financial metrics. And this require a lot more effort than reading annual reports only.
  • books play a important role in research. But first question all American books? One of significant problem is unavailability of Indian books. Then big question is where are real investors of India? Our accounting, regulatory practices and business environment are contrast to others and we all know it. Still we go back to those famous books in quest of thinking they will work. My experience start from available books and start pruning them heavily as you move forward.
  • listening to con calls and depending other research reports ease your research. But inflection point is what to believe and what not to believe?
  • Lots of business strategy books and economics books are not written keeping an eye on investors only. E.g. Competitive Strategy/Michael Porter. But I found if you can get knack of them they gives more insight to a company than some of investment books which always after circling will come to history of money making!
  • access to management: some responds and some do not respond. But I found when a mail backed up by genuine data and analytics I got a response in lots of cases of course with positive bias.

Third question money making. Once again my few shots:

does research makes a lot of money?

  • yes it makes money, but the timing of making money and doing research are not co related, so is the hit rate.There is no guarantee you do the research today and make money tomorrow. Similarly 10 out of 10 research become multi bagger.
  • accept our research falls way short some times. The number of unanswered questions is a basic fact towards it.
  • money making includes a lots of luck as well, and no one better than a speculator understand this. Research has to be intertwined with business acumen and behavioural finance. So research compliments money making not stand alone activity of money making. We know this as well:)!

Question no 4, interesting one for me

can any one survive in investing without doing research?

  • we all think American’s are crazy about Warren Buffett when it comes to investing. Unfortunately no, Buffett doesn't tell you an easy way of money making which actually should be the case. It was likes of Jesse Livermore created an envious wave in early 1900’s. Imagine some one push a button and make hundreds of million dollar. Livermore spent lavishly on his lifestyle, every American started thinking if he can why can’t we? The dream crashed with 1929 crash, SEC and ultimately Livermore put a bullet through his head.
  • I always thought for long years traders are the one who are gamblers, if some trader is making money it’s just pure luck. I was dead wrong, speculation is the biggest thought process before an act that a human can practice. A trader’s behavioural finance is million times stronger than investor. Yes they do research as well, the area and objectives are different.

Answer is no, you can’t survive ; even to speculate you need research.

Last question for today

is research only thing required?

this is one area of less dispute:). we all agree with each other you need a package to survive, be it’s research, experience, behavioural finance, capital allocation.

That’s it for today, thanks for flipping through. Next weekend my second unwinding would be “ where are the real investors of India?”

Do let me know what you think? Do you think we know a lot of them or at least majority of them (not person but methods)? Do you think they are doing enough to create next gen? Do you feel the current available investors (including likes of you and me who write on social network, forum etc) are doing a fair job?


(Anandh) #6

There are Indians who are writing books on investing. For example Parag Parikh, Rahul Sarogi and the upcoming book by Santosh Nair on ‘Bulls and Bear’. the per capita books per investors is WAY lower than abroad, but thats true for other genres also.

Also, on the topic of whether research gives an edge or not, Nate(Oddboll stocks) concludes in the context of Western markets that it does not
http://www.oddballstocks.com/2016/09/you-dont-know-anything.html However for Indian stocks, I think there is still scope for information edge, whereas screener sort of systems are slowly eroding analytical edges.


(The Confused Consultant) #7

Good link, giving a different perspective. I agree with his views on research as he is trying cut out extent of involvement beyond a point,....again subjective to every individual. Second applying a probability with intellectual estimate will attracts layers of debate something with no definite conclusion.

Agree impossible to get into mind of management or industry thought leaders. But I still believe imperative for us to estimate intelligently to understand the business which is not crystal clear from publicly available information. I don't think anyone is trying to get into shoes of an entrepreneur and rightly investor is in different value chain of wealth.

The last part not sure about my inference, if the article suggest extent of research to money making then probably nothing can be linked to money making. The best bet of last quarter for me is Escorts (a pure trading play) but it doesn't add anything to my investing capabilities.

These subjects will be eternally discussed till the time we survive. :slight_smile:


(maheshkumar) #8

Great sir ,very inspiring


([email protected]) #9

Can you help me in understanding how capital has to be allocated to stocks.
The problem is I have around 10-15 stocks and struggle to identify which stock to focus and which needs more allocation.
Any inputs would be very helpful.


(The Confused Consultant) #10

Rather than advising number of stocks etc. let me put something else which may be relevant for you.

Allocate capital, go ahead and allocate more and more.

  1. But make sure you have them plenty when you need.
  2. But differentiate execution from research.
  3. But either never increase your risk or increase risk to the level you can tolerate.
  4. But have a plan to recover losses when you incur them, update a checklist to avoid catastrophic losses.
  5. But maintain metrics to understand what you want to achieve.

