What was the problem you were grappling with?
The biggest challenge I faced was shifting my mindset from trading to investing. Trading and investing are like the North Pole and the South Pole—completely opposite. Initially, I would make money from four or five trades, only to lose it all in the next one. I couldn’t save; it was like playing a game of snakes and ladders where the snake always bit me at 99. The prospect of making quick money lures many into trading, but investing requires patience. Preparing for investing instead of trading was the toughest hurdle I faced.
Whom did you approach for advice and why?
In my early years, I met an elderly investor, S.P. Modi, in Kolkata, my hometown. He was solely focused on investing in stocks, while I was purely a trader. He spent a lot of time thinking and reading newspapers. I had the opportunity to meet and spend time with him, often listening to him intently. Since people rarely disclose why they buy and sell shares directly, I observed him daily, trying to glean insights from his conversations. By observing his lavish lifestyle I also tried to move away from trading and become an investor. What was the advice you received?
In the initial stages, I struggled to even read balance sheets. One piece of advice that came from Modi was, “Whenever there is a sectoral turnaround, pursue the sector leader.” That guidance proved to be invaluable.
How effective was it in resolving the problem?
I adapted Modi’s advice to my own approach. I believe that knowing yourself (KYS) is more important than knowing your client (KYC) in the stock market. He advised me to chase the sector leader during a sectoral turnaround. However, I preferred to choose laggards. I looked for smaller companies within that sector and evaluated whether they could grow faster than the top players. I believed that while leaders might multiply by two or three times, laggards had the potential to multiply by 100 times or more. If I add dividend of one of my stocks, then the return is 16,000 times.