Author Archives: ZerotoBillion

This has been the best Diwali season in a long time, both for the nation as it comes out of a long drawn pandemic and for me personally as it marks another fantastic time of festivities at home. No wonder it remains my favourite time of the year with full blown crackers and lights.

I’ve been a bit quiet here for the past couple of months and for good reason. One, nothing really has happened in the market which nudged me to come out and voice my opinion and two, my investment philosophy requires long periods of inactivity to let the noise drown down and stocks return to their rightful prices. Like I always joke, I still own the same ten stocks as I did last year and they continue to flourish in business so there is nothing more for me to add.

However, this Samvat is special and requires attention. The world market is slowly waking up to the India story with our market outperforming every major market by some distance, especially the US market which is in the grips of a vicious bear trap. Meta is down to its 2015 levels while major tech players which led the last boom to unprecedented levels falling by the side, down over 50-80% in most cases, except barring an Apple or a Microsoft down a bit less. Exxon and Shell are back to making record profits in a world facing severe energy crunch. Europe is in a momentum of reversals, lumping from energy crisis to migrant crisis and rising inflation. India remains the beacon of hope and prosperity.

We all witnessed what a terrific festive season it was. People have bought cars, mobiles, gold, other discretionary and what not in record numbers. One study cites that Indians bought over 19000 crore worth of gold on Dhanteras alone. I myself witnessed empty car showrooms with even the demo car being sold out. Hotels are booked for the entire upcoming season with prices skyrocketing. The Indian consumer is back with a vengeance.

Apple just announced record sales in India. The UK is dying to conclude a free trade agreement with us and King Kohli is back in full form! What a time to be living in India

India is on track to become the third largest economy over the next five years and this is the beginning, not the end of what is likely to be a tectonic growth story with almost 20-25 Trillion Dollars of economic growth in absolute terms over the next generation. This country will grow from a $3Trillion to $25-30Trillion and the world around us is going to witness India taking its rightful place in the comity of nations. So how bullish am I? Hell yeah, 100% and some more!

Anyone who is likely to bet on this story is going to experience life changing wealth and as I’ve narrated in previous blogs, Indian consumer and financial companies are going to grow from $1-5Billion market cap to $100-500 Billion market cap and more. So the only bet one has to take is India. Pick your stocks, hold them for the next decade and relax.

Easier said then done, right? It is hard seeing your stocks do nothing for a month or even a year while something you didn’t own or sold out goes up and above. Well, investing is simple but not easy. You’ll see yourself massively underperforming and suffer from FOMO but eventually, when the rising tide is itself going to be so high, all boats will be carried afar!

One thing we Indians must be wary of is this professional naysayers mafia. They’re mostly people of India origin/ NRIs/ left bent self anointed custodians of public intellect who have a vested interest in keeping India poor and divided. They’ll make you defensive for being Indian, for celebrating your religion, your culture, your identity. They’ll call you names, ignore you, hound you and label you as fascist or question your credibility for everything. Well, this is nothing new. The communists labelled anybody who questioned them as Nazi and Fascist and the ecosystem was such that they hounded people and made them irrelevant.

Not anymore, Sir. Be proud of your Indianness, take pride in your culture, follow your tradition and embrace your identity. We’re a nation with five thousand years plus civilization and were thirty percent plus of the world GDP in the 1600s. Today we’re just around 3%. Over our lifetime, we’ll reclaim most, if not all of it and this doesn’t suit a lot of people’s agenda and livelihood. They want us to fight among ourselves and not focus on the real task at hand.

Be wary of people who can’t get over the fact that they’re not deciding who’ll be running India and in a way of their liking. Steer clear of people whose only ambition is to secure a place in a government led by someone they find convenient and will thus, confuse opposing a government with derision of the nation. You may choose to vote for anyone, you must be a proud Indian.

So on this occasion of Diwali 2022, let me wish all of you a happy and prosperous new year with loads of wealth and good health.

PS: Donald Trump is likely to be back on Twitter! It’s going to be fun 🤣

This has been a tough year for all of us in the markets. Global stocks and most major asset classes have seen a rout and the glory days of NASDAQ types seem like a distant past. Just when we thought June was the finale of this eight month downtrend, the Fed came calling and stocks tanked in unison.

India has been a major outlier but we’re now beginning to play a catch up on the way down. Over the past two weeks, we have shed over 6% on the major indices and mood has turned sombre. The experts who ran over each other trumpeting a major bull run in a decoupled India are now drowned out by the pessimists who foresee a long drawn brutal bear hug.