First BUT

We are in a place where uncertainty is way of life, market is about roller coaster. That would mean opportunity will be thrown everyday every cycle. Do you have capital allocation plan to grab most of the opportunities? I can share with you what I do:
- I deploy capital which works for me and withdraws which does not work for me. This means if a stock does not perform for a threshold time (no need to worry about time, once you practice you will come up with your own).
- I do not invest into a share if the market conditions are against me. I am not of the school stock is cheap. I am here trying to make money higher by selling at a higher price.
- All money unutilised fetch me 7.1%-8% comfortably from liquid fund with turnaround time of 24 hours. Unless I am not getting that type of return I pull back from portfolio.

Second BUT

Research is good and we love them all. Let us continue to do those good things. But market place consists of many characters with different mindset. How do you ensure your research is complimenting capital allocation?
- I keep a watchlist of stocks, currently around 61 stocks on watchlist. I try to update business stories, results regularly for all of these stocks to best of knowledge and abilities. But just because my calculation says there is a margin of safety 50% I dont jump and buy.
- Rather I wait for others to jump in first and then join the party after some time. A multibagger moves from 100 to 2000. I am happy if I can join at 300 and get down at 1500.

Third BUT

Risk first is corner stone of any place where you deal with probability. If you are likely to lose more than you win capital protection becomes paramount particularly when you play with your own money.
- Unless a purchase gives me profit and makes me risk free I do not add. Meaning if I buy a stock at 100 rupees my first calculation will be how much I can lose say 10%, that means at 90 I will sell the stock. If the stock moves to 130 first thing I do is make the first transaction which I purchased at 100 free of risk , meaning I won’t sell below 100 i.e. my purchase price. The risk that got freed from transaction 1 becomes available for transaction 2.
- From a freely available capital i.e. say I have 1 Lac rupees to invest. I do not put risk in such a way I get wiped out easily. Say I will try with 1000 rupees risk each time i.e. 1%. At least I can survive 100 times, imagine I put 25000 each time. 4 knockout punches, I am done and dusted. But losing 100 times in a row is far more difficult.
- I only buy and hold stocks if the risk becomes negative. Majority of stocks I have hold more than 5/7 years were all having negative risk.

Fourth BUT

Losses work geometrically opposite against me, more the losses more I have to recover them. If you lose 10% you need 11% to recover. If you lose 90% then you need 900%, recovering 900% is just madness!
- My losses are decided on profits I achieved. If my average return in a stock per year is 20% I do not allow losses more than 7-8% average.
- Whenever there is a slippage out of my control I just go out of market and comes back when I feel comfortable. Even if the entire market has green ticks everywhere.
- If I am given extra ordinary profit I try to sell into strength. I do not want to sell when everyone is selling but I want to buy when everyone is buying. Say if I make 50% money on a stock I sell at least some profits and locked them.

Fifth BUT

Actual results show the way for a customisation. Do not believe in standard numbers thrown by others, that may be working for them, may not work for you. In short maintain metrics.
- Maintain your own gains and losses. You will know how much return you can achieve, work on that to improve. Also, it becomes a tool how much losses you can take to survive.
- Include time element into your calculation, either you rotate capital with low margin or maintain capital for a long period with high margin.
- Analyse every loss what went wrong?

Money management and risk controls are the most significant subject for me. I would write in detail on the other thread. Small caution there, I do follow different plans for investing and trading portfolio, but principles remain same as I explained above.


(gautham1) #11

hi @The_Confused_Consult . thanks a ton for all your posts. very useful.
I have one question. In the debt part of your portfolio, do you invest in liquid funds only or do you also invest in ultra short, short term , long term debt funds?. The trailing one year liquid fund is around 6.8%. In the current low FD interest scenario, this is still good. But < 7 % is some sort of a physiological thing. Whereas 7% looks nice.


(The Confused Consultant) #12

I am not aware of much of debt instruments. I have been using JM High Liquid fund and HDFC liquid fund. I saw on an average these funds range between 7-8%. Beyond that never paid attention. My battle is in Equity quadrant and I need a place from where I can pull funds at quickest time possible when required. Most of the time within 24 hrs I get a credit into ledger.

I don't keep a 7-8% return like risk free or even 15-20% return basis mutual fund in mind, I am operating in a place where volatility is far higher i.e. equity. My job is to ensure not to lose my shirt first, second not to give profit away when it comes. A return from market when is favorable can be eye popping. All I need to do ensure park if safely for next battle. Even I am ok with 5% on this, safety first liquidity second and return third, fourth etc.

Just to add returns from equity if managed properly are so high, unless you destroy all of them average can be way beyond your requirement. Some people go on cracking 20/25 times of psychological return you have mentioned for years and step aside when they start loosing to ensure damage is minimum. There is a larger catch also, focus and do what you are best at; one product is enough for you to become extremely successful.

Good luck!


