Investing Chat with Muthu 5 years later
“A Single conversation with a wise man is worth a month’s study of books” - Chinese proverb
In 2016, I had published an investing chat with D Muthukrishnan a.k.a. @dmuthuk as the twitter world knows him. A few months back I had re-read the investing chat I had posted on my blog 5 years back.
A lot had happened in the world over the 5 years, the most significant event globally being the COVID 19 pandemic. In India the re-election of our honorable prime minister Narendra Modiji played a significant role in the upward march of Sensex to mount 58K.
With this in my mind a thought flashed across that it would be great if it was possible to revisit this initial interview taken 5 years back and check with Muthuji if anything had changed.
For those of you who know Muthuji’s, you will agree that Muthuji’s is intensely private person and very choosy about giving interview. I have been incredibly lucky to have the chance to pick his brains not once but twice. Once in 2016 and the second one now in 2021.
The investing acumen gained over years of study, reading and experience permeated into our conversations.
The conversations touched on many topics ranging from investment strategy followed, why Financial Independence (FI) should be every investor’s key goal, what needs to be done to achieve FI, investing greats who have shaped his investment strategy, Investment book recommendation and much more.
The investing insights from both the chats have been combined and logically grouped to present a holistic picture of a topic. The chat has been divided into two parts :
Part 1 - Investing
Part 2 - Achieving Investment Success & Financial Independence
Part 1 - Investing
We focus completely on Muthuji’s thoughts on investing:
Entry into the world of investing
Investing strategy and bright minds who inspired
Characteristics of Businesses he prefers to own
Investing books recommended
How I entered the world of Investing and personal finance
When I was studying in college, I was attracted towards the stock market. I hail from a very low-income family and naively thought that the stock market is a quick way to get rich.
I joined a stock broking firm in Madras Stock Exchange (MSE) which gave me an opportunity to read financial newspapers, business magazines and interact with many investors. That kindled my interest to take up a career as a personal financial advisor.
But destiny had a different plan. After the start of National Stock Exchange, many small broking houses had to shut down and I lost my job. At the same time, in the second half of nineties, the BPO industry in India had started coming up. I got an opening and soon found myself progressing well in my new job.
Because of my innate interest in investing and personal finance, I used to give financial advices to many of my colleagues. They found my inputs very useful and also encouraged me to share more.
This went on for a decade. Though I was getting paid well, various factors including the odd working hours, continuous travel and stringent timelines started to take a toll on my health. By then I was married and discussed with my wife about pursuing my passion in personal finance and becoming a financial advisor.
Being high savers, by the age 34, we had a house, no loans and also had a corpus worth 10 years of our expenses. Since my wife continued to work (she quit after our son was born 6 years ago), she encouraged me to become a full time advisor. I took up the CFP (Certified Financial Planner) certification and then started my own practice about 11 years ago.
Investing strategy and Bright minds who inspired
My investment strategy is influenced by Prof. Sanjay Bakshi (his writings on quality), Terry Smith and Nick Train.
I define my investment strategy as follows (influenced by Terry Smith):
Buy quality companies
Expect to hold for 10+ years
Try not to overpay
My investment philosophy and strategy which evolved in the beginning of last decade remains unchanged. So, buy good companies, rarely sell them and rest of the time just stay the course remains my investment mantra.
What’s Changed in the last 5 years?
Moving away from Intelligent Fanatics, lending, and leverage business.
Last decade, I was greatly attracted by the concept of intelligent fanatics. Hence had bought two companies, Piramal Enterprises and Thomas Cook, based on the above concept. The concept of intelligent fanatic didn’t come naturally to me.
Subsequently decided to stay the course only with quality investing. Hence sold both these companies. This pandemic has reemphasized the concept that portfolios need to be created to survive bad times. Since I’ve a focused portfolio, decided to move away from lending businesses and leveraged entities.
Traits of Businesses preferred
Catering to the wants and needs of the society
Likely to keep doing the same thing for next 10 to 20 years
Subject to less disruption
Capable of evolving through disruption
Investing Books Recommendation
Part 2 - Outline of Contents
Why Financial Independence is the Key goal every individual should aspire for?
What to do for attaining Financial Independence
Getting rich slowly
Need for right temperament
Six-point advice for investment success
In this part, we discuss about achieving investment success and achieving financial independence. This part will be published in Stock and Ladder Telegram Channel.
A small note from my end. To remain an independent voice in the financial word means I will need support from passionate individual investors like you. Bringing quality content takes a lot of time, effort, and study.
To this end, I have started Stock and Ladder Telegram Channel- An online platform for continuous learning. Munger said try to go to bed wiser than you got up. Einstein spoke that compounding is the 8th wonder of the world.
My goal is to combine both. Get to bed a little wiser every day and repeat this for a few months and years and before you realize- you would have become a Superinvestor.
On the channel we combine Earnings and Learnings to help you get better at investing one day at a time.
For Earnings, you get access to Momentum Buddha Watchlist – a list of high-quality momentum stocks based on my proprietary Bluechip momentum investing strategy. The watchlist is updated every week and has delivered a performance of CAGR of 37.7% p.a. since May 2021. The underlying strategy has been back tested for Indian markets for 15 yrs., 10 yrs., 5 yrs. 3 yrs. and 1 year and for each of the period has delivered an excess of 20% CAGR.
For Learnings, you get access to handpicked infographics, insights, and information for intelligent investing.
Please do subscribe to Stock and Ladder Telegram channel today for a very nominal price of just 800 per year and embark on a lifelong journey of trying to get continuously better at investing.