So what am I seeing here? Let me take an example. Anyone who has worked out in a gym or has run tracks or has seen the career of a sport legend will understand the theory of growth, reversal, plateau and growth. This means once you begin to work out in a gym, you’ll grow very fast as your body reacts to the efforts and can see a bigger bicep in a month or two. This, invariably is followed up by a phase where you’re working out harder than before but your body doesn’t move an inch. You still look the same as before and are contemplating giving up on the membership.

Once you somehow get through the grind of six odd months of no visible growth, you’ll realise you’re lifting heavier, your stamina has gone up and you can feel a change within. This is exactly when your body is preparing for the next bout of explosive growth. This process repeats itself until you hit the next plateau and so on and so forth.

What is of utmost importance in times of grind is to not give up. You can’t wake up everyday and expect your body to look better or leaner or chiseled, whichever your goal is. All you have to do is to keep compounding in silence and bide your time. You’ve to walk the extra mile, lift the extra weight and keep moving forward, and one day it’s going to be your day.

This is as true in any walk of life as in markets. Your portfolio will not always move in the way you prefer. The company can do everything right and still see its stock nosedive for every other reason one can imagine. This is not the time to sell in May and go away. You must realise that you’ve bought a minority stake in a living business and all you must do is to allow the company’s stock to play catch up with its fundamentals.

You can’t and will not beat the markets everyday, every week, every month and every year because that’s not what you’re trying to do. You’re trying to bet the fact that what you’ve bought today is going to be worth a lot more in future wherein it can go anywhere in the meantime. This is the rule of the game, period.

For all the stories of if only I’ve bought Eicher motors in 2003, the hardest part is to buy it at 2000, see it rises to 4000 and still not sell when it goes down to 1800. Everyone loves a multibagger, in hindsight. In reality, we’re all too worried about the Fed, inflation, Ukraine and elections.

We spend hours and days selecting the perfect stock for our portfolio and most of us commit to buy for the long term. On the first day of the gym, everyone pays for a yearly membership. Within three weeks, the morale begins to drop and by the end of the third month, you have everything else to blame for not continuing with the fitness plan. Similarly, in markets, everyone who was buying TCS and Infosys for ten years has chickened out because IT has ceased to be the flavour of the month.

If you look around, the euphoria of the post Covid run has fizzled out. In the office I recall, everyone around me was bullish on IEX, chemical stocks and how people just couldn’t get over the FOMO of not buying IRCTC at 2500! Those guys have now quietly moved on with a 20% drop on the portfolio and have given up on putting any more money to work till things subside. They’re not only going to miss the rally on the way up but some of them who booked their losses at 20-30 or even 40% down will be scarred forever. Worse is in store for those who thought selling out of the money options is like a money minting machine. With nifty moving 500 points overnight, they’ll be bruised badly.

This is where I will recall what Stan Druckenmiller, one of the greatest investors said what George Soros taught him- it’s not important whether you’re right or wrong. What is important is how much you win when you’re right and how little you lose when you’re wrong.

I’ll add to this by asking a follow up question. If you think your company is doing well, it has a decent growth story and a good enough runway ahead, will you not just sit quietly and let it compound because the odds are that if you’re right, the stock can easily triple in three to five years. Patience, like I’ve noted earlier is the rarest virtue in markets.

One fine day, markets will realise what you’re able to visualise and the catch up rallies are massive. You only have to see what SBI and ITC have done in the past one year or so after a decadal slump.

So here’s my two cents in conclusion. Don’t interrupt the compounding, be it in life or in markets. One day, the work done in the dark will shine the brightest. Your time will come!

It’s been a while that I’ve posted something. One, I’ve been inactive and two, I enjoyed it. Inactivity is generally associated with laziness but it isn’t necessarily so. In investing, as in life, inactivity can be productive.

Charlie Munger said that the biggest money is not in identifying the best stock or timing the market, it is in waiting. You can buy what is right but unless you sit your ass down, you miss out on outsized gains. This is personified best by RJ’s two decade holding in Titan. The legend literally died with his conviction intact. Another famous example is that of Nick Sleep and his holding of Amazon since 2004.

So as far as my portfolio is concerned, I’m drilling inactivity in myself. I’ve hardly sold anything this year and intend to hold on to whatever I’ve for at least the next three years. Portfolio moves up and down and this time it’s underperforming the market, not massively but still a bit. It, however, is par for the course. The gains in equities are concentrated in bouts of massive moves, which, however are beyond anybody’s comprehension. The best performing stock of one season or year can be a dog for the next five.

Just look at SBI, NTPC and meme’s favourite – ITC. All of them are coming out of decade long wilderness and are ruling the roost. They didn’t go anywhere in 2012-2022 and have suddenly become everyone’s favorites. One more stock which I believe is due for a sustained upswing is Hero Moto, a dog for the past 8 years. Its absolute return since June 2014 is Zero. However, its peers, especially TVS have gone up 20-30x in the past 15 odd years.