(The Confused Consultant) #13

If anyone reading and getting influenced in case! I am realising I would do a disservice if they are not aware of important facts at least. My risk profile may not be ideal one, neither there is a guarantee it will work even. I believe in unconventional approach and imbalanced work life. Currently I am able to survive and don’t see a reason why I have to work again, but you never know. Anyway, these are not relevant to you. What is relevant is this:

  1. My exposure to liquid assets has been more than 90% always, since beginning of working days i.e. around beginning of year 2000. Today its almost 95%. Liquid assets I meant equity and if I do not have an investment choice parked in some cash and cash equivalent stuffs like liquid fund.

  2. Never ventured to any other asset class in life, I believe every asset class can outperform and deliver stellar returns if one understands them, practice them day and night. My preferred choice is equity. I don’t know even how to manage another asset class. I bought a small flat in Bangalore in 2007, someone said it’s going to be Manhattan in 5 years. After 10 years the price hasn’t gone anywhere, rental yield is pathetic, liquidity is terrible, now people says old property! Anything wrong with real estate? No, not at all. I never tried to understand how a real estate works in India, how it would even pay me off?

  3. Because my approach requires tight risk management it requires losses to be taken in numbers at least. And trust me booking loss is not easy for majority of guys. One of the biggest stumbling block of behavioural finance. I have moved from 90% equity holding to 90% cash holding swiftly which involved walking on your own corpse of broken beliefs.

  4. I fully understand by growing at 200% every year even I can’t be millionaire forget about billionaire. To do that you need to play on leverage, not margin but OTHER’S MONEY. But I am happy with what I am as it gives me freedom to do what I want.

  5. I had certain extreme swings in personal requirement. The one or two years when I asked my daughter to travel twice in Train I won’t forget the face. Me and my wife then worked hard to infuse certain traits. These steps are painful, not every one may be all right with this.

  6. I have to adjust my expectations for every year. For example, in this current market, I am mostly out of action except few trading here and there. And if you are full time it would be maddening to sit out of action more so when you have capital.

One thing what definitely worked for me is despite increase in portfolio my risk nosedived from 15% to today it’s negative 30-40% or even more. Even market wipes me out, I won’t give back anything. But the transition period required severed discipline, I faltered number of times due to bad behavioural finance.

Stay safe guys and develop an approach after you understand yourself. I wrote something called Know Yourself First in another post. Link below:

Knowing yourself doesn’t include confidence or beliefs. So, if someone says it’s not possible, don’t believe it at all; even don't pay attention. It comes mostly from people who hasn’t done it!

Lets discuss more about position size, risk management some time.

Wishes and Luck


(aditya modi) #14

Not sure-how you reached this level of clarity and belief in yourself. its inspiring to have such progressive thoughts.

Am keen on meeting in person and learn from you. Would you please be my mentor? :slight_smile:

Will be grateful to pass on the legacy!!


(The Confused Consultant) #15

Logged in after 24 hours to see couple of messages which are heartening.

First to Aditya: I think you are giving me more importance than what I am. But feel free to send a message to me with a contact number in case you want. I am more than happy to talk to you. This forum gave me some vibrant people, one Brigadier, one Air Traffic Controller, one Doctor, one self made business man. Few more, I don't want to single out them. The real investing world is behind screen, call it's travesty and tragedy some of best investors hide behind spouse name or even refuse to talk to media. That gives a indication best of world we are yet to see.

Second to Sarvesh: @8sarveshg, sir I am still your dear old friend Suvi/Suvendu. Just identification changed to confused consultant which I am always.

For others I spoke to Sarvesh first some time back who wanted to move out from a job to own in investing world. Despite of multiple conversations I wasn't sure whether this guy will go ahead with what he wants. After few months Sarvesh sent a message that he has started, if you are around Mumbai lets catch up.
I was with my mentor, showed him the message. He told me first line Paul Tudor Jones arrived in Mumbai! Yeah guys he just came out to his own world with conviction and courage. No numbers, no theatrics! This guy will road roll many records in journey. There are many in this forum who needs that eternal trigger to go past their ultimate dream!
I am attaching few updates I shared post my employment, it may help you guys.

Cheers


(The Confused Consultant) #16

Official mail to my colleagues in company when I quit my job

Subject: It is never an END- Bye guys for now…..we will meet up for sure….I am round the corner!

