'Would exit all positions by day-end': Zerodha's Nithin Kamath on how he, Nikhil Kamath made money amid 2008 financial crisis

Zerodha founder Nithin Kamath said that he and his brother and Zerodha co-founder Nikhil Kamath made money during the financial crisis of 2008. He credited Nikhil Kamath for his “phenomenal job” during that year. However, two years later, the stock broking industry faced the worst time as an industry, he added. 

“Around 2006-07 Nikhil joined me, he was 6-7 years younger to me. He had also started trading at 16-17 years. Around 2007-08 is also when I realised that Nikhil is a better trader than I am. I think you need some in-born skills for trading. Trading is like art,” said Nithin Kamath in the SparX podcast with Mukesh Bansal, founder of Myntra and Cult.fit. 

“Nikhil did a phenomenal job of making money in 2008. He was short on the market. We were day traders and the thing about day trading is that even if you are right, you are out very quickly because you are there only for a few minutes. We didn’t lose money that year, we made money,” said Nithin Kamath, adding that they would exit all positions by day-end and that they would “sit on cash”.

The Zerodha founder said that during those days he did not enjoy the phase of managing people’s relationships and money. “Everyone was like ‘oh what’s happening to the market and what’s happening to my money’. Today if you think about Zerodha being bootstrapped and not as raising money, probably that has something to do with it. I don’t have to pick anyone’s phone calls and don’t have to be obligated to anyone. In the 3-4 years I managed people’s money, I felt obligated. I couldn’t say no to anyone who had given me money,” he said. 

He said that around 2009, he was very active on the online trading communities and that he used to run some really big Yahoo Messenger groups as well as be active on trader forums. “I used to call myself different names in all these forums,” said Kamath, further adding that the initial few customers of Zerodha came because of that. 

Moving on to 2010, Nithin Kamath calls it the ‘worst year for stock brokers as an industry’. “In 2008 a lot of people made money because of the volatility but in 2009 the volatility disappeared. 2009-10 were really the worst years for stock broking as an industry. Back then when I used to talk about becoming a stockbroker, people were surprised since stockbrokers were themselves diversifying. And here we were trying to start a broking firm,” he said.

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