[latentpotential]

Originally Posted by smartcat

Don't bother getting into full time investing (or trading) with a corpus of Rs. 20 Lacs. To do that, you need to have no EMIs and enough funds in bank FDs/debt MFs to cover for your monthly expenses (through interest income).

Then you can consider increasing your networth via full time long term investing or trading with another Rs. 20 lacs (preferably more).

If you are saying that one needs to consider the corpus as an amount you are willing to write off if need be, then I agree with this statement.

[.sushilkumar]

Originally Posted by VindyWheels

Thank you Anand! Sure, but some response will let me know that people are actually reading my rather longish posts

Sir,

There are many silent reader on the forum. Please assured that every word is read of yours. In fact i have registered on valuepickr & awaiting a feedback .

[JMaruru]

Originally Posted by VindyWheels

Valuepickr is a website where we collaborate to analyse companies threadbare. I am an active participant there and does company visits and management interviews.

Originally Posted by .sushilkumar

In fact i have registered on valuepickr & awaiting a feedback .

Is the registration by invite, or do we need referrals? It seems like a closed forum.

[VindyWheels]

Thank you PatienceWins. With that handle you definitely cannot be a trader...Patience is the key to investing! If you can earn 100% return in a year the 20 lacs becomes 40 lacs...but that's not much of wealth. Really good patience will do wonders if the process is right.

At 26% return a year, 20 lacs will become more than 20 Cr in 20 years! Power of compounding!

But pulling out money for monthly expenses may not be a good idea as you do not get the above compounding. You need an alternate cashflow to fund expenses for atleast next 10 years to be safe. But if you read my story you might show me the middle finger

I resigned from my corporate job in 2010 end. My wife was about to deliver our baby and we hardly had 40 lacs worth investments. We had an apartment worth 50 lacs then, with a home loan of around 20 lacs. I should admit it was an emotional decision rather than a rational one. I wanted to enjoy fatherhood, learn investing seriously and I was also fed-up with the operations job in a Bank which did not allow us a lifestyle we wanted. So I bid goodbye to 7.5 years of corporate life...retirement at 30!

The thinking was, we have enough money to survive next 2-3 years, lets give it a shot to live life in our terms and if things don't work out....hope to get back to corporate life. If nothing else I was confident of selling home loans as a sales executive on commission basis.

The first thing we did was cut down expenses - moved to a large apartment in the outskirts sharing rent with a friend, and minimized expenditure where-ever we could. I also enrolled for CFA (US) to ensure that my CV looked good in 2 years...if at all I had to get back to the rat race. The pressure was so much that I cleared the 3 levels of CFA in less than 2 years. I used to go and sit in the IIM library daily to study, it was impossible to sit home and study with the baby around.

So after keeping aside enough money for 2 years expenses, I started of investing and preparing for CFA. Since a large part of the CFA course helps you in investments, there was more motivation to study. Valuepickr was a godsend, I became active there by 2012, met senior investors, spent lot of time with them, picked their brains, accompanied them for company visits and ensured my decision to resign meant I do everything possible to become a good investor asap. I still remember my first visit in 2012 August to Baroda which was a turning point - 4 seniors and me and they would just keep on discussing stocks, mistakes, strategies, the art part of stock-picking and human behavior. We visited 4 companies in 3 days in Baroda and Ahmadabad and interviewed the managements. I was all the time thinking why some businesses do extremely well and how the market decides how much to pay for which business.

In 2013, I bumped into an old college mate who had started a wealth management firm in Bangalore in 2010. I joined the small 8 member team as I was impressed with their ethics and long term goals. For over a year now I have been recommending the same stocks that I like to clients of this company. The salary is quite low and cannot fund even 50% of my expenses, but I am in no way compromising on "freedom", "travel" and time with family and friends. From our progress so far, it does look like the fortunes of the company will only improve. Since returns from my investments are more than decent, I am in a happy situation as of now.

To cut the story short - it is possible to become a good investor if you really love discovering businesses, understanding how a rupee is earned and master the art of evaluating the future potential and value the investment at current price. You should also be ready to tame your mind and fine tune it to achieve higher levels of rational thinking. I know great investors who have no accounting background, but you need to have some grip on analysing the annual reports including financial statements. Seeing the larger picture by connecting all the dots is the key - its like a top notch investigation, intellectually challenging and really enjoyable.