There is something new every day, we need not something special inside cranium or even a cacophony to identify the “new”. Soaring above territory and work within cannot be a fathom. Reach out few steps to switch on your live…..passion can be only a handful.
I couldn’t muster my courage all these years to tell myself that temperament, emotions and irrationality cannot be delimited by frugality. The traditional risk management intrigued me to draw line between independence and passion. Yet I am here going out to fight a virtual monster with bad emotions and temperament. More so it does not have a physical existence!
I am going to stand with both feet against aggression of stock market, BUT I have a trump card…..I don’t need roulette wheel to conclude my trick. Hundred years on value investing is winning against whims and fancies of market. Because I am trying to buy business not a price sticker! That’s my idea and that would mean end of active employee career for now.
When I look back at these beautiful and exciting employment career of 16 years lots of moment to cherish. My strike rates of good supervisors/managers has been impeccable. I can’t remember any colleague who was not good either.
I thought can I recollect my best FIVE moments, trust me to draw them was toughest job. Here they are, sometime try it….much more than fun!
1. Shaking hands with Chandrakant Sampat- I shook hands with him once when he was alive, the warmth and confidence of his veins shot through my pulse eternally. Arguably he is the greatest investor of this country yet selfless and devoted philanthropist who even didn’t left anything for his own children.
2. A meeting with XXX- self- made entrepreneur and investor, I like his gut and grit both. We have heard dozens of stories where people started from scratch. This is a story where a celebrated academician chooses passion over job.
3. Lesson by XXX- fearless journalist and hugely successful investor. First time someone pull out a diary and showed me the value of speaking truth can be enormous (300 million dollars for 30 years where you start with 1000 USD).
4. Stumping Prof XXX- I felt absolutely proud when Prof XXX gets surprised on a counter question by me on quality of management. Of course he is a legend, can smash me every second every day!
5. Making my father to have a glass of water- I had written about it earlier, my mathematician dad found it difficult to digest between compounding of my gifts (shares) and his.

Yes that’s all the great moments I had. When I compared with other felicitation I received else where I realized they can’t stand on same footing as these five. Of course the people who encouraged or praised at place of employment or elsewhere were very genuine. A lot of manager spoiled me in accommodating my passionate ventures, unusual week end writings and not so discriminatory employment rewards. If my XXX manager taught me how to read industry, the XXX supervisor encouraged me to carry forward my passion. XXX Manager brought me back to reading habits, Barclays manager rushed to hospital when I was fighting some anxious moments of life. Or even heart to heart sharing with XXX Bangalore head. They been all fantastic persons, most importantly I still have their numbers on mobile.
Where next?
Still a terrain, starting from surface ignoring past success and failures (except experiences) would be sanguine way to look at life.
Value Investing: this is my identity at least to me. I am among those proud value investors who continue to practice them with an optimism to see a better world. I will spend dedicated time for value investing and that keeps me going.
I been trying to raise awareness and know how towards equity investment, do not hesitate for a second to call me. Still I repeat stocks properly selected and with discipline, hard work and blessings can create unimaginable wealth and freedom. Treat them as business stories where you are stakeholder.

Does this mean I don’t have nemesis or plan B? My guruji told me when plan A is not started why to think about B,C, D etc. I refrain from writing about my Guru who literally influenced each of my decision. Whether it’s cash flow quadrant, value investing or even philanthropy he convinced me money is only unit of account. He is a true fan of Chandrakant Sampat so am I.
I promise you, I will remain same whether it’s my lifestyle or endeavor. And to do that I need your wishes and love.

With loads of love


(The Confused Consultant) #17

First update mail post employment

Subject: Alas, it's 3 month's now- was the dream tawdry?

Here comes April 29, 2016….it marks completion of 3 months logging out from active employment. Today morning when I woke up, thought how do I define this journey….was it a high street drama becoming sour? Perhaps too early to know that. When sun went down on evening of January 29 in EGL campus,I got ready for submitting ID card, I was thinking is that all? Of course not, battle began when the facility and admin boss was candid enough to drop me in Majestic Bus Stand. By the way I continue to travel by local buses where necessary although net worth additionally swelled to another 22 months of expenses and I am unlikely to change that habit. Then was it a dream which I thought as passion and now look tawdry? Perhaps not, why so….here are my few mundane thoughts.

Missing Salary on 25

It was half past eight of Feb 25, the message from HDFC bank was missing….the joyful automated message of salary credit. Worrying lines I could see on my face, was a right decision? Immediately I latched on to inspirational books whether it’s Dale Carnegie, Napoleon Hill, Stephen Covey etc. Dropped myself from investing research for two days, brought a feel good factor by day 3. March and April I didn’t have to call again Dale for help, now I perhaps understand a particular day is not important to earn or learn rather everyday is for earning….may not be money only.

Loneliness and seclusion

This was another aspect I was worried about, what will happen when you are not surrounded by calls, colleagues and daily happenings; after all office was my second home. Honestly I miss office, the people but not work. I am tired of sleeping everyday unsatisfied. It seems like never ending task for finishing one or another, the worst part is I don’t see any plausible remedy to this problem in near future. My learning here when your circle of competence is narrowed it become nostalgic. In my opinion one should be careful not getting carried away too much by subject! I rewind myself and realised some of differences were meaningless, few of closeness were actually not affection. Few of the folks I caught up to cement the distrust if any will continue to do going ahead.

