हिंदी – My investing journey

Hello investors , my name is Sagar and in this video I will talk about my investing journey If you have watched my videos , you already know that I finished my MBBS degree and then I decided to become a full time investor and fund manager so how did I make this switch ? Many people believe that you need to have a business background to make money in the stock market and I want to show that’s not true Usually , before investing in the market , many people attend workshops or they do some online course , which I think is a very good decision but it wasn’t the same in my case . I actually decided to invest all my savings in one stock (Apple ) when I was in my 5th year of medical college I chose Apple because it had a very good past record as I didn’t know how to analyse stocks at that time . I also knew they were going to come up with great products in a short amount of time After some time , the stock started falling more and more every day . This is when I got worried because all my savings were in one stock ( another mistake ) this is when I decided to learn more about the stock market . I started with classing investing books like The Intelligent Investor but I wasn’t able to understand them very well So I changed my strategy and I started focusing on biographies of Warren Buffett , Charlie Munger and Mohnish Pabrai among others. There are three main advantages with biographies. Firstly, they are written in a very simple language so everyone can understand them. Secondly, they are very entertaining. That’s why I have started with case studies of companies like Titan and HDFC as they are entertaining and you can learn a lot from them and the last but not the least point is that they talk about their past investments. In the case of Mohnish Pabrai for example , he talks about Fiat Chrysler and how did he value that company. You can learn a lot about valuation from biographies. In the case of Charlie Munger , he uses the example of Costco . Please keep in mind these are not recommendations. So I learnt a lot about valuations from biographies although I didn’t get any new stock ideas from them. So I was confident that I would be able to get good returns from the stock market but I still needed to learn more . I still wasn’t sure where should I focus my attention If you type ” stock market ” on google , there are hundreds of blogs and articles on it . So where should you focus your attention ? In my case , I decided to focus on three points and as a matter of fact , I still focus on these three points . You will see that everything you know about the stock market falls into one of these categories Firstly, we need to learn how to select stocks. I learnt that you need to focus on quality companies from what I read . the definition of quality is bit confusing. A quality company for you won’t be the same for me and vice versa. In the beginning , I used to believe that if a company can increase their revenue or sales more than 20 % , it’s a quality company I didn’t pay attention to balance sheet and cash flows but later I understood that the company needs to increase their profits and profit margins as well . I was still ignoring the balance sheet later I realized that there are several companies that are able to increase revenue and profits but still go bankrupt because they have a huge amount of debt . Then I learnt about the balance sheet. and only at the end , I started focusing on free cash flows because I realized many companies were reporting profits but they didn’t have any ” real earnings ” that’s why I always talk about free cash flows in my analysis videos so you can see how much cash do they end up with So my definition of quality keeps changing as I learn more . Now for example , I focus more on return on capital employed . I did make a video on this topic. There will always be exceptions such as Rain Industries. This company has a lot of debt but it’s normal because they made some acquisitions with debt. but the return on capital of this company is very good , especially for their new projects . So the definition of quality keeps changing. So I started focusing on quality companies. So now that we know how to pick stocks , how much should we invest in them ? If I have a portfolio of 1 lakh rupees, should I invest 10 000 in 1 stock or 20 000 ? This is known as capital allocation. I learnt that the majority of the gains of Berkshire Hathaway for example came from 10 – 12 stocks So the portfolio was very concentrated. If we talk about Mohnish Pabrai , hos portfolio looks very similar as well. Rakesh Jhunjhunwala made a hug amount of money from just one stock , Titan . This is how I understood that I needed a concentrated portfolio. but you might have realized that many people aren’t comfortable with three companies for example. I’m not comfortable either. I actually started with 10 stocks , then I reduced it to 7 and eventually 5 . So it has been a very interesting journey and I try to concentrate as much as possible and I will try to minimize my risk as much as possible and the last point is when to sell the stock because now we know what to buy and how much should we invest in it . Valuations help you a lot with this. I have uploaded some videos on this and I also teach this in my course but I was struggling with this for a very long time Prior to my youtube channel, if you watched any analysis video , everyone used P/E for valuations so for example , if a company had a p/e of 50 , it was expensive and if a company had p/e of 10 , then it was cheap so I heard so much about p/e and I thought it’s the correct way to value stocks but when I read biographies of Warren Buffett, I realized that he doesn’t talk a lot about p/e . I understood that it’s not the correct way. I was lucky enough to find a conversation of Warren Buffett where he talks about valuations and he said it’s very simple. He said that when you want to buy any company , you just need to understand how much will you earn from that. and I realized that there is a formula known as Discount Cash Flow method that helps you understand that and I teach this in my course with several examples this is when I understood free cash flows and what they actually mean As I promised in the beginning, everything falls into these three categories : stock selection capital allocation and when to sell . There is on last point : my investment philosophy. You might have seen that every investor has his own style. Many people focus on growth investing while others focus on value investing I’m still experimenting various styles . So , for example , I have a growth stock in US that grows at 20 – 30 % every year while I have value stocks in India. I also have some contradictory stocks that many people hate. I would suggest to try each one of them just so you know what suits you the most. I want to have all of them in my portfolio sometimes, growth strategy will work the best sometimes , value stocks will do better but overall , the portfolio should do well in the long term don’t forget to subscribe to see more videos

11 Replies to “हिंदी – My investing journey

  1. Your routine from the time you wake up till the time you go to bed. As a fund manager wat all do u do? Try making a video

  2. Sagar would have been a millionaire if he had a dollar everytime he said, ' please, ye koi recommendation nahi hai' 😂😂

  3. I think I was expecting more on how you transitioned to a full time investor because there is a factor to lose regular income and come to an uncertain full time stock market. Try covering that if possible.

  4. Hi Sagar, have you heard about Aswath Damodaran? He is also a very well known name in investing world. Just want to know whats your take or learnings from him.(video would be highly appreciated) Secondly, please tell us what parameters we should see to value bankings and NBFC stocks. How do we know whether a bank or NBFC is a good quality one?

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