Over the last one month, other than the annual reports and other research reports, I have been busy reading two books, i) The Thoughtful Investor and ii) The Manual of Ideas. Today I am sharing my thoughts on the first one. I will post the review of the second book in a short while. Firstly, The Thoughtful Investor is not a mere book on investment. It is more a description of an investment journey that the author Basant Maheshwari has undertaken. A lot of retail and HNI investors in India have probably visited the website/forum he started and moderates, theequitydesk.com, better known as TED amongst followers. The first thing that stands out is the exhaustive contents of the book. Very few things that a serious investor needs to thing about is left unaddressed in the book. It covers the psychological aspects of becoming a good investor, the pains of holding too long and the use and misuse of leverage. It gives a reasonable overview of fundamental analysis - though you will need to know the basics as that is not really covered here (and that is how it should be - this book is not really for beginners). It also has a very nice section on portfolio construction - a facet I have seen only very senior and serious investors focussing on, and something which is perhaps the most critical for overall returns than individual stock selection. The book ends with a checklist that can be picked up as-is or modified based on your individual experiences. What is refreshing about the book is that it captures the passion of an equity investor through the struggles of making and losing money. There are very few good books on experiences of individual investors, specially Indian, and this is definitely one of them. The only improvement area for the book that I felt could have been better was the editing. There are quite a few typos and grammatical errors, which at times take away from the pleasure of reading a well-written book. Every good book should provide atleast one takeaway. The main takeaway underlying theme that I felt coming out throughout was of making enough absolute returns to become financially free. I have heard a few folks complaining about the price of the book (it is priced at 999 rupees) and asking whether it is really worth that price. To me, if you are a serious investor investing in Indian equities, you should read the book, if for nothing else, than to just drill the key takeaway from the book in your heads. Being financially free is definitely worth much much more than the 999 rupees you pay.
Being a value investor is fun!! It gives one a leeway for being lazy and inactive while putting on a facade of being intellectually stimulated. The above is a disclaimer for delaying updating my portfolio at the end of July and doing it a month late :-) The updated portfolio is on the Portfolio page of the blog. The performance of the portfolio has been extremely satisfying to me. Luck does indeed catch up sometimes. For the first half of the year: Portfolio - 89.3% Sensex- 21% HDFC Equity Fund - 40% HDFC Equity Fund is my benchmark mutal fund. My thesis is that if one can't perform better than a good fund over a period of time, then better invest in the fund and pursue other passions. This time the returns were distributed and came from many of the portfolio stocks - Mayur contributed the most with a stellar rise, taking the price to an uncomfortable territory. Astral also has gone to a level which is making me uncomfortable, but not yet to the point of selling. Finolex Cables, Balkrishna, Ajanta, Alembic, PI Industries all contributed their fair share in the performance. In the first half, I added Bajaj Finance, PTC India Financial Services, Kitex Garments and Selan Exploration and booked profits from Page & Atul Auto. I believe Bajaj Finance is on a very strong wicket and will do very well for a long period and is available at reasonable valuations (more I suspect due to the fact that they did not get a banking license). PTC Finance is also doing extremely well and has good visibility of earnings in the short and medium term though longer term is hazy. I need to do more due diligence on Kitex and Selan. Currently, I am relooking at some of my old favourites like Sintex, Shriram Transport and some others like Persistent Systems, Symphony Coolers to see if they fit into the portfolio. In my opinion, we have just started a bull-market and we have a long, long way to go. So, good stock selection and portfolio weightage can give outsized returns even from these levels. Happy Investing!
