Well, it was like love, I never knew when I fell in love with this subject. It actually started, when I was in 7th or 8th standard, there used to be some news on markets & Dollars. I always wanted to know whether Sensex moved up or down to impress my Dad, without ever realizing what did sensex mean. That was my first taste of the financial markets.
After SSC, I shifted to Mumbai; I lived with my maternal grandfather. He owned many Bluechip stocks, mostly of original prices. What he wanted was dividend from that stock. I started questioning him the basic of stocks and its relation with the dividends. He told me that just as you become a proprietor you own 100% shares, and when you own a share it might have different share of business ownership.
During that time, the markets had suddenly shot up and KP had made name of himself. I was growing popular amongst my friends as I boasted the name of Infosys and also prices of K-10 stocks. But then, the dotcom bubble busted (I literally came to know the meaning of “Bubble” in stock terms; my eyes popped out when I saw all how these stocks were dumped and the prices being hammered mercilessly !!). My grandpa lost some of his investment, not of the earlier stocks but all the stocks which he had bought on the Broker’s recommendations (I still remember the scrip’s name-Websity Infosys-The broker promised that this would become the next Infosys, who cared what the company does, whether it’s profitable, and at what price it’s available at?). But who wanted to miss out the bus in IT. Even my grandpa, who was quite conservative and asked questions on reserves and profits, became greedy.
This was the first time when I started to know about equity research. It was my 2nd year of graduation. I came across the stock, Infosys, which had become so popular in the entire neighborhood. I came to know that great companies are made by great entrepreneurs like Narayanan Murthy and Azim Premji.
I read the book written by Gita Piramal, “Business Maharajas” which helped to understand the mechanics of good management. Also, during this time I came across the book “One up on the Wall Street by Peter Lynch”. At this point, I asked myself whether I can have a career in Equity Research. But I never knew what qualifications did the equity analyst have? What I knew that Peter Lynch had a degree in management, so I decided to pursue the same.
I learnt more about compounding, IRR, NPV and stuff during these days. But most importantly I learnt more about Warren Buffet, his ways of selecting the companies and most importantly basics of investing that, “Value of an asset will determine its return”.
In search of value I undertook a job in a research KPO, but it was a process oriented outfit where I came to know more about sector specific things, and earnings models. I believe even though in equity research there is compulsion in predicting the earnings, it’s always hard to do practically.
Equity analysis is quite challenging field and it’s the markets alone which decides whether you are right or wrong over the period of time. One cannot give reasons of team not performing, systems not working as the person alone is responsible for the results.
(Markets are quite irrational for short term, but in the longer run price always tend to follow value).
It’s the subject where one cannot learn single-handedly. Warren Buffet learnt from Ben Graham (his mentor, I still need to find one like him) by working there. He evolved as an investor over the period of time. He made equity research a career which is a mean to achieve an end i.e. to become the successful investor by finding good undervalued securities. So, my motive is also to become a successful investor by applying the sound equity research process, making mistakes (of course, quite sparingly) and earning decent returns……
