An early start in investing is really helpful. Not because of the power of compounding alone, it is also that you can implement the learning. I know, I know you will jump up and say ‘the past performance is not an indicator of future performance’. I agree, however having been in this ‘business’ since the 1970s (oops cheating, it is actually 1979!) which makes this the 5th decade of investing..let me tell you some of the benefits:

  1. You understand that the same portfolio cannot work: Portfolio management is a dynamic concept, but my first purchase of Hdfc happened in 1979, and it continues to be in my portfolio. Thank you Deepak Parekh, you have made the journey more than worthwhile. 36 years!! many marriages do not last this long. My father’s investment in many MNCs started in 1977 and still do continue.
  2. My first trade was for 50 shares of Ind Suzuki @ Rs. 32 and I used to trade frequently! The process of investing is learning about yourself. Learning to be calm when the ‘Sensex’ was introduced in 1984, or when Indira Gandhi was killed, or when there was an oil crisis, or when the government put a ceiling on dividends, or when dividends were made tax free (1992) or when Sebi was formed (1992 and we had great expectations), or when Harshad took the market to dizzying heights, or staying calm from 2002 to 2007. Like meditation, you keep getting better with practice. You know the price of being calm.
  3. History does not teach you the ADVANTAGES of asset allocation: Please remember asset allocation between 2 asset classes one with a CAGR of 21% (total return) and an asset class with 6% return JUST DID NOT WORK. If I knew the results in advance I would have been ZERO in debt instruments. However in 1999-2002 updating the PPF passbook was so satisfying, while one was bleeding in equities.
  4. Past asset allocation (or its history) is useless for future: The period that I covered from 1979 saw me start earning, etc. the next decades will see me retired (and worried about exhausting my portfolio) so I may react to a fall very violently..I.E. MY OWN LEARNINGS WILL FAIL ME – this is Maya! One day old age, decay and death will happen. Will I remain calm at 77? My brain does not know, my heart may behave differently.
  5. It allows me to smile when people say equity does not compound, and SIP does not work. Sure it does not. Show me the alternative FAIL proof, Fool proof method, I will stop talking about SIP.
  6. I learnt about sip from Suraj Kealey (now with UTI, in 2000 with Franklin Templeton) and have benefitted since that day. However, I have been and will be a direct equities person. I do not do it professionally because I have no clue how to charge for it.
  7. Past history of promoters has been an amazing learning, and my portfolio reflects that: Mnc, Tatas, Murugappa group, Hdfc, and a few individual stocks like Supreme, Hero Honda, Biocon, Asian Paints, etc.
  8. There are no rules: I made money in commodity stocks like Coromandel International and EiD parry: untouchable shares for most institutions, and HNI customers..saying it is not a brand. However commodity stocks need some trading.
  9. Could have bought Indica by selling Ta Mo, did not. Hopefully will buy a Jaguar! Oops will not, just saying.
  10. The collective energy of all the innovations, hard work of entrepreneurs, greed, desire, risk taking ability, ..of the promoters has created tremendous wealth in the economy, but I still feel the best is yet to come.
  11. Learning the investing process is good. If you do not know go to a good adviser and learn from him. People who have not done it, have no business hurting other people’s portfolio, I am seeing many such people.
  12. The Internet is not a great place to learn investing. Investing is a self discovery process. YOU need to learn, it cannot be taught.
  13. Risk Reward Ratio: When you take more risk, you EXPECT more rewards. What happens is completely different, there in lies the risk. It is simple only AFTER you understand.
  14. Cycles, trends, disruptions, political changes, will all happen and keep the market dynamic.
  15. Promoters integrity is the only thing that matters, good times will follow bad times. I stuck with Cholamandalam during its worst times, but have traded many times in that scrip.
  16. Equity may not compound (but dividend reinvestment will help) , SIP may not be perfect, but dammit, YOU do not have a choice.

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  1. Thank you Subra Sir, as usual great article.

    16.Equity may not compound (but dividend reinvestment will help) – can you confirm you are referring to direct equity, I.e., not MF route?

  2. Hi Subra,

    In direct equity, one has to pour through current and past ARs, then ARs of competitors, understand the business in and out, find out what can be the future triggers for the business, isn’t all this a pain, over and above your job and family ?

  3. I agree perfectly. Whether through direct equity or through MF (both are basically investment into riskier asset class but one direct and another through an investment vehicle which aggregates money from large number of people and use their expertise and charge a small percentage of that and give you a reasonably fair return – more than 15% sometimes touching even 20% CAGR figures for years together – say for more than 10, 15 or even 20 years is extremely huge numbers).
    I agree that “best is yet to come” and and “Investing is a self discovery process”.
    After doing all the analysis and leading to “analysis paralysis”, there is no doubt in my mind that it is the integrity of Management (read Promoters) who actually makes all the difference. You see in any industry comprising of large number of players, there will be one or two who would always stand out and give you an astounding return/results over a longer period because of the quality of Management.

  4. Good one Subra Sir!! Along with investing, selling is a key. The one who times this will master the art and complement the art of investing.

    I completely agree with Kamal Garg’s comments.

  5. “… I have been and will be a direct equities person. I do not do it professionally because I have no clue how to charge for it.”
    How about doing a paid newsletter where you share your opinion on various stocks. Given the unique voice you have in the personal finance blogging space, I’m sure people would be willing to pay to hear your years of experience translated into stock analysis today. I know I would…

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