Regarding leaving your job to do full time investing - I am an amateur with just 4 years of experience...cannot really advice you to do that. I might have been lucky not to lose too much capital in my initial days when I did day trading. I stopped trading in few months and have never touched futures or options (does not mean that you cannot make money doing these, just that I could not and am not made for that). I was also lucky to be in the right group of investors and double by capital in 2 years... and I haven't handled a recession as an investor.

You also need strong support from your family to take that decision. In the initial days when the future looks really uncertain you can easily breakdown.

Wrote a long post because the question you put forward is a very very serious one.

If you can devote 4-5 hours a week, you can still work and make serious money. Your learning curve might be a little less steep, but you do not risk your family's security.

If you are not happy with you work-life equation, you can think of a middle ground of compromising a bit on salary to take-up another job which will allow you more time for investing and pursuing other interests. For last one year, my wife pitches in with some cashflow by working around 4-5 hours a day on weekdays, but she enjoys her work and has enough and more time to look after the little one. If you already have a good house, rental income can be considered and you can shift to a rented house paying less than the rent you earn.

Search for answers earnestly and some path could show up. But be rational and have a plan B.

Cheers and all the best for achieving "Nirvana" (financial freedom)

Vindy

[S_U_N]

Originally Posted by .sushilkumar

I am not asking him to join as employee. Investing in a organization & employment are as diff as chalk & cheese.

I hope you are just trying to pull my leg here with that statement.

Originally Posted by VindyWheels

Search for answers earnestly and some path could show up. But be rational and have a plan B.

Cheers and all the best for achieving "Nirvana" (financial freedom)

Vindy

Great post, @VindyWheels

[PatienceWins]

Originally Posted by VindyWheels

If you can devote 4-5 hours a week, you can still work and make serious money. Your learning curve might be a little less steep, but you do not risk your family's security.

If you are not happy with you work-life equation, you can think of a middle ground of compromising a bit on salary to take-up another job which will allow you more time for investing and pursuing other interests. For last one year, my wife pitches in with some cashflow by working around 4-5 hours a day on weekdays, but she enjoys her work and has enough and more time to look after the little one. If you already have a good house, rental income can be considered and you can shift to a rented house paying less than the rent you earn.

Search for answers earnestly and some path could show up. But be rational and have a plan B.

Cheers and all the best for achieving "Nirvana" (financial freedom)

Vindy

Excellent post and a truly inspirational journey.

I would like to share my investment journey, and the lessons I learnt on the way, for the benefit of others.

2004 - I am a bachelor, believes in instant gratification - so no saving, other than the small yearly payment to ULIP - a mistake I realized later. We sold a family property in our native and I suddenly have around 25 lakhs in bank. My father is no more, so the money belongs to me. Knowing that I would invest in cars and electronic gadgets, my family made me book an apartment in Bangalore. I paid the initial deposit for the apartment and I had around 18 lakhs remaining with me. The rest of the payment had to be made in monthly instalments until the apartment possession in 2007. I also took a loan (around 20 lakhs) to meet the remaining amount.

In 2005, I noticed that stock prices are going up. As I have money lying idle in bank, I got the idea of investing in stocks and selling few shares monthly to meet my monthly instalment. So, I invested the money in ICICI bank, NTPC, Hindalco, Bharat Forge, Satyam etc. My investment philosophy - watch CNBC and select stocks based on my gut feeling and price momentum. Stock price was going up and I was a happy and confident man. In 2007, my apartment construction got delayed, so the monthly payment was reduced and tenure increased to 2008 (notice the year, recession started). By 2008, I had sold most of my stocks for my apartment. In 2008 recession, I lost some money while making the final payments for my apartment.

It was a big learning experience for me. I realized that I was just lucky to get out at the right time, especially Satyam. I also learnt that I should not invest the money I need in the short term in stock market. I started thinking that there has to be some method to the madness, and started reading about the guru of investing - Buffett. What I read about Buffett made perfect sense to me and I started seeing stocks as stakes in businesses. I have been learning value investing ever since. From Munger, I learnt the importance of behaviour biases in investing. I enjoy learning about businesses and investing; and would love to get into it full time.

I am mostly sitting with spare cash and will invest only when I see real opportunity with market irrationality. I invested some money in capital goods sector few months back when it was going through tough time (BHEL at 140; and crompton greaves at 90). With the recent Modi euphoria, I got profit of more than 100%, so could not resist selling half of them to get the investment money back. I need to learn more until I have a good investment philosophy. I am also studying my behaviour in markets closely. I think I still do not have enough maturity to be a serious long term investor.

Hope to have a crash in the next few years. My favourite quote from Buffett is "Be fearful when others are greedy, be greedy when others are fearful".