Value Investing

I call myself as value investor, lot of investor loves to call themselves as well….not because we follow Ben Graham’s principle but it’s due to iconic investor Warren Buffet is regarded as value investor. Though Chandrakant Sampat called it as “investing values to life” I realised am far away from it. Each concentration band of mental model requires more work than initially estimated, although glad to inform you I managed to pull out a framework on each of the concentration band; still way to go. A value investor irrespective of investment philosophy trying to see a better world everyday through reliance of discipline, integrity and hard work. To repeat what the concentration bands are:

A. Competitive Advantage of Company B. Quality of Management C. Risk Management Capabilities (Operational, Financial, Compliance and Strategic) D. Margin of Safety (Business and relative valuation, safety net) E. Future Catalyst (undercurrent in economy, management triggers, business ignition) F. Special Situations (hidden asset, restructuring, distressed asset etc).

What else

  • Started a series called Guru Mantra in India’s well known forum Value Pickr (https://forum.valuepickr.com/t/guru-mantra-16-competitive-advantage-racing-for-uniqueness-the-second-part/4814) though realised equally happiness comes first and reversed the decision to write. Still working on few things and getting ready for my website launch in terms of content.
  • Markets nose dived from Dec 1st week to February middle and equally made a strong come back except laggards left behind. Good companies still gives signal we will perform, difference is we need to identify signal from noises.
  • Book reading; this one I advocate strongly everyone in world. It can radically change your conscience or even your view of looking at world.

Then of course I lost my Guru on March 1st week, a lifetime of devotion of values and investing end abruptly with a massive heart attack.

I am getting more and more convinced, there is no substitute to hard work; doesn’t matter its employment , investing or anything else. When actions are identified with passion wealth and happiness is outcome.

Good wishes all, please do well and stay happy!


(The Confused Consultant) #18

Update 2 Post employment

Subject: 20 Years of Value Investing- East to North, West to South

Finally rain set in Mumbai again, as usual I got down at Teen Batti bus stop of iconic J Mehta Road on Walkeshwar. Otherwise known as Malabar Hills, one of the most costliest place in India ….a square feet pinch you more than 1 lac INR, 1000 sq ft condo may cost between 1.5 to 2 Million USD. As I started approaching my abode which I occupied for more than 2 decades, recently lost its king this year. A plush 4500 Sq Ft plus sea facing duplex is no more noisy, the king has left his kingdom for heavenly tour. Gushing memories with heavy heart, I start putting my foot steps slowly towards the abode, to my utter surprise the apartment now carries a familiar name; “Saraswati Education Charitable Trust”! The place is jostled with kids who are orphans neighbouring tycoons like Kumar Birla, Rakesh Jhunjhunwala and endless list of billionaires. He again stumped me, all of us……another indelible stamp of greatness and token of gratitude to society. Yeah, that was perhaps my last visit to my Guru’s erstwhile kingdom.

The trust have left one room on upper deck of duplex where Guruji sat and perhaps saw a dream for children in despair, misery and pain. He continued to amass wealth enviously for 4 decades, enjoyed the proximity biggies of dalal street, hand picked by none other than Chandrakant Sampat! In the end he bartered Malabar hills with poverty, my heartiest salute!

This year marked by 20 year of investing journey, shaped by my Guru …..it couldn't have been better tribute to see him alive, but nevertheless standing in his room and collecting pieces of annual report, papers, books…..I am planning to create a library in my home town or Bangalore.

So, how these 20 years been? Was it roller coaster? Of course yes. Was it rags to riches? Of course not. Did it made me better? Of course yes. Could it have made me better further? Of course yes. There can be multiple yes and no, only 2 things I could learn to some extent in these 20 years and that define my journey from teen age to middle age.

FIRST and FOREMOST Understanding value chain of happiness
SECOND and ONLY Habit strategy

Before I come back to the two key topics, let me pull out a performance score card.

Graph 1

The first graph portrays the movement of my portfolio over twenty years (Blue Line) against BSE index movement (Red Line). The first year I equalised to 100. This means every 100 Rupees invested in 1996, I could make it to 9892 INR at a compounding growth rate 25.8%, a neat 4 percent ahead of Warren Buffett. Still I am no where to close to tiny fraction of his portfolio, the reason is bad capital allocation and base forming. At the same period BSE index moved from 100 to 683 (14.8 CAGR).
1- 1996, 2-2001, 3-2006, 4-2011, 5-2016

Key lesson from this graph:

Look at that curve after 10 years , sharp up move than index. That’s power of compounding as time passes.
I didn’t stick to index stock much, 95% investment comes from non index stock.
Also reinvestment of profit outsmarted index on long run.

Graph 2

3 year performance starting June 13, specifically covers my last employment (Jun 13- Jan16). I came back to Bangalore with a big loss in my portfolio. A change of habit, adverse incidents brought out the best from a human they say. The result is 50% plus CAGR, this is against flattish backdrop of BSE. No wonder habit is the biggest strategy a human can have.

Can future be forecasted, of course yes…..here it is:

Graph 3

1 starts from 1996, 2 becomes 2001 ….hence 9 becomes 2036.

