Moving on to perspectives from a trio of avid practitioners/hard workers/thinkers among the VP Community - Gaurav Sud, Abhishek Basumallick, and Yours Truly
Abhishek Basumallick - is probably the most process oriented guy I know among the VP Community. In the initial days, I used to wonder at his ability to stay rooted to the Basics - when I used to start salivating at seemingly mouthwatering (to me) prospects . He helped me a lot in maturing as an Investor. He was the first guy I know who worked religiously in maintaining a LIVE Checklist document âŚright from the start !
Wonderful presentation Abhishek, by far the best slides (canât say about presentation) as far as Iâm concerned. Youâve surely actively thought long and hard about your investment philosophy.
Loved your quote about us being the culmination of all our past experiences.
You mentioned that above Nifty P/E of 25 you would sell. According to the plan, would this be incremental or in one shot? Would help if you could share your experience from past cycle(s).
You put a question mark for Edelweiss. Is that because of the lack of rerating triggers (till business units are held under 1 umbrella), or the cash guzzling insurance unit? I sold off after realizing I couldnât understand the business dynamics well enough and had mostly borrowed conviction - cloned RJ.
@basumallick - Great content and slides indeed. Easy to notice the wealth of experience and some great nuggets of advice for me to takeaway.
Few questions-
Love the idea of a personal checklist which includes past mistakes and behavioral biasesâŚI donât think you can go a lot wrong if you go through that checklist to objectively analyse each potential investment (and refrain from telling yourself this time itâs differentâŚhahaâŚyou got the behavioral biases covered as wellâŚbrilliant)
So the question is, donât you find it way too time consuming to analyse each idea using the checklist? I just go through a basic checklist to take an initial position and then deep dive to understand better. Obviously, my way is not the bestâŚbut Iâd be seriously turned off to spend so much time to reject 90% of the ideas.
Sell Idea - Headlines in non business daily? I understand that the markets may be reaching a bubble at that point, but isnât it too simplistic a view which is not based on hard facts? Surprising for me that youâd have this as one of the sell criteria when you use a personlised checklist before investment.
Your take on Sintex Industries? See youâve mentioned it as a possible beneficiary of lower interest rates and also shared itâs curious case. Iâve been adding my position after every quarter results over the last 12 monthsâŚbut now itâs become 25% of my portfolio. And reading that Tacitus phrase just scared me now, considering what happened in middle of 2013.
Abhishek, Thanks for sharing your prudent investment journey. It was a great mix of intellect, experience and process of investing. Great to read your one liner gems like
"Over time I have realized that my mistakes have come from not doing the basic stuff well."
âManagements are as much under psychological influence as common people.â
âGiven a long timeframe, all businesses are mediocre businesses.â
Great slides. Thanks Abhishek for sharing with all of us. Sometimes as Donald mentioned we jump too early at âapparentâ mouthwatering prospects; however without sufficient focus on risk and position sizing the downward journey can wipe out years of hard work.
Also the point of focusing on Keyman risk is critical as you have mentioned and is often ignored. Investors in Cera experienced that first hand.
I recollect Gaurav Sudâs mention of a 50% portfolio position being wiped out 90% in the 2008-09 meltdown. We tend to ignore the risks during good times when everythingâs up and rising.
The personal checklist is conceptually great but is very very difficult to follow diligently at every instance. Getting to do the simple basic things repeatedly with discipline, makes a world of a difference.
I think @Donald is being overall modest. I donât think I helped him much at all, in fact it was more the other way round
@chintans - Selling in my opinion should be always incremental when it is based on macro factors. It should only in be one shot if there is a problem with the specific company one is invested in. Like for example, starting in 2006 most people could figure that markets were getting overheated but if you had sold in Q1 of 2006, they would have missed a lot of the wealth creation in the following months. You never know if the market is going to top off at a PE of 25 or 30 or 40. So, the prudent thing to do is to keep invested and keep moving to cash beyond a certain point. For me that point is a PE of 25. That is when I seriously start thinking about selling a significant percentage of my portfolio (above say 30%). And for me that is a lot. I am usually 100% invested at all times.
For Edelweiss, its a complicated business to really understand very well. They have their fingers in a lot of pies. That is why the question mark. But, I think it is worth spending time to understand the business model for the company if not for now but for the long term. One can be ready for later.
1 ) How many stocks do I really need? 15-20 for my portfolio. Why canât I spend 1-2 weeks going through a checklist when I am putting 5-10% of my networth in something? Also, over time & experience, the checklist comes in at the end of the process and not the beginning. How many companies go through my basic study & understanding - not more than a handful in a year.
Selling is a very difficult problem for me. So, I have tried to keep things simple. Plus, this is an anecdotal evidence that I saw both during 2000 & 2008 crash. Look at it even now. Have you seen a single headline in the last 3 years about Sensex in any non-business daily on the front page? When it comes and becomes persistent, it is definitely time to be very cautious, because then the herd will come ⌠to get slaughtered
Sintex is a risky but potentially lucrative bet. A lot of things need to go right and similarly a lot of things need to fall in place. But I am invested, so keeping the faith. But I would not allocate 25% of portfolio on a stock like Sintex.
Agree with the non-business-daily-headline-about-sensex metrics. I remember late 2007 when Times of India used to carry headlines like â20K Captured!â
â˘Internationally, JOCKEY underwear is NOT a premium product - Personally I think that is the main USP. You can either buy CK or Tommy in INR 900-1500 or buy Page in INR 200-500. Just like Royal Enfield Bullet Vs Harley, Norton and Victory Motorcycles.
â˘No perceivable moat (!) - Agreed, but currently there is no competition.
â˘Questionable market size - Agreed - This worries me - Not because it might be overstated - but because it might be understated (with no empirical way to measure it in india).
â˘The growth music will stop, I just donât know when. - That is true to any business.
This was an example of my mistakes And some reasons which stopped me from buying Page. This was that because I had seen Jockey in Walmart, JC Penney etc in US as a mid-level brand, confirmation bias pitched in in my mind and stopped me from buying & holding onto Page
I was floored by your presentation on blockchain and disruptive technologies. The use cases you described are all gamechangers and will change the world of businessâŚ
Disruptions coming our way - Valupickr summit Goa 2017 is an eye opener.
Can you please share your email and contact coordinates. it would be a great learning for me to talk to you.
Congratulations Abhishek da⌠well deserved !! It was fascinating to know that we are similar in age and profession, and yes the similarity ends there :), your today is my tomorrow of dreams :). Your story is inspiring to make us work that much harder and keep improving our journey. Congratulations and thank you for sharing knowledge with others so selflessly.
Very well deserved @basumallick. Congratulations! I especially like your long term orientation and at the same time your willingness to try out different approaches. I look forward to your well curated articles that you post on VP and read them without fail. Having achieved all this while holding on to a full time job is truly phenomenal. Excellent stuff!
. He helped me a lot in maturing as an Investor. He was the first guy I know who worked religiously in maintaining a LIVE Checklist document âŚright from the start !