Changes in lifestyle to attain financial freedom:
1. Paying housing loan whenever I get some lump sum amount. The only loan I have.
2. Started saving - though I am not good at it. Tracking my expenses using an excel sheet.
3. No loans (will buy costly items only if it is really needed and I have ready money).
4. Read at least for an hour everyday.

[VindyWheels]

Hi you can register without referrals or invite, its not a closed forum.

Activity is less as the kind of discussions we have there becomes too overwhelming for most folks. That was the case with me too. You will have to learn and spend time on analysis to participate meaningfully in VP.

And most folks want "instant gratification" through stock tips and few want to know if the company they invest in will survive next 10 years! We research for days before buying a 20k mobile and for months before buying the 10 lac car.....but when it comes to investing which can potentially make you a free bird, people invest based on a stock tip in seconds!!

Originally Posted by JMaruru

Is the registration by invite, or do we need referrals? It seems like a closed forum.

[anand_saraf]

Originally Posted by VindyWheels

Thank you PatienceWins. With that handle you definitely cannot be a trader...Patience is the key to investing! If you can earn 100% return in a year the 20 lacs becomes 40 lacs...but that's not much of wealth. Really good patience will do wonders if the process is right.
....

Search for answers earnestly and some path could show up. But be rational and have a plan B.

Cheers and all the best for achieving "Nirvana" (financial freedom)

Vindy

Excellent post and thanks for sharing. I too used to think for a long time about doing a similar thing.

I had felt that one needs to have a system / investment philosophy to do this on a continuous long term or full time basis. So a couple of years back, I decided to try a simulation exercise wherein I took about 6 lakhs of savings to try investing with a theory/strategy; about what to look for when buying the stock, some preset return percentage for exit, allocation in a basket of stocks, etc. I wasn't doing day-trading but rather trying short-term investment wherein I might buy something and sell something every month. It went okay for about 5-6 months and I was making a monthly return on it - ranging from 8% to 20% in a month kind of return on invested capital.

The primary mistake I made was to not to have a strict stop-loss. Somewhere along the way I got busy at work and took my eyes of the investments, procrastinated exits when I should have sold at loss. By the end of the year, there were lots of stocks which were showing 50% loss and invested capital of 3 lakhs had become around 1.4 Lakhs. Didn't have the gumption to sell and book the loss, so instead stopped my exercise and held those AS-IS to exit at some point.

As a background, I have been investing in the markets since 1989 or so but with multiple breaks whenever I have had losses; like after Harshad Mehta, and so on. Growing up, my favorite movie was Wall Street and I always dreamed of a making a career in stock broking on Wall street. Life had some other plans for me so that didn't happen. Did try again around 1992 by signing up for the ICFAI course here but couldn't put my head to the books by that time.

Few lessons I have learnt is that strict stop-loss is very important and you must be willing to book a loss when your purchase hasn't worked out and that sometimes a company may be intrinsically good (from value perspective, valuation perspective, growth perspective, etc) but may not move in an upward direction for years - maybe due to sentiment or some other reasons. Also that your own personality has a big say in what kind of investing/trading you do - and it is very important to understand yourself/your own personality to become a good investor/trader. For example, for myself, I have realized that I prefer to book when I have average returns (even if there is a possibility of huge returns) rather than facing the possibility of losing the average return too.

[S_U_N]

Great to hear these stories/ experiences.

About stop-loss, I am not sure if I understand when to book losses.
For example, I bought Mafatlal shares after Value Picks blogger recommended it, in January for Rs. 160/ share. It was almost at its peak. The lesson learnt was never buy anything that Value Picks blog recommends in the first week, else get it immediately on Monday morning.
So, after that the share fell down to approximately Rs. 110 in March and I had made a decent loss. But since the total amount was nominal, I did not book the loss.
Today the stock is at Rs. 151. Should I book loss?

Similarly, I bought Tata Steel stocks in mid December for around Rs. 413. The stock fell down to around Rs. 218 in March. I did not book loss.
Today the stock is trading at Rs. 550 (approx.) and I don't have any idea why it has gone up so much.

Still, I am still not in a hurry to sell.

Edit: I am looking for a good website with nice charts of stock prices. Moneycontrol has too many adverts.

[rahulsharma2008]

Originally Posted by S_U_N

Edit: I am looking for a good website with nice charts of stock prices. Moneycontrol has too many adverts.