It can be nobody’s case that a TVS will outperform Hero or Bajaj will not do anything but Eicher will or an ICICI will move up while Axis doesn’t. These are great stocks and will all go up in the long run, some will certainly outperform the peer group for some duration and others will play catch up. As long as the sector itself is not facing extinction or regulatory concerns, a lot of good companies go up with time, some doing good on Mondays while the others catch up on Thursday.

These are, however, discovered stocks. You, me and everyone on the street know enough about them, in equal measures. Thus, the only play in these stocks is to identify the ones trading significantly cheap to the peer group and hold. The easiest hack is to buy the one with the highest dividend yield vis a vis its peers. Like ITC was trading at 6% yield last year while HUL is at 1.5% and Tata Consumer trades currently at less than 1%. The rebalancing has happened in ITC while for Colgate and some other MNC stocks, it is due in my opinion.

The game, however, is not in buying a Bajaj v/s a Hero or Nestle v/s HUL. The big money in buying into stories for the future, the one with significant growth years ahead and are mispriced by the market for one or the other reason. The typical dollar bill trading for less than 50 cents, in Graham’s terms. The juice however is if the bill itself grows into a $10 or $20 bill, which you are buying currently for less than 50 cents. That’s a home run I’m aiming for.

Such stories, simply because they are untested and unknown go through long periods of do nothing, go nowhere. The trading volumes are low, institutional ownership is rare and the media ignores everything about it. If you can hold through this part, you’re bound to be rewarded beyond belief. The news may be terrible but if the business fundamentals are intact, inactivity is glorious!

We all know the India story, the financialisation of savings themes, the long runway ahead etc. What we don’t know is how long it will take to play itself out. No multibagger happens in a year, no great stock moves up on all days nor does it always outperform. It will have more bad days than good but in the end, the lesser number of good days will be worth the weight in pure gold.

All one should do is to do nothing. Play Ludo, take a walk, workout and relax. Don’t even bother looking at the market and if you do, restrict yourself from selling even one share.

So what keeps me occupied while I’m doing nothing–> long walks, books and Gym. And my newest obsession of playing Ludo at any given instance. Markets are quite like a game of Ludo. You can have a fantastic streak of 6s and 5s and can run ahead in no time, only to find someone patiently sending you back home with a 1!

Here’s my book recommendations for the week- I finished two biographies recently and one almost a biography and all the three turned out to be fantastic reads. The first one is on the life of John D Rockfeller, titled Titan which is a massive 700 page tome and took me over two years of effort to finish, but it is quite detailed and broadens ones horizons of the life, business and markets in the 19th and early 20th century America.

The other one is called Blood and Oil, a biography of Mohammad Bin Salman,the crown prince of Saudi Arabia and a most recommended book from my side. PS- I’ve a positive opinion of MBS and was silently rooting for him through the pages.

And lastly, a biography of Bill Gross, and in essence of the firm he founded PIMCO. He is a legendary bond trader, euphemistically termed the Bond King.

So, I hope you can find your own version of a fulfilling and engrossing bout of inactivity!

As India celebrates its 75th year of Independence, it’s time for us to realise how things are going to unravel within the next generation and how much money is waiting to be made by those who bet big on India. At $3 trillion, India is now the fifth largest economy. Even at a measly 6% annualized growth rate, we would grow to become over a $12.5 trillion economy in the next 25 years. This will easily make us the third largest economy and with a population of roughly 1.6-1.7 billion people, it means a per capita income of over $7500.

Now here’s a thing- once we reach an economy of that size, our population will grow much richer in absolute number than what the average suggests. This means our population will have much higher disposable income to consume and to invest ! Let’s see what it means!

Assuming an average saving rate of 20%, it means an average of $2 trillion waiting to be invested, be it in property, gold or in stocks! Even if 25% of that money is brought into stocks, that’s over $500 Billion to be invested, and this is only domestic flows! Compare that with the total size of the Indian domestic mutual fund industry today which is roughly $475 Billion! Now that’s serious money which is likely to propel all the associated players- brokers, exchanges, asset management companies, etc to levels few can imagine currently. If you think it’s all hyperbole, just check the annual revenues of Stock Exchanges such as NASDAQ, NYSE, LSE etc over the past 15 years and you’ll see what I’m talking about. There’s a reason all of these companies are valued north of $50 B in most cases because with growing revenues, comes the operating leverage as costs are fixed and margins rise significantly. This means the stock prices are likely to grow exponentially.

Similarly for our asset management companies, most of which are languishing at 52 week lows because there is rising competition and sales growth is flat. Well, once the pie rises, even a lower absolute portion of a much bigger cake will ensure that they’ll generate significantly higher sales and profits. It’s a no brainer for an HDFC AMC operating with almost 75% plus margins, in a world where a sustained 20% margin makes you a long.

