An individual Fundamental Investor, FI is a firm believer of Indian Growth Story. He is a guitarist who shares the financial wisdom through his personal twitter handle, @FI_InvestIndia.
Let’s get some insights about his investing journey.
Dhruv Girdhar, RichifyMeClub: First of all, I would like to thank you FI for taking the time out of your busy schedule and penning down your thoughts. Behind the Curtains is an initiative by RichifyMeClub to share the insights of the investing journey of Mentors, Investors and Role Models. Surely, our readers will gain a lot of wisdom after reading your story. Please tell us about your investing background and experience. When and how did you find that the stock investing was your cup of tea?
FI, Fundamental Investor: Thank you, Dhruv. Well, it was in 2006 when I was still completing my internship with a stipend of Rs.7K per month. My father has had the greatest influence on me in terms of Save First & Spend Later philosophy.
I still remember that special moment when he took my 1st pay-check, got it photocopied and parked the money in a Bank FD. With that, I began my investing journey by investing my whole stipend in a bank FD. And when I began my full-time professional career in 2007, I started investing more than 60% of my income in Mutual Funds.
I believe that in the early phase of the career, one must be least bothered about the returns. Saving money “Regularly” should be the Key. “Investing” is important. In 2008, when the markets collapsed, I was in my 2nd year of saving mode. I continued investing in Mutual Funds, undeterred by what was going on globally. I worked hard, earned more, invested progressively and stayed the course.
Then, I was introduced to the world of equity in my office. A few friends of mine used to play Options. Ironically, I was introduced to the stock market through Options. My first earning in the stock market was in a Call Option. And, the first loss I incurred was in a Call Option too. During my initial phase, I grasped a lot of beautiful concepts like Time Decay, Risk, Volatility, etc.
Besides, I used to read a few wonderful blogs and somehow, I could connect with all of them. In the next couple of years, I learned how to gauge businesses. I used to be fascinated by how we could own the businesses with a small amount of money.
I never shied away from getting in touch with Company Secretaries and asking questions at length. The discussions used to always be about the business prospects and its potential to grow in the future. I always believed that if the future is great, there will always be a room for returns.
During this time, I continued investing in Mutual Funds. I had bought a few businesses that I found cheap. And I find myself extremely lucky that I played many of them successfully. The last 5-6 years have been pretty fantastic and the chosen businesses have done amazingly well.
It’s been 11 wonderful years now. Many more to go, hopefully 🙂
Dhruv Girdhar, RichifyMeClub: 11 years of experience. That’s amazing, FI. What made you start your tweeter handle – Fundamental Investor?
FI, Fundamental Investor: In 2014, I was watching a YouTube video – Different Ways of Cleaning Stains. I found that, for every problem, there are so many people who contribute to the subject on the Internet by providing their views and solutions. That too without charging a penny. That very moment, I realized that I should share what I have learned from Mr. Market all these years.
Since I am zero in Technical and Chart Analysis, I started writing on Moneycontrol Board as “fundamental_investor”. It’s a heavenly platform where I could connect with thousands of investors. I was inspired. I started connecting with people on my email (email@example.com). Responding to their emails turned out to be a delightful experience as I personally felt so satisfying. And, I still try to respond to emails every night before going to bed.
Later, I started penning down my thoughts on my website – http://www.fundamental-investor.com/ Subsequently, I started a free Google Group where we used to have a lot of awe-inspiring discussions. Many wonderful people who really wanted to learn and share, joined the group.
A year ago, in March 2017, I joined Twitter and started my handle – Fundamental Investor. I find this medium really effective when it comes to connecting with thousands of people instantly. It’s an amazing feeling to connect organically with my friends and it feels really great to see the likes and retweets my thoughts get. Reach couldn’t get better than this.
I am glad to see that when I started with a single thought of contributing to the world in some way or another, nature ensured that all this gets fit in place effectively. We all know something. We all learn something!!!
Dhruv Girdhar, RichifyMeClub: Amazing. I happen to know that you organize various investors meet at different locations. When and how did you come up with this beautiful idea? Do you charge any fees for such events?
FI, Fundamental Investor: Earlier, I used to interact with everyone only through emails. I was in touch with some phenomenal investors, bloggers, technical geniuses, and newbies as FI (Fundamental Investor). My dear friend Amit Gadre, happened to visit Bangalore to meet his clients and well-wishers. When he decided to visit my city, we planned to have a “No Agenda Meet” exclusively for people who have been following both of us for a long time.