If I am able to compound at 18% going forward every 100 bucks invested back in 1996 will become 379224 by 2036. That is a whopping 3790 times! And look at comparison with index which shamelessly flatten out. Sensex will do well, but compounding on good stocks become so vociferous once the period progress it smashes out all competition.

Does this look same for everyone? Answer is no, this is performance of average human. The superior portfolio will much be more upward bias. Can this be repeated, of course yes….I will come back to 2 key ingredients next week 1. Value Chain of Happiness 2. Habit Strategy

Few pointers which will point to what exactly I may want to say!

Difference between rich and poor, extra ordinary and ordinary, hard work and laziness is psychology and psychology only.
Billionaires, super stars and celebrities excel in life due to better philosophy.
Physics, accounting, chemistry and all other physical sciences have no value unless you can apply philosophy to them.
Stock market , value investing has more to do with human behaviour (behavioural finance) than competitive advantage.
Luck exists, but you need to follow luck to be the beneficiary….it won’t come to you.
Selfish people, person with a harmful attitude or what ever other attributes defines a person as bad never succeeds in life. Count of money is not success!

Am I trying to tell you life and success is about social sciences. Yes, you get it right; it took me 15 years to realise a small section of it. Sooner you understand better for you!

Happy days ahead….cheers!


(The Confused Consultant) #19

Next update post employment

It was the month of October dated back to 1929, when America was at pinnacle of consumerism, hyper growth; market responded by moving to an astronomical height. Manipulators add the compounding of woes by all sort of artificial trades, lack of regulation was perhaps adding spice to the euphoria. This time there was no Pierpont Morgan (famously known as JP Morgan) to bail them out. The US treasury (with direct blessings of the President) turned to seven most famous personalities of that time privately in a hotel (business men, speculators and politicians). Still the market crash couldn't be avoided and America fell to depression for almost 2 decade post 1929 crash. But that’s not something I wanted to emphasise rather then SEVEN men in that meeting and what happened to them? Three of them committed suicide, 2 went to depression, 1 left for Vatican!

Importantly two speculators included in that historical meeting who made so much money so fast it made even Rockefeller's and Rothschild’s look average. One was Aurther Cutten a known bull ( an intellectual estimate that prices will go up) and other one was Jesse Livermore the plunger or bear (who expects price will go down).By end of Oct 1929 all Aurther Cutten had was a pair of shoes, clothes and a watch!

When everyone was buying in frenzy, some one was selling lots after lots. When market crashed by 40% in 3 trading sessions he landed up making 100 million dollars in 3-4 days. Ahan, don't ignore 100 million as small amount, with 8% compound it’s 81 Billion dollar plus now not even the richest man in world worths. That was Jesse Livermore often credited for 3 stock market crash (1907, 1912 and 1929). The man made US to create a central bank (Federal Reserve Board) in 1914 and more importantly SEC in 1934. It was amazing Livermore went bankrupt 4 times in life including that 100 Million and finally put a bullet into his head in 1940. Once counted among top 10 rich people of world otherwise known for lavish lifestyle.

I was told about Livermore long time back, but why one would want to impersonate some one who ended life so tragically with cursed by a country and people. For investors Jesse Livermore is benchmark of rules and methods while executing investment decisions. It has been more than 100 years his methods are still applied be it stop loss or pyramid. Rightly so he is called as greatest trader of world.

Where am I now? Revisiting Jesse Livermore and unlearning

Last time I spoke about my venture into speculation to support capital. And realised if I have to survive in dark world of speculation only one man can save me and that’s Livermore, specifically the portion of unlearning.

Stop loss- one comes to market place to make money no matter what ever philanthropy or other activity is doing. Kill positions brutally which doesn't work for you, that’s I guess key mantra behind speculation. One has to survive today to fight next battle.
Pyramid- Livermore was famous for reverse pyramid, add higher positions when in further uptrend. I have started with lesser incremental position, may be next would be reverse pyramid.
Never break rules- I lost out a portion of compounding due to one trade among 134 trades I took up due to simple fact , breaking own rules.
Amend life style- Livermore filed bankruptcy not due to his rogue trades but his superficial lifestyle. Still trying to continue with same life style, portfolio is just a number.
Review of failures- when I looked most of the failed trades, could spot errors for many cases. Be it technical or emotional error plays a big role than blaming luck and all others.

Those were FIVE things I implemented from Mr. Jesse Livermore’s style of investing. The irony is he wrote the best rules after violating his own rules and consequences were heavy including death in last one. Few other rules in line will attempt in coming days.

You will be happy to know I could manage to cover two major milestone during this period.

One is I managed to recover my salary for 2016-2017 from value investing which I something was confident of before getting started.

Second came as a surprise, the speculation income between June 16-Oct 16 exceeded budgeted expenses for the year 16-17.