The brokers, also working as Investment bankers will have a fantastic period too for companies will get bigger and better, resulting in even higher M&A fees, bigger IPOs and of course much bigger volumes means higher fees. Why am I so confident? Well, just read about the period beginning 1982 in the US and you’ll realise we are going to live through a similar phase in our markets when more savings make their way to the markets, resulting in a sustained bull market which is going to create unimaginable wealth for those on the right side of this tide.

One more thing which is a harbinger of things to come is that the government pension fund, EPFO is likely to approve investing of an even higher portion of its cumulative savings in stocks. This alone can generate flows to the tune of hundreds of Billion dollars along with the NPS. This happened in the US in the 1980s and created a sustained flow to the markets.

Now let’s come to the consumption part of the story. As Indians get richer, we’ll consume better, buy better clothes, shoes, cars and what not. Just remember, McDonald’s has been a hundred bagger even from the 1980s and so has been Walmart and Costco! Most global companies such as Unilever, P&G, Diageo hardly had a billion dollar valuations in the 1980s are now valued at North of $100 billion easily. So the opportunity ahead of us in terms of our HULs, United Spirits, Dabur or even the ones selling cars etc is massive! It doesn’t matter if you like Tata or Mahindra, if it keeps selling a better product, it’s going to grow enormously.

One reason I’m exceptionally bullish on TaMo is because it’s selling an aspirational product to the masses. I want to buy a Jaguar or a Land Rover once I become rich and so do most of you. Once India grows richer, just imagine the kind of luxury cars it’s going to consume. Don’t believe me? Just see how China has grown to become the largest consumer of every possible luxury item – Chanel bags, Blue Label Whiskey, Teslas and Land Rovers and what not, in a matter of a decade. This is exactly what we’ll experience in India over the next ten-15-25 years.

Just see what Reliance is doing. It’s bringing in every available luxury brand to sell through itself in India because it knows how soon Indian women will not just be content with just Hidesign and Lakme and how Indian men will need just more than Arrow and Nike. So be it a Nykaa or a Dmart, an HUL or a Titan, this part of the market is going to grow exponentially from here and this is why they’re valued at what they’re valued at currently. I for none will suggest go buy a Nykaa or a Zomato but the larger point is that everything and anything which is going to cater to the enormous wave of money Indians will go shopping with is going to grow big.

It’s almost unbelievable that the second biggest exchange in India is selling for hardly a Billion dollar market cap, the largest investment bank cum broker is selling for less than 12 times trailing earnings and the largest retailer and the largest telecom player is selling for 25 times earnings! This is an opportunity of a generation. Bet big on India, इंडिया का टाइम आ गया है।

Today’s a sad day for us in the Indian stock markets. The biggest Hero for millions like me, the legendary stock investor, Shri Rakesh Jhunjhunwala passed away this morning. It was the most terrible news to have woken up to. He was and remains my Hero, the one man I really looked up to and one I really admired and took inspiration from. He went away far too soon, for he had almost an entire generation ahead to inspire.

I’ve been investing since 2017 and that was around the time when I began to learn about RJ and was instantly hooked by his persona and what he managed to achieve in less than a generation from scratch. I am neither friends nor family, never met him but I did consider him as my Hero, one who taught me more than anybody else has, anybody else ever will. He made me think big and doubled down on India. I’ve always been optimistic about the India growth story but his journey, which he told through the multitude of interviews all over the internet inspired and gave me the courage to bet big.

If ever I was in doubt, I plugged in with one of his interviews and somehow could always find the right answer. If I have been able to make some money in this market, it’s got to do a lot with the courage I gathered out of his early days and how he raised money from his brother’s clients and doubled down on the Madhu Dandavate budget, etc. The biggest high of my small career was when I had about 30% of my portfolio in TaMo and discovered that he too had bought big in the company and propounded the same idea – how can a company with 3lakh crore in sales have a 20000 crore market cap!

One thing I get inspired from him is to dream big and believe that it can happen. I always had a hope that one fine day when I will be an investor of some name, I might get to meet him in person and pay my respects. Alas, not possible anymore but I pay my deepest respect to the first real King of Indian stock markets and it’s only fitting that both on the days he passed away and the following one, Markets are shut and in some way, we all are paying our respects through this coincidence.

As the country celebrates Azadi ka Amrut Mahotsav- the 75th year of Independence, let’s also celebrate the life of a man who lived the Great Indian Dream- how a man born in a middle class family can amass a fortune worth Billions of dollars, in a fair and clean way and without cutting corners and give a lot of it back to the society in less than a generation. He may have been India’s second richest Individual Investor but is and forever will be the guy who had the most impact on the market. He was in a sense, India’s stock market impersonated. There are some idiots who have always cast doubts over his integrity but what bigger proof one needs than to see the Chairman of Tata Sons arriving to pay his condolences at his residence!

