This is the third part of a three part interview of fintwit guru – Venkatesh Jayaraman.
- About Venkatesh and his passion for Investing
- How his investment journey began
- His Investing methodology
- How he learnt and keeps learning about investing
Part 2 – How Venkatesh manages his risk profile
Part 3 – Venkatesh Jayaraman’s biggest learning and message to fellow investors
My biggest learning from investing
I wish to record my thoughts on a related aspect through your interview.
Success or big changes in our lives do not come from one advice, one learning, one activity or reading one book. It is a series of such actions or advice or learnings which are inter-related is what brings success or the big outcome. As an example, to protect oneself from a harmful virus, a few steps below would be needed:
- Wearing a mask when going outside
- Social distancing
- Washing hands
- Are a few and the list would go on
If one seeks to pick one most important activity/caution will prevent the virus…leads to ignoring other factors and eventually leading to get infected – The purpose to protect is defeated.
In similar lines, the approach of picking one best idea or one learning or one advice would not be an ideal one. Try to get all the factors and line them up on priority or the ones having a big impact. Let the reader decide which fits his/situation. In this complex world, things are inter-related and inter-disciplinary. So, can’t see one aspect in isolation to others.
Below are the 4 biggest learnings from my mistakes.
|~75% exposure in Realty like Unitech, Ansal Properties, Parsvnath, Omaxe etc. Most were having high debt and badly butchered in the 2008 downturn.||No over exposure to one sector
Avoid hot stocks /sectors
Avoid companies with high leverage
|Before entering the game, understand the rules.
In 2008, I was just buying whatever names came up in TV or discussed by my friends and media
|Investing is a game of wealth creation.
Understand the game well, its rules, pitfalls, the knowledge, skillsets and various knacks to succeed before starting the game.
I had no business in investing, if I could not do my own analysis and make decisions
Investment based on names from social media or friends or television is not a strategy for success – By this strategy, have you learned anything?
|Sold out very early post the market movements in April 2009 (After the election results). From there on markets gave a very huge return for the next few years. Many of my sold picks rose by 3-10x!||Timing the market is not possible consistently and is a random strategy for success. Time in the markets is possible, and a definite strategy for success.|
|The biggest mistake, not learning from our own mistakes and repeating the same mistakes||Why would me (or anyone) not learn from their mistake?
Starting point is to first acknowledge a mistake has happened, only after which the mental doors open to identify cause of what went wrong
We forget our mistakes and lessons soon
To avoid that, document mistakes or learnings from past investments in an investment journal
Over a period of time, it becomes repository of knowledge
This helps us to look back the past and learn from our own mistakes
What Goals was I able to meet from Investing
My Dad came from a challenging financial environment and started his life as a Technician in a TVS group company. He had in mind all the pains he went through in his life financially and made sure that I don’t go through the same.
Towards that he has taken care of all my basic and discretionary needs right from my younger days and continued even for goals like marriage. So, most of the big needs were taken care. The need for me helping my parents is out of question, as they are sufficient enough to take care of themselves.
In terms of starting a business… Yes, in a year or two planning something but that would be asset-light and does not need much investment.
So, which financial goal am I investing for? The only goal, I invest is for achieving Financial Freedom, which I am close to. After which, I will keep myself busy by starting a consultancy in future.
My advice to fellow investors
Spend less, save more, start early, invest regularly, have discipline…all such advices are there in tons from many social media influencers. These are simple to follow and there is nothing more for me to add on this. This being simple, still many are not able to make the cut. Why is it? That is where, I want to share two advices:
1. Do not Procrastinate:
- Everyone has all the information, tons of advice are available from many social media influencers
- Every information you want to know or the topics you want to learn is available in the internet
- Many do not take the efforts to do act on the information and “Just Procrastinate”
- The more you delay, the greater number of years of compounding you lose
2. Make a Financial Plan:
- In our professional life, we make project delivery plans, to a daily level and adhere to it and do everything needed to meet the dead lines
- So, planning is something that we know and do…But unfortunately most them do not make such planning in their financial life
- For a beginner, this is the right time to think and create ‘Your Own Financial Plan’ from the month they start earning
- Have a proper financial plan with the minute details at least for the next 5 years and stick to the plan, whatever comes across
My views on other aspects of investing
1) DIY Investing:
- DIY investing is not about investing money in stocks that come in media or social media
- You own the process end-to-end i.e. analysis and decision making (Both to buy and sell)
- If you are buying a stock or selling a stock, your thought process must be clear as to why you brought a particular stock or why you are selling it.
- DIY Investing would cost you time and money (apart from investment money) in getting knowledge – Give both of it liberally
- Spend money and time in good books and investing related workshops
- If you do not have the needed knowledge or time, best is to stay away from DIY investing and resort to Mutual fund or PMS route
2) Finance Planning:
- Finance planning is seen as an expense which is actually a lifelong investment:
- Here I am mentioning about Financial Planners who work a plan for you and not sell any financial products
- I am not mentioning about financial distributors, who sell you only financial product – Many are in the guise of financial planners!
- Getting a good financial planner is difficult, but not impossible
- In a real estate deal, we shell out a x% as commission to brokers happily, in a restaurant, we pay 5-10% of the bill amount to waiter for his services.
- Same is for financial planning – Find the right person, take his help and pay for their services
- Do not merely read for completing a certain number of pages or books in a period
- This is completely a flawed approach
- Read something which you will help you in some way i.e. Career or investing
- Even if you read 1 chapter, see what action items can be implemented in a life, work out an implementation plan and stick to it
- This way even if you read only one book the whole year, understood and implemented in your life…that benefit is much bigger than reading 100s of pages a year, without implementing and eventually forgetting the reads in a few days.
About stocks I track:
As a personal restraint, I don’t discuss stock with friends or social media. To answer what I am tracking now…is to understand:
- What new technologies and services would be required in the new normal (I plan to share it as a video series in a few days) – This could have a long runway in the coming years
- IT and Pharma sectors did not do that great in the last few years. In the current crises, would these two sectors gain?
- Particularly given the fact that the IT industry was running from home, despite the primary and secondary economy was completely down
- Will the IT industry gain from business opportunities in the evolving new normal i.e. Contactless and digital world?
- FMCG sector had a long run in the last few years, would this continue in future?
Thanks to you for the patience in working with me for this interview. Good luck to all investors.