A new beginning , unknown territory….honestly I wasn't expecting much of a result. The quick turn around reminds me a very important thing, the significance of well wishes. Though it sounds rhetoric it means a benevolent for me, agree speculation is an art and science , an intellectual estimation but more importantly you need that extra subjective edge which can be only supported via well wishes, kindness, charity and philanthropy. Some of which outside my nucleus of competence that’s where so many nears and dears chip in with genuine feeling, love , regards and wishes. And I am more than confident I will continue to win the wishes going forward as well.

An expanding list of 700 plus email id in circulation reminds me how important people are, fortunately I have a lot of folks who criticise me on face and praising at back; the biggest symbol of well wishers!


(The Confused Consultant) #20

Next update

Surviving 1 year: swings, dreams and resolutions

There it goes, end of year 1 post job. Technically 15 days left out, I have trainings lined up for next 2-3 months. I thought this would be good time reaching to well wishers.

First the key learnings which may help others:

Overestimation: I had overestimated both good and bad, for example what will happen if my portfolio becomes zero, where do I go? On a mathematical aspect it could have been remote then , even now. Of course anything can happen! Now an example of reverse side, by Sep 16 the lady luck was smiling, only to get awakening in Nov 16 made me conscious that you can not over ride on luck always.
Overwork: this is one of problem I am yet to overcome. In real sense an investor makes money from execution and learning become continuous process. Everyone knows this, somehow it gives us a sense initially as long as you don't get money you work. I was terribly wrong, finish 10 tasks another 20 gets added and this has nothing to do with money making. I have done some pruning work, be careful if you are venturing out, you may fall into trap.
Over information: world seems to become permanently flat, pick a subject you will get all varieties of information; starting from literal view, objective interpretation, critical view to contrarian etc. This is dangerous in distorting your objective, many of them sound sensible and you can’t adopt all of them.
Over indulgence: With advent of social media and forums, we all have rights to express our opinions. A lot of times these opinions are stuffed with ego including our own and start affecting decision making process. Make sure , don't spend a lot of time on two way communication on social or investing or any other forum. Personally I found a lot of opinions may not be applicable to you and land up in plethora of debates. Rather create focussed work groups and interact frequently, if 20 people objective is aligned your learning would be enormous than jumping on a public forum without a substance.
Overly biased: one year looked to me world is all about investing and similar kind of activities. This means I missed the action in sports, movies or some where else. Every time I saw a swash buckling movie (which is unreal actually), next day my decision making was more robust.

A bunch of issues came and went away , I couldn't create a pattern why this happened and neither found them a permanent pattern. Perhaps those were tricks of trade.

Coming to value additions:

Behavioural finance: I picked from where left, lots to do still. Yet I had spent a enormous hours on behavioural finance, specifically blending them to:
while buying and selling
position management
expectancy

By the way investing or trading is 80% behavioural finance. I know many won’t agree, let them stay in their wonderland. If Ed Seyokota and Richard Denis couldn't convince people I am anyway too small.

  1. Multi disciplinary view: the great Charlie Munger called them network of mental models meaning use different subjects as physics, philosophy, mathematics, accounting etc to your own focussed advantage. What I could do:
    application of probability to position size including risk per trade
    survival barometer than CAGR
    additional business strategy experimentation

  2. Prototype: 5000 plus stocks, frequently changing dynamics; I realised if I have to survive then need to follow 80-20 principle. Developed a “one file driven” checklist which can be completed within 35 hours for a stock.

Lots to come, want to work on expectations investing, high growth valuation, performer patterns. The list is never ending, at same time need to bring sanity check through some non investment assignments.

Thank you for being there, loads of wishes.


(The Confused Consultant) #21

Next update

Financial Year 2016-17 (Update): Different ideologies with same biology

The door of year 2016-17 just closed behind though I forgot to check whether room became brighter than 2015-16. I always thought it is definitely as I have numbers, but on contrary thought may be yes or may be no.

A quick snapshot

Net worth increased by 32.43% YOY, does this answer question whether danger line got erased? Actually the danger line I created myself has become line on water. In other words I can fight more years with whims and fancies inside me, also you have to bear with my rants at least for a second even if you are deleting the mail without reading.

steady investment practice, able to see a correlation between money making and research: not yet there.
enjoyed art of speculation for especially second part of the year. Whether it’s stop loss, pyramid or crowd behaviour it kept me on hook.
Guru’s earthly departure left a huge vacuum, my current mentor has been instrumental bridging the gap.
Substantial cash holding through out the year, one time it was well above 85%. This resulted average 7-10 days off every month for a holiday!

Ok, what are the key themes then?

Fascinating world of behavioural finance

My mentor like to call “neural finance”, a combination of art and science ; add a further layer to behavioural finance. The gut and logic drives data repository inside brain to unlock something valuable, you may call it wealth, wisdom, good health or any other name you feel like. When you apply neural finance to investment a performance just shoot beyond imagination.