It’s also heartening to see the top political leadership paying their condolences and celebrating his legacy, in public. It’s high time Indians begin to give as much respect to him and other Investors as Buffet et al gets in the US. The least I expect of the government is to posthumously award him with a Padma Vibhushan, for he truly deserved every bit of it. In more ways than one, India lost one of its greatest sons, just before turning 75!

And I’ll finish with his parting line- India ka time aayega nahi aa gaya hai!

In my previous post, I had mentioned that the day the Indian government announced its Windfall tax, our equities had possibly made its bottom. This has now proved to be prescient as we are up over 10% from that day and Nifty has rallied from around 15600 to over 17100 in just about a month. From its peak, Nifty is now down less than 10% and thus has come off a correction territory. Globally, S&P 500 is now not in a bear market while the NASDAQ is up almost 15% from its lows of around 10500. The global markets are now brimming with some sort of optimism that at least and at last, the worst is behind us.

The FIIs which were relentless in their selling since October 2021 are now showing an early sign of a reversal in sentiment. They’re buying on and off in minor quantities and thus, markets are also going up, albeit on low volumes. This is a classic case of the beginning of a new run. People were so pessimistic in June that every 2% rally was sold into and new bottoms were made. Some stocks were sold so out of shape that many of them almost touched their Covid lows- HDFC AMC traded below it’s Covid lows and also for a day traded below it’s listing day low!

I’m of the opinion that this was a long due time correction in a structural multi year Bull run India is in. COVID-19 was a sharp price correction but the markets bounced off so quickly that people forgot that in a week in March 2020, most global markets used to open circuits down on multiple days.

The recent ten percent rally in my mind mirrors that of the April2020-June 2020 one where markets recovered from around 8000 Nifty to over 10000 Nifty without anyone believing in it. People kept predicting impending doomsday in the next month and the following month and the markets never traded below 10k after that. In early June 2022, you had a swath of experts predicting a 12000 Nifty by August and lo and behold, we’re above 17K.

One good thing about this correction ( we didn’t technically hit a bear market in India as on the Index level, the fall was less than 20%) was that it taught people the difference between a good share and junk. The high flyers of the post Covid run-up are now languishing in the dust, mostly down 50-60-70% from their last year’s highs. And this my friend is the opportunity before us!

Personally, I hold ten stocks and of which 5 stocks are around 80% of my portfolio in value terms. I am not in the race to best the markets but learning to hold shares of companies whose businesses I believe that I understand and hope will survive the test of time and are on the right side of Indian growth story. So what does my day in the trading hours look like- well, I use moneycontrol app to track my holdings and some stocks which are on my wishlist but other than that, I hardly follow the broader market. I completely missed the China+1 story and avoided chemical stocks, didn’t own any of the midcap IT ones or had any high flying Sugar companies.

I find it hard to understand that the experts who come on CNBC and sing praises about great businesses and long term views they take and then talk about sectors and stocks which are likely to do well over the next one to three years! To my mind, these are just glorified punters who will buy anything which is going up and justify their buying in terms of a narrative they believe that they can sell to quench their client’s intellectual thirst and move on to buy luxury villas with fat commissions. This is not how I believe one gets wealthy in this market.

I’m hardly 5 years old in this market. I may be completely wrong but I truly believe in the idea of owning shares over long periods of time and in the idea that one stock can change your life. I buy two kinds of stuff- one is what Nick Sleep has proved to us and what Chris Myers so eloquently showed us in his eponymous book- 100 Baggers. This is exactly what Munger has advocated about buying great businesses and what Jhunjhunwala has done in the case of Titan and Lupin and Radhakishan Damani has done with Dmart. You buy stocks in businesses which you believe can do well over long periods of time and which eventually will go up in terms of the original stock investing idea- share prices go up for companies which do well in their business!

Every true refined investor which I have gravitated towards has his own version of the above idea. Buy great companies, sir down on them for years, pay a low enough price and do nothing. Out of this flow my next kind of companies – the Colgates and Unilevers of the world. The ones which are truly great businesses and I know for sure that they’ll be around for the next hundred years and will likely do well just a tad better than the markets and because India is still a huge growth market, even these companies from here can go up 10-20 times in a similar timeframe in years. Colgate is hardly a $5B market cap company in India and can easily be trading at ten times that price in next ten-15 years simply because the runway even in the case of toothpaste selling is so huge in India.

