Guest Presentation to the CFA Society Kolkata Chapter

Yesterday, I made a guest presentation to the CFA Society Kolkata chapter. It was very heartening to see a lot of young students and investors interested in the process of wealth creation for the long term.

CFA Society Presentation by abhishekbasumallick on Scribd

Charlie Munger - Daily Journal Annual Meeting Notes (latticework)

Charlie Munger in full flow during the daily Journal annual meeting. Click on the link below for a full transcript

http://latticeworkinvesting.com/2018/02/19/charlie-munger-full-transcript-of-daily-journal-annual-meeting-2018/

Standing on the shoulders of giants

Yesterday Economic Times profiled me in an article. You can read it here - 
https://economictimes.indiatimes.com/markets/stocks/news/up-to-45-times-return-this-kolkata-it-guy-knows-multibaggers-better-than-coding/articleshow/62831441.cms

Sir Isaac Newton once said, If I have seen further, it is by standing on the shoulders of giants. I completely echo his sentiments. Coming from a typical middle-class background,  investing started off as a means of becoming financially stable and free, and over the years has become a passion and a way of life for me. I have learnt many things by sitting and spending time with some of the best thinkers of all times through their written words in books. Investing is on vocation which fulfils my passion and love for reading on myriad topics. 

Buffett and Munger are role models, gurus for me. I have learnt more than investing from them. I have learnt how to lead life. Over the journey of the last 17-18 years, I have had the privilege of learning from a lot of people. I cannot name all of them for some are very private persons and do not want to come into the limelight. I received a fair number of questions and comments on twitter (I have lately reduced drastically my usage of Facebook, so if there are some questions or comments there, I may have missed them). I have tried to group them and put one question for every group and will try to address here. 

Q. Could you guide me where to start to learn about investing?

One of the easiest books to start with is Peter Lynch's "One Up on Wall Street". Not only is it easy to read but it covers enough ground to make it worthwhile for beginners and also intermediate investors. Follow that up with reading a business daily like Economic Times, Business Standard or Mint daily. Also, a couple of business magazines from Outlook Business, Forbes India, Business Today etc. For those who are comfortable reading at length on a computer can take a magzter subscription. Keep at it and gradually you will start understanding about businesses and what drives them. 

You can get basic and advanced tutorials from http://www.investopedia.com/university/all/basics/
You can do them in the following order:
1. Investing 101: A Tutorial For Beginner Investors 
2. Stock Basics Tutorial
3. The Greatest Investors 
4. Understanding The P/E Ratio
5. Become Your Own Financial Advisor
6. Ratio Analysis Tutorial
7. Discounted Cash Flow Analysis

Investing is like any other vocation. You have to put in years of effort to become an "overnight success" :-)

Q. So far i have not invested anything in stock market.I would like to start it from tomorrow.Can you please suggest me some good company shares, and your valuable suggestions are welcome.

You need to do your own research and build your conviction. If not, even a small fall, and you will run towards the exit door. Taking someone else's stock picks will not help you get better as an investor. Even if you make mistakes in the beginning, they need to be your own mistakes. And you need to take the learnings in your own way from them.

Q. Only thing I was looking into article which seems missing is how do you prepare the very first list of companies out of thousands out there? 

The process of idea generation is not fixed. I can get ideas from reading newspaper or magazine articles, observing actual businesses or from financial screens. I also get a great deal of ideas from valuepickr posts and by speaking to fellow investors. Valuepickr, by far, is the best resource for serious investors in India.

Q. Wouldn't it be better if one were a bit more patient, based on qualitative parameters and the ability of the management as suggested by their history in handling tough times, rather than taking a decision based on price performance of the stock ?

The way I see it is to make money in a stock I need to be right in a few things - i) get the business correct, ii) get the valuation correct and iii) get the market mood correct. If any one of the three is completely wrong, then there is a major possibility of losing a large part of the capital. When a stock falls significantly (say more than 20-25% after I have bought), then one thing is for sure - I have made a mistake in understanding the market mood. I could be wrong on the other two aspects as well. So, I have found it useful to sell, book my losses and then evaluate with a fresh mind later. That way I will not get tied up with endowment bias. This has worked for me. People have to figure out what works for them and follow that path.

Q. Any book recommendations specifically for valuations? 

There are lots of books of valuations. And I have read a fair number of them. The honest answer is most of them are practically worthless :-) So, if you know the basic DCF and PE ratio analysis then you can cover 80-90% of stocks. Just make sure that you focus more on the process of valuation and the assumptions you are making than too much on the precision.