Neural finance picks the biases and prejudices from the concept of behavioural finance and apply right side of brain or gut as a decision making process. In case you are interested to know further happy to chat.

Three memorable personalities of the year

It was an eventful year, lots of excitement including speculation, roller coaster, Livermore’s giant dining table to JP Morgan’s deserted mansion. But if I have to sum up nothing beats out below three.

One: Ritesh Shukla, The new age investor

Bored with Titan, Shree Cements? Stories of how people created big bucks through Eicher or Ajanta Pharma? Heavy hand style of writing with bludgeon post success? Ritesh doesn't have them all, he is just a mid twenty guy working in a bank. For him investment began after push up rally of 2014. A fresh look to new breed of investor, I have interacted with him numerous times. Though he thinks I am a giant investor (why? because I own Shree Cement, Ajanta Pharma etc and proudly can reconcile my success to Munger’s mental model. More importantly I can communicate with all my ego on public forums!). Five key learnings from Ritesh:

50%-50% effort between pre execution and post acquisition. Meaning after you buy a share equal amount of effort is required, not necessarily events related to fundamental only but how to optimise and maximise return on capital.
Price and value relationship has changed forever in stock market, price is catching up faster than value.
market going forward will be more and more cyclicals with faster turnaround. Watch out for crowd funding explosion.
buying a company means buying a business; of course yes. But don't hallucinate that you are buying a position on board.
market data is source of information, use it to your advantage. Don't try to analyse why this price appearing on stock ticker?

Honestly my experience in stock market is 6-7 times more than Ritesh, I don't mind to accept this guy has long way to go. More so he came at a stage in my life when I was focussing crowd behaviour.

Two: Vinod Patrick, the new age manager

A big tattoo looks like Harley Davidson on forearm (after elevation I thought tattoo wont be added, I was wrong; this guy has a bigger one last week on Goa beach!), a French beard, a speed bike and so on. You must be thinking a developer, right? Well that is definition of Bengaluru, ask Mumbaikar they will tell you must be cranky copywriter working in advertisement or media company who have a habit of murdering white collar corporate ethics. Actually he is neither of them, then who he is?

This gentleman leads a pack of white collar and disciplined finance folks at a serious company who deals with equally serious customers i.e. Banks! Then how come such indisciplined character managing a bunch of disciplined guys?

The answer is one line only, stereo type is broken if you are someone like me who always believed, “ a finance guy must look like an umpire (no matter how colourful spectators and players are) and raise his movements of hands and legs directed by others”. Times have changed, leadership is not caged with rules and tight lipped soft spoken languages!)

Three things I picked from Patrick:

management people of listed company may not necessarily look like zombies. I promised myself, when I analyse my owned companies I wont care whether there is a tie or tattoo.
impeccable leadership comes from “leading a group”, not necessarily a principal player in group. I am searching for now manager in my companies who has posted pictures with employee on social networking sites.
charity, compassion plays a massive role in everyone’s life.

Though this guy yet to give a party, still I am forced to acknowledge what I learnt from him!

Three: Zubair Ahmed, the new age preacher

He is a preacher at a difficult time when society is divided across lines. So what’s so special about this guy? He is open for a conversation!

When I started working for victims of Hindu-Muslim riots I wanted to meet few religious sermons who can perhaps help us. After meeting few two people stood out (other one is a hindu priest) in our opinion!

Some interesting conversions I had with Mr Ahmed with pointed replies:

Question: what do you think about current state of affairs? Distrust, violence and so on!
Answer: All I can see is same world as before with better marketing tools and medium.
Q: Are you trying to be philosophical or optimist? Why cant we accept some of things have gone wrong?
A: Things were right and wrong always before as well. The way we look at things have changed.
Q: Can you elaborate further?
A: Violence is old as hills, it happened with Maurya dynasty, Roman or Moghul empire, even British expansion. What has been added is information being supplied in a refined manner through media.
Q: So you say we will be like this future? Doesn't it affect our existence?
A: Yes this will remain same, we existed for so many years; we will survive going forward for sure.
Q: Are you worried about youths currently? I mean so much hatred!
A: The world is taken over by capitalistic people who just look at return on capital. Crowd is an effective tool to earn return, in your language it is called behavioural finance. Destruction of human is added as cost of doing business, and weapons are ease of doing business. But I can assure you capitalist will continue to rule, they might call themselves something else. They were called kings and emperors earlier, some time company now ministers, speculators (investors) and business man.

I was not definitely not happy with last answer, indirectly it was a hint to me who is a small fish in capitalistic cauldron (as per his definition) is source of all these problems.

Despite of my annoyance for last line, I still agree with isn't we surviving for so many centuries? What is this fuss then all about? If you think its real and not blown out of proportions then who is going cut down that proportion? I guess you, me, us….

This reminds a famous line from Sting, “regardless of ideologies we share same biology.”