I’m not playing the game of beating the market. I luckily have moved past that. I also am not looking to find the hottest sector for the next year or two. Why don’t I do that? The reason is a bit subtle- I’m not looking to manage someone else’s money by proving to him that I’m the smartest money manager in town and the only way I can prove it is if I can identify stocks and sectors which will do well and avoid the ones which don’t and can sell roughly at the top and predict the overall direction of the market and so on. This is the world of professional money managers who swear by the idea of portfolio diversification, sector weightage and NAV and alpha generation. Think Samir Arora and Saurabh Mukherjee. Unless they can come up with the great stocks to own over the next few months and years, they can’t ask you to hand your money over to them to manage for a fee.

What I’m trying to do is to become an Individual Investor who simply became wealthy for his sheer optimism about the India growth story. One doesn’t make a Billion by managing someone else’s money unless you’re Larry Fink! ( Google this name!)

So my idea of buying stocks is to own small stakes which get bigger as the company gets bigger and better over the next three-five-seven years. BSE basically was flat for me between 2018-2021 June and from then it went up five times in six months. This has happened to multiple investors in stocks which changed their lives and I am most likely going to experience something similar.

Find your Cera ceramics, find your Blue Dart, find your Titan. All these stocks have changed the lives of the investors who bet early and bet big on them. The only challenge is that you must stop playing the game professional money managers are playing. Don’t aim to beat the market. Don’t aim to time the markets. Don’t aim to fool yourself. Bet on one idea, maybe five but bet big on them.

In the last few weeks, markets are slowly beginning to turn around, make a possible bottom at 15200 and things are looking up on the whole. The relentless FII selling has slowed, if not yet reversed and our markets are showing signs of a true reversal. This, however, isn’t about the markets but the real food for thought and my first real passion- Reading.

Everything I’ve been able to do is through reading. I don’t know how but reading wide and about things which are not necessarily related to your daily chores helps one immensely. What I try and do is to somehow read a book a week or roughly 52 a year, at least for the past two years I’ve been able to hit that target with around 95% success rate. It certainly is a fading passion- most of us simply don’t read. Someone rightly said- buying books and reading them are two separate things!

If I have to rate all the books I’ve gone through in the past 8 years and make a Top 10 across genres list, it will be something on the lines of – Mossad, Animal Farm, Richer Wiser Happier, Boomerang, 100 Baggers, Bulls Bears and other Beasts, The Prize, Reminiscence of a Stock Operator, The Big Short, Barbarians at the Gate etc. The newest entrant on that list is The Spy and The Traitor.

I read a lot of spy craft books especially the ones on Israeli defence forces and the Mossad. This, however covers one of the greatest escapes from the strictest police state ever- the USSR by a KGB agent working for MI6, the British spy agency.

Let me tell you something – Imagine you are a spy working for the Britons, double crossing the KGB( Soviet spy agency). The Soviets know it and have put you under strict surveillance in their backyard- Moscow. The nearest border town which isn’t a Soviet satellite ( in theory) is in Finland, some 850km away. This is 1985, when modes of communication were almost non-existent, and bugged severely by the KGB, if at all you could find one. They know that you’re trying to contact MI6 but are sure that in a few days from now, your body will lie in an unnamed grave at an unmarked place. The only way possible is if you can contact the British diplomats in Moscow, who have never seen you and can never speak with you in person or on the telephone, with whom you can’t make any verbal/ written contact lest the KGB kill you on the spot. And if you can somehow make this contact and communicate to them your willingness to escape through the Finnish border half a world away, they will dispatch a couple of their diplomats which again will be under strict surveillance to take you out provided you reach within ten kilometres of the Finnish border, without being arrested or killed en route. If it all happens, you will try and hide in the British diplomats’ car without being noticed by the following convoy and pray that the five border check posts don’t catch you lying half naked in a car’s bumper. If somehow you make this crossing and the KGB doesn’t wake up to see that you’ve vanished under their nose and doesn’t dispatch the hit team to exterminate you while still driving through Finland, you might land in London through Norway!

So what do you think! This sounds so unreal that it’s scary! Well, this is exactly what happened with Oleg Gordievsky, exactly 37 years ago on July 19, 1985. Read this book for the joy of life, pour some whiskey and think how little do we know about the world around us.

If you find this book fascinating, pick up a couple of titles on the Mossad, their story as to how they managed to kidnap Adolf Eichmann from Argentina in 1961 or how they eliminated the Red Prince or how they flew down all the way to Uganda and brought the Israelis home.

One of the biggest Heroes of the Investing world, Charlie Munger has been termed as a book with legs by his wife. All the great investors read, and read widely. Some find solace in the poetry, some take care to learn History. It is but for a reason Investing is termed as the last liberal art. The game is one which requires patience, skill and chance. The ability to identify long runways, hidden agendas, big potholes, a frenzy to avoid, a bubble to stay off just doesn’t happen through the Balance Sheet. Investing is a lifelong learning journey which doesn’t only stop at finding the next multibagger. It’s about becoming a Man worthy to hold a conversation with, someone who knows his values and has the right ethics in place.

