I was talking to one of the gurus of value investing recently. He has actually created wealth for a lot of people and of course for himself…I asked him some questions..some stupid questions too..but I am not writing about them. After all I have not done any course on value investing.

Here we go….

You sound happy when the markets go down, is it true?

Yes it is. I am just 60 years of age and am still investing. I guess I will be investing even at a later date. So I celebrated the fall of Sun Pharma and bought when prices dropped below 500 and Indigo when its price dropped below 1100. These are just indicators, but yes, I will turn a buyer in sugar ONLY after some more blood letting happens. I am in no hurry to buy. Face it, if you are a buyer should you be wanting the prices to fall or rise? Simple no?

Is the market high or down now in June 2018?

Well the market is neither high nor low. I can see pharma as a good industry to look for bargains and BFSI as a good place to look for over priced candidates to sell.

You never play the ‘shorting’ game. Why?

Well in India there is not enough liquidity in the Futures for even 90 days. My only recourse is to take shares on rent. That market is not well developed. Also the political atmosphere is not so great. I would have happily gone short on the ADAG shares – almost all – but there is some protection because of which at least some of his companies are not falling. Also like in investing I would like to take 3 year views on my shorts, not 30 days. Its almost impossible for me to take such a short view.

Recently Cummins did not come out with good results..are you still holding the shares?

Yes of course. I have a small concentrated portfolio. I have been holding Cummins since it was Kirloskar Cummins – which means in the 80s. One poor result does not matter. In fact I have been using such opportunities to buy many shares. Cummins has not fallen enough to trigger my taste buds, but I did pick up a small quantity and have since sold that trading position. My investment position stays, and stays strong.

What is one bit of advice that you have for new investors?

Remember two things in the market. One- market will be volatile. It is not new. You need to have tremendous meditative skills to sit tight when there is a tiger sniffing at your feet.

Don’t lose money. Remember even companies like Apple have had a near death experience. Tata Steel, Tata Motors, have also gone through this.

I will not name the industrialist, but he rescued ME from a near death experience. If he had not, I would have been dead by now. I had gone short on his share and he had bought. I just could not get enough shares to cover. I had also run out of money. My most important learning was – never ever run out of cash. Another learning was don’t take such a huge position…that it burns you.

What do you mean by losing? I have seen one share in your portfolio fall by Rs. 183 crores (23% fall) and you did not bat an eyelid. In fact your analyst told me that you even had a buy order at that level but did not get executed.

Yes I remember that position, and let’s not name that share! You remember I took a loss and closed my position in another entertainment company? (again not naming them because the promoters are in the market looking for money). I bought that share from 120 to 200. Then when I saw the numbers and the order book…I just panicked and sold off everything.

When I say “do not lose money” I mean do not get carried away. In a rising market there are many trading opportunities. We both know that. 2016 and even 2017 were such exciting years. We did make a lot of trading money. However I did not touch my investing portfolio much. Yes an occassional sale did happen, but not really much change in my investing portfolio. In fact I added Indigo, Sun pharma, Hdfc, – maybe at higher prices than what is prevalent in the market today. When I say “don’t lose” I mean as a batsman you should know where is the off stump.

part 2 will follow…not sure when….

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  1. Holy cow…. one share in the portfolio fall by 183 crore…. and still he is alive- maaaan he should be having a heart of steel.

  2. Maybe you should preface this by defining ‘value-investing’. From what I just read it seems to be a little more of the usual value/growth/garp that most people here do.

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