It was supposed to be a Free Event. Since more than 100 people agreed to attend the event, we had to book a big hall well equipped with mike and sound system along with snacks arrangement. We asked everyone if they could contribute a small amount to cover the expenses, for which everyone agreed. It was an amazing experience. Time just flew by in the company of genuine questions and people. We literally lost track of time. It was an icing on a cake.
Amit & I are planning to organize such events in future too. Those will be a “No Agenda” meet. Just discussions with genuine people where all are welcome with their wonderful queries.
Dhruv Girdhar, RichifyMeClub: That’s great. During your investors’ meetups, what do you generally talk about? Is it about the individual stocks or the overall investing strategy?
FI, Fundamental Investor: Investors’ meets are usually open. Since the number of attendees is on the higher side, we want every question answered. Every point put across, we want everyone to come up with their thoughts. We don’t discuss the individual stocks but the attitude behind it.
Personally, I have created all my wealth simply with the right attitude of saving. Of course, we need to understand the underlying business, its valuation, growth prospects, etc. But, unless we hold a business for at least a year, we won’t be able to gauge the pulse of it. Hence, the holding intent while neglecting the noise and a deep passion to understand the business must be there. Without all this, valuations are of no use.
Besides, we tend to focus on long-term wealth creation and hence, we talk about it in our agenda-free meetups. I usually don’t talk about anything which I have not experienced personally. But yes, it’s mostly about strategy and most importantly, what NOT to do. We talk about the things that didn’t work for us.
Dhruv Girdhar, RichifyMeClub: That’s nice. Besides investing, what else do you do?
FI, Fundamental Investor: Investing is a process where we don’t have to do much. Businesses and its dedicated management team work for us. And we need to allow them to do so. I am not saying it just out of the air. It’s true. I don’t keep on hopping in and out of my positions easily. I am extremely stubborn on that front. My friends wonder how I can sit tight on the same boring businesses for years.
Professionally, I take care of the operations of one of my company’s customers. My wife and I have been a part of a spiritual organization for the past 15 years and hence, we tend to witness our lives from a different perspective. Recently, we had decided to homeschool our son all the way along with many other wonderful parents and their children. That’s a wonderful opportunity for us.
We aren’t fond of running a rat race and hope to provide enough exposure to the road less traveled while working with a lot of parents. Being a music lover, I play Guitar and sing Bhajans in temples. The energy is simply fantastic. We travel a lot across India and the serene Mountains. We love the simplicity which India offers across. Every single day, we live a fantastic life.
Dhruv Girdhar, RichifyMeClub: You are doing a good job with a spiritual touch. That’s nice, FI. What mistakes did you commit during your investing journey? What can an individual investor learn from those mistakes?
FI, Fundamental Investor: Just like any other investor, I did commit some mistakes during my early stage of investing journey. And I have worked really hard not to repeat them. Thankfully, I never lost hard in over a decade. And I hope, not to 🙂 Some mistakes that I had committed are:
- Holding on to a business during bad times but selling it just before the party starts.
- Stressing too much on price movements has been an early mistake for me. I sold some businesses due to a fall in stock price (even a drop of mere 5%).
- Once upon a time, I used to believe in “Opportunity Cost”. Now, I don’t anymore.
- I had bought a few stocks at higher prices since I didn’t understand that market discounts positives early, especially in non-compounders. And then, I had to wait for more than 2 years to sell it at the original price.
- Few times I thought that having “exclusive” information is an advantage. Later on, I realized that it was a curse. Too much information is injurious to research.
- Another huge mistake was that I didn’t book my losses. I held on to some businesses, which were in losses, for more than 2 years. I should have booked losses in the initial years and adjusted to the short-term capital gains. I had some businesses which I had sold either at the original price or with a slight profit after 2+ years and hence, couldn’t leverage on the taxation benefit.
Dhruv Girdhar, RichifyMeClub: I am sure one can really learn from those mistakes. Moving ahead, when it comes to investing, who is your role model?
FI, Fundamental Investor: I have hundreds of role models. I don’t read any books and hence, everything I learn is from the people who are around me. During my early stage in the stock market, I had learned that I didn’t have to be the Jack of all Businesses. I have tons of friends who are just a call away when I have any questions. Each of them specializes in a sector or a strategy. They all are my role models.
Besides, I have watched a few interviews of Warren Buffet and I simply love his thoughts. During my journey, I must have owned at least 40 businesses and I am inspired by all the management that run my businesses (ex and present). I loved talking to them & learning from them. I love watching interviews of the people who have built the businesses that I have held all along.