Investing for me is a journey to invest in myself, to make myself a ten bagger version of myself, over the next ten years, every decade. You read widely not to clear an exam or to sound intelligent at the next meeting with your boss, but to tell wrong from right, to be able to resist the temptation to follow the crowd, and most importantly, to know yourself.

PS: This is for all of you working in a hierarchical organization or a bureaucracy. Pick up Animal Farm. Once you learn that all you end up becoming is a pig walking on two legs, you will never be the same again! Till then, All animals are equal but some are more equal than others.

In the last blog I mentioned the fact that maybe we had hit the bottom post the Windfall tax news. Post that, NASDAQ is up a thousand points, almost ten percent and nifty is also up over a thousand points, almost 6%. We should realise Nasdaq was down almost 35% while Nifty was down 18 so it’s an almost equivalent rebound.

The GST collection has consistently over 1.4 lakh crore, exports are averaging $40 Billion a month, Indian rupees hasn’t fallen off the cliff even amidst all this flight to the safety of US dollar. Corporate profitability, their balance sheets are in the pink of health and capex journey is all set to begin. Now what it means is that Indian economy is in a much healthier shape than before and the moment markets turn, India will resume its upward journey.

As far as markets are concerned, my belief that we’re in a secular up cycle which suffered its first time correction over the last eight nine months. This has shaken the weak hands and the punters who thought buying shit can make them millions are now out of the system mostly , if not completely. The days of ultra high valuations for anything and everything is over and most of the fancied Saurabh Mukherjee’s names are down in the dust. My best way to find out is that his appearances on the TV have reduced which is an indication of the new reality.

What went up the most has fallen the most. Nobody talks about IRCTC and IEX anymore. So does about Dr Lal, Chemical stocks, India Intermesh types were taken to the cleaners while metals have fallen off the side. ITC is back to the top of the charts while Reliance and TaMo have refused to fall that much.

I’m personally extremely bullish on HDFC AMC and ICICI SECURITIES and luckily Mercellus has exited it as well post their exit in ITC. It is the Jim Cramer of Indian markets. Whatever they sell goes up significantly. ITC was sold and look what it has done. And AMC has begun to crawl back to a more rational level.

The thing about ISEC is that people were worried about the fact that markets will go down and that will reduce its brokerage income and thus it got corrected from 900 to 400. Now the thing is, less than half its income comes from broking. Plus, markets have begun to turn and people will come back all guns blazing and so will brokerage income. Plus, it’s extremely less owned by funds so the moment it turns, there will be a rampage to add it to the portfolio, something like a BSE move last year.

My blogs are getting shorter and that’s because after saying the same thing in 70 blogs, I’m getting the clarity I require.

The only thing you need to do is to bet on India, on stocks which are going to grow faster than India and the ones who can survive the next five years. Rest, it’s all taken care of.

If you noticed Reliance falling almost ten percent on Friday and went around scratching your head as to how something like that happens, well, let’s just say it did better than ONGC and Oil India for the day. And if you tried finding answers on Twitter or TV, you’d have come across something called a Windfall Tax. What it did was to ensure our faith in the PSU was dented, again as who’d want almost a year of gain knocked out in a day?

So now let’s decipher the news share some views and then move on to what I have been up to. The government said since these oil refiners are milking a lot of money turning crude oil into marketable products, let’s ask them to share some part of those excessive profits with itself and try and solve a couple of problems simultaneously – help the government manage an impending Current Account deficit by discouraging exports of crude produced locally which could be used for domestic consumption, thus reducing the need for importing similar quantities at a much higher price. This might also help cool the inflation which to be honest is at a much more manageable level in India than in the West.

Noble objective, right? Yes. It only had some collateral damage in the form of carnage in share prices of some companies as I mentioned. Well, we missed something equally important. The government raised taxes, shares tumbled but markets ended in Green! It was very bad news to be honest but markets recovered. If it was any other day, the market would have sinked but it didn’t. I sense this is the beginning of the end of this fall we have experienced over the past nine months.

A lot of people have begun to dig out the fact that the FIIs still have close to $500 Billion of equity exposure left in India so it can go a lot worse from here. This is crying in the face of an impending catastrophe, the end of the world if you will. What I truly believe is what Seth Klarman told us- the world doesn’t end that easily. Let me share what I feel sums it up all, so well

Coming back to my portfolio – I’m now crawling back from an almost 25% cut at the bottom and now I believe I should say, only a 25% cut! One thing which I learnt this year is to avoid stocks where one policy decision can kill the story and thus, I’m out of IOC, ONGC,OIL, NALCO etc.

