My first brush with the stock market happened way back in ’95 when I had some savings from my recent 1.5 years of overseas work. Based on my friend’s advise, I had bought some shares of “bluechip” company – Tata Steel. To my bad luck the market did not realize that I had bought the share, because the share continued to fall for the next 1 year. Before I knew, it had lost half of its’ value.
But I did not loose heart and wanted to learn more about stock market. Hence I started reading Economic Times on a daily basis and started tracking the prices of several shares. I did not have any understanding of the basics of investing in those days. I had no idea why share prices rise and fall. I started to buy some more shares based on news articles. I had purchased SAIL, Silverline, Satyam Computers, DSQ etc. This was still in ’95 before the K10 (Ketan Parikh) mania of ’98 and ‘99. During these heady days, tech stocks knew no gravity. The IT stocks used to move up daily by 5 – 10%. Everyone was talking about buying IT stocks like there was no tomorrow. At one time, my stock portfolio was worth over 20 Lakhs (a huge sum in those days). My investment was less than 4 lakhs.
Then came the meltdown on tech stocks in 2000–2001. This was the reverse of ’98 and ‘99. The shares were locked at the lower circuit on a daily basis. Even if you want to sell, it is very difficult. So, I was kind of trapped after the roller coaster. As my investments had already lost significant value, I decided to hold on. By this time, DSQ and Silverline were already bankrupt and the shares were worthless.
I was lucky to exit shares of Satyam at a hansome profit before the Ramalinga Raju fiasco hit the newsstands. SAIL also gave me a handsome profit as the Steel cycle had turned around in 2003.
In 2003, I decided to re-enter the stock market, now the difference was I had done my MBA and was very well aware of fundamental analysis. I was following the Ramesh Damani chat in rediff.com. This chat series every week was very interesting and informative in which Damani used to share good investment ideas. One of the stock ideas that I picked up from him was Sundaram Finance.I started buying this share in 2003 at P/E of 6. I still hold half of the shares of Sundaram Finance even today, 15 years later. This has given me superlative returns in the last 15 years.
I also started investing in Mutual funds in 2003. My savings was very good as I was working in Europe. Gradually I started SIPs in Mutual funds. I was also an avid reader of Equitymaster.com. I took a subscription of stockselect and also bought shares based on research report of Equitymaster. I continued my Mutual fund SIPs till my return to India in 2009.
The Lehmann brothers related stock plunge in 2008 was one of the events which gets every investor to doubt his/her convictions about investing. The entire index had lost 50% of its value in a short time frame of 6 months. Every investor must go through one or two such periods to understand the risks involved in stock investing. Its not a bed of roses. You need to withstand gut-wrenching periods to get first-hand experience to believe it. Luckily for me, I had ensured that I had not invested my money required for short-term goals. This was in safe fixed deposits. This helped me to ride the extreme volatility of 2008. In 2009, before we knew it, the market recovered the entire loss in no time at all! For those investors with money to invest, 2008 bottom was the best opportunity to invest. However, you get to know it only after it has passed. At the bottom, you always felt that the market will only dive down from there.
I had taken the services of a fee-based financial adviser in 2009. Little did I know at that time that I am going to make this my profession in future! This gave me a perspective of goal-based investing. I stopped chasing returns. Instead I learned to keep money in safe liquid funds for near term goals. I also calculated my retirement requirement.
The bull market of 2016-18 has helped my portfolio immensely and helped me to take a decision on retirement. In 2018, I had decided to declare financial independence as I had enough for retirement.
After leaving my full-time job, I decided to devote my full time to investing and investment advising. I got myself registered with SEBI as Investment adviser.