On Twitter, we have so many amazing investors who keep on sharing their thoughts on a regular basis. They all are my role models because they share what they have experienced.
If we have an open eye, we can see the best in everyone around us.
Dhruv Girdhar, RichifyMeClub: That’s great. How have you transformed your investing strategy since the day you started investing?
FI, Fundamental Investor: I believe, right from the beginning, returns were not my criterion. I find myself really lucky that I got phenomenal returns. Even today, I believe that the businesses which do really well, will compound our money by leaps and bounds. In my investing journey, I have taken some calculated risks and played it big. I was an allocator. I knew the businesses to the dot. I knew what was available in the public domain and monitored it like an Eagle.
I have stopped my long-term investing approach in cyclical businesses where a natural calamity can play a crucial role in the earnings. Besides, I stay away from such businesses where the announcements are made strategically to move prices up and down.
I do play a lot of positional trades (3-6 months) with a lot of study and caution. And I hardly lose on them. But more than 95% of my portfolio is locked in the long-term compounding machines which can grow very well in future.
I believe capital is everything. If we lose it, we have nothing to compound.
Dhruv Girdhar, RichifyMeClub: So, the long-term approach is the key to compound money. That’s nice. I am sure this advice of yours will surely help investors to choose good companies. Going forward, what do you think will be the challenges faced by an individual investor?
FI, Fundamental Investor: Today, I believe that we are in a world where the information is available in an excessive amount. Even on social media, there is too much distraction. There are too many things that are reported and as a consequence, the prices get too volatile. Going forward, I believe that the people who understand the businesses really well will do much better and be more peaceful. Investors will sleep better than the speculators.
Moreover, the market is extremely mature currently. Good businesses are being bought by the smart investors, especially when overall markets face some correction. And if we are not mature enough we won’t be able to make the right decisions.
There are millions who are born with high Intellectual Quotient (IQ). But a very few possess high Emotional or Spiritual Quotient (EQ). And this is going to be another challenge for investors going forward. I believe, if an individual investor gets his/her emotional side strong, investing will turn out to be a joyful affair.
Dhruv Girdhar, RichifyMeClub: That’s correct. You also happen to believe that one should look at the individual stock, not the broad market. How do you suggest that one should find out a company worth investing in the haystack?
FI, Fundamental Investor: I am a strong advocate of the fact that in a market correction, the junk stocks get pulverized first. The consistently performing stocks face correction too. But when the market recovers, the latter bounce back really quick.
There are numerous investing strategies. We can look for the companies which are small, determined to grow and ready to capture the market share. One can also look for the companies that are leaders and have a huge market opportunity to cash upon.
One can think of the companies that have been doing badly due to the unfavorable conditions but doing better because of structural changes. We can also choose the dividend-paying growth companies. One can pick the companies that are working in a niche segment and have a huge edge over the peers. Else, one can look for the companies which have built a huge entry barrier.
Precisely, it’s subjective. What works for me, may or may not work for others. Before we move into the market, the questions that we need to ask ourselves are – What am I doing in this market? Am I an Investor? Am I a Trader? Can I spend enough time every single day sitting in front of the screen? Or should I just invest with a long-term perspective? What’s our risk-taking ability?
We need to know the reasons behind our entry into the market. What is it that we really need? There are thousands of businesses. As I had said earlier, we need to invest in a business which we can understand and falls under the circle of competence. At least, we must understand the basic things like the product it manufactures, its direct and indirect customers, its reach and the potential to grow in the future.
I have played in all kinds of businesses and I think each investing style has its own pros and cons. So, the moment we understand our strengths, we will find the right business in the haystack. It’s all there. Believe me, if we search, somehow, we will find it.
Dhruv Girdhar, RichifyMeClub: That’s great, FI. I am sure one can really use one of your aforementioned approaches to start with. And one last question – What books do you believe that one should read to develop a good investment philosophy?
FI, Fundamental Investor: Many people read. A rare few implements. Be those rare few.
Dhruv Girdhar, RichifyMeClub: Wonderful, FI! Thanks a lot for being so truthful about your investing journey and sharing the acumens. I wish you all the best in your future undertakings.
FI, Fundamental Investor: Thank you, Dhruv! Thank you for this incredible ingenuity. I enjoyed reading your conversation with Amit, Midcap Mantra. And I am pretty sure that going forward, I’ll get to read many more interesting stories through this amazing interview series. Thanks a lot once again.
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