I’m now running quite a concentrated bet wherein the game is clear- it’s a bet on rising India, both on the consumption and investment side. This theme took a beating last year when all the asset management companies and broking stocks are down in dumps and we are now being asked to not come anywhere close to them. Well, this is exactly the time when you can buy great stuff at such prices. I believe in three years we can look back and say, those who bought it in 2022….

What a day it was. Nifty is down to 15300 and everything came down crashing alongside. Beyond a point, I couldn’t even look at the screen to check my portfolio because it didn’t seem real at all. Twitter is flooded with doomsday predictors and everyone and his aunt is advising you to sell everything and run away.

Let’s see some facts. This is the first close to 20% drop post Covid crash of 2020. However, this correction has now entered its ninth month and is slowly wearing everyone down and out. What is being felt is the idea that this is just the beginning of a long drawn bear market and we’re slowly heading towards much lower levels on the indices. Well, let’s go back a year back and recall how things looked back then.

India was reeling under an extreme Covid induced emergency and we had hardly vaccinated a million people. The world and left cabal predicted the end of the road for us as a nation. The tax collection was severely hampered and we didn’t even know if we could ever come out of a lockdown. On the day the second lockdown was announced, the market made its then bottom of around 13000 and flew all the way up to 18600 in six months time.

Cut to today. Our monthly GST collection is over 1.4l crore, direct tax collection has crossed estimates, exports have touched $400 B and are on their way for another record breaking year this time around. Add to this that the FII have sold close to 4l crore( over $50B) since October 2021 and are relentless in their pursuit. On the net basis, they have now sold more than what they invested since the end of Global Financial Crisis, way back in 2010.

The Indian market is slowly being supported by its own money- money you and me are investing, betting on India. Retail money through SIP crossed 12000 crores a month in May 2022, which is almost twice what it used to be hardly 4-5 years ago. If it was not for our retailers, Nifty would have been sub 10000 by now. Remember, on account of a much subdued level of selling, our markets fell 60% in the 2008-09 crisis.

As far as the US markets are concerned, nobody knows where they’re heading. If it is really the doomsday everyone knew would come one day since 2009 or not, I don’t know. One thing though, is very clear. This whole shebang of Startups changing the world has landed in the gutter and is being flushed pretty hard. The only reason we don’t know the real extent of pain is because private equity prices aren’t quoted daily. Just see what has happened to Cathie Wood’s ARK innovation ETF or our very own Paytm and the likes.

How am I faring? Well, being down 20% doesn’t feel nice. However, to be down just 20% in a market like this is a blessing! We didn’t even realise when Hindalco fell 50% from its peak or how Bajaj Twins are both down 40% or how HDFC group lost its sheen that when I realise I’m still only down 20%, I somehow thank my stars.

What am I feeling? Well, I’ve single point belief in the idea that India’s market is in a multi year bull run and this is just one of those Bull market corrections I had read in history books. I unflinchingly believe in the idea that in ten years time, India would be much richer than today and some of the stocks which I own today will not be up 2-3x but will possibly go up 20-30-100x from here. Everyday when I look at the prices, especially when nobody has any money left to invest, I realise the prices are in some cases unreal. The selling is irrational, not as much as we saw during Covid but pretty close. This is definitely more intense than 2018 though.

What am I thinking? As a keen student of behavioral investing, I sense pessimism getting towards borderline depression. Everyone is predicting doomsday. Everyone and his aunt knows that inflation will kill our savings and how recession will kick us in the butt. Everyone knows the market is headed south. People have literally stopped me to ask how low we are going. This is music to my ears as I sense we’re pretty close to the bottom. In April 2020, I distinctly remember I told my friend that we had hit a bottom because everyone was talking of an impending crash in June that year.

I was today telling my wife that the fastest way on the upside is by short covering. The markets are getting severely oversold. One small trigger and there can be massive short covering. What today looks like down 20% can in a matter of a few days become down 5% or even better. Remember that nifty went from 7500 to 10000( a move of 33%) in hardly two months time. So to go back from 15200 to 17000 is just a matter of a week.

I do realise that to say such things when everyone is losing their shirt is not easy. Well, who says investing is for the faint at heart. It takes courage to lose a couple of lakhs a day and still smile. Imagine how much down RJ would be on a day like today. Even a down 2% day is over 800 crores for him.

So my dear friends, I am extremely bullish on India, always was and forever will be. This is the time to buy, as much as you can. If not, this is the time to hold on to your stocks tightly.

One of my favourite lines is what Jack Bogle said” Your success in investing will depend in part on your character and guts, and in part on your ability to realise at the height of ebullience and the depth of Despair alike that This Too Shall Pass”