Monday, 10 February 2014

Beginning of A New Journey: Stay Hungry, Stay Foolish

When I first listened to the famous speech delivered by Steve Jobs  at Standford University, my reaction was similar to that of many others. I was moved, motivated and challenged! But as it had happened numerous times in the past, I assumed that the effect of this too would be ephemaral. However, as years passed by, the words spoken by this self made creative genius, lingered onto my psyche much longer than I had anticipated!

"Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.

 And

"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary "

Eventually,  One more emotion that his speech evoked was  that of "determination"! Determination to follow my heart and eventually settle for nothing less than what I like doing for rest of my life with same passion.  I kept looking, with the hope that one day I will come across something which will garner my undivided attention. Something that will ignite passion and give satisfaction every time I did work. Then came a moment, when I was introduced to this concept of Value Investing.It was indeed "love at first sight!". Simple, subtle and powerful! But, as in love, the first impression and first reactions can sometimes be treacherous. One has to spend enough time with each other before making a life long commitment! Hence, I started spending more and more time to get better grasp of value investment philosophy. Warren Buffet, Charlie Munger, Phil Fisher, Peter Lynch, Mohnish Pabrai, Howard Marks, Seth Klarman, Prof. Sanjay Bakshi and many other senior value investors became my "virtual" gurus! I was learning vicariously.. following the teachings of my great gurus! With all the theories and concepts in stride, now was the time to test my mettle in the battleground and start investing serious money! It's been 4 years since I started managing my personal and family's capital by applying value investing philosophy. Though 4 years is not a long time in life span of an investor, the results so far has at least given me the confidence to pursue this journey further. It is satisfying to note that in the tumultuous market of last few years, I have been able to compound the capital at more than 40%+. Also for each of the individual years and cumulatively, the fund has outperformed the benchmarks by a wide margin.  These four years have also been fabulous in terms of learning new concepts, meeting some well entrenched value investors and paying up "huge tuition fees" for the mistakes I made!

Hence, finally, I felt the time had  come to make the commitment! I have decided to devote significant portion of my time to Investing. To begin with, I will largely manage my friends and family's portfolios. The scope may expand eventually, but definitely not for now. I also intend to eventually start an investment advisory firm  rooted in value investment philosophy. My motivation to start an investment advisory stems from my strong belief that value investing is an extremely powerful and yet hugely underrated and unknown philosophy for creating disproportionate long term wealth for many ordinary mortals like me! I can add my "bit" of value to the society if I can help some people create wealth from themselves.

I also want to acknowledge that taking this decision was not easy at all! It meant making tough choices. It also meant, changing the status quo. It meant, moving out of the realms of known world to chartering into hitherto unknown territories. Though it was difficult, I had a promise to keep to myself! Once again quoting Steve Jobs showed me the way

"You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life"

One thing that I have realized in last 4 years that I have spent as an active investor: Ability to correctly differentiate between risk and uncertainty  can be very rewarding. In the same vein, it is also equally true, that not getting this distinction right can result into substantial permanent loss of capital. I only wish that I have got this distinction right this time.....