You can use this website which has all the charts available. Brilliant features too.

http://www.bseindia.com/charting/BSE...&expandable=10

[anand_saraf]

Originally Posted by S_U_N

Great to hear these stories/ experiences.

About stop-loss, I am not sure if I understand when to book losses.
For example, I bought Mafatlal shares after Value Picks blogger recommended it, in January for Rs. 160/ share. It was almost at its peak. The lesson learnt was never buy anything that Value Picks blog recommends in the first week, else get it immediately on Monday morning.
So, after that the share fell down to approximately Rs. 110 in March and I had made a decent loss. But since the total amount was nominal, I did not book the loss.
Today the stock is at Rs. 151. Should I book loss?

Similarly, I bought Tata Steel stocks in mid December for around Rs. 413. The stock fell down to around Rs. 218 in March. I did not book loss.
Today the stock is trading at Rs. 550 (approx.) and I don't have any idea why it has gone up so much.

Still, I am still not in a hurry to sell.

Edit: I am looking for a good website with nice charts of stock prices. Moneycontrol has too many adverts.

Well, I used to have exactly the same thoughts as what you mentioned. And I have also always had similar examples like the ones you mentioned just now. Right now, I have been exiting a few shares that were purchased around three years back and were sitting with 40-50% or more losses and have just now turned no-loss type of situation.

The point I was trying to make is that if you have invested it as a side activity - then you have the luxury to maybe wait it out for a few years or even indefinitely. But if you are doing it as a full-time activity - then the capital you invested gets stuck in those shares - and you can't invest in something else till you exit those investments - assuming you have fixed a finite capital to invest like I had. So you are hit both ways - stuck with a share in loss and can't partake of new opportunities for lack of capital and then it becomes a vicious circle.

As far as what stop loss to fix - what I arrived at for myself is like this: if the stock falls say 50%, I have lost too much capital to book a loss and not worry about it and if it fell further from there, it's a bad situation for my capital. So, the stop-loss had to be somewhere where I would be able to walk away from the loss without feeling too much of a pinch. So I would stop-loss at anywhere up to 20% depending on my conviction about the stock, %age of loss on the share price and %age of investment in that from my total capital. For example, if I had invested 50,000 out of 3 lakhs capital, I could stop-loss at 10,000 (20%) even though 20% is quite high, because the net amount is manageable and under 5% of my total capital - if I was convinced about the transaction.

Of course, this is my personal opinion - and I am no expert.

[faustus77]

Originally Posted by VindyWheels

Hi,

I do not have much idea about most of your stocks. Generally PSUs are having a good time after Mr Modi took charge. So it may not be a good idea to sell good quality PSU stocks.

I somehow did not like Tata Investments, it is like a mutual fund which invests largely in Tata group companies and that too there is no sound reasoning in investing more in "x" over "y". In such a scenario why should we trust them to make the best use of the company's capital?

If you like only large caps I would suggest ITC (Rs 335) and TCS (Rs 2000) at current levels. That would be two "sleep-well" stocks where-in you need not even track quarterly results

Hi.
Thanks a lot for your reply.
ITC : Bought in 2005 and still holding
TCS : First bought in 2007 and have been adding a few shares now and then.
Incidentally both these shares have not been going anywhere in the last few weeks. But I have no intention of selling them.
Tata Investment: It has been underperforming the market.Reading the message board on moneycontrol(taken with a pinch of salt) it seems to be heading much higher.
Once again thanks a lot
Regards
PS: Your Navneet has been jumping recently. For a long time it was in a congestion zone.Seems it has broken out now.

[drsingh]

Has anybody looked at Max India? From a long term fundamental perspective? Any thoughts?

[sgiitk]

Folks. Let us not discuss individual scrips. If I buy and you sell then I expect the price to go up, and you down! My judgement against yours.

[VindyWheels]

Hi Patience, great to read your post, I can see that you are making a genuine attempt to learn and your steps to cut expenses are really appreciable.

Just to understand your thinking process, if you do not mind, can you state what your hypothesis was when you bought BHEL and CG?

Originally Posted by PatienceWins

Excellent post and a truly inspirational journey.

I invested some money in capital goods sector few months back when it was going through tough time (BHEL at 140; and crompton greaves at 90). With the recent Modi euphoria, I got profit of more than 100%, so could not resist selling half of them to get the investment money back. I need to learn more until I have a good investment philosophy. I am also studying my behaviour in markets closely. I think I still do not have enough maturity to be a serious long term investor.

Hope to have a crash in the next few years. My favourite quote from Buffett is "Be fearful when others are greedy, be greedy when others are fearful".