Transcripts for TED Meet 4

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Transcripts for TED Meet 4 – MumbaiPune Chapter

Post 1 
Q: What is risk? 
Basant: 
●        Over a period of time risk comes from doing what you don’t know. 
●        If you are buying strong stable consumer oriented companies, you will get your money back. It may take a some time but the chance of permanent capital destruction as Buffett says is minimal.. 
●        I don’t believe in mindless diversification. Something like, “I don’t want to own 3 stocks but I want to own 30. So I will buy 27 with little or no information against only 3 in which I have good information better buy the 3 and put your heart and soul into it.” 
●        Risk is buying 27 unknown names rather than buying 3 known names. 
●        With a 5 to 10 stock portfolio I can’t buy any stock that may be cheap. Even though they may be very cheap you have to leave it alone. With a few stocks one has to think exclusively in terms of return of capital rather then return on capital 

●        Now let’s say you have a 15 stock portfolio. Maybe you can then take a 2% bet on those cheap stocks. But with a “2% exposure majaa nahi aayega and with 20% exposure in them neend nahi aayegee”

Q: Your experience with investing? How did you start? 
Basant: 

. 
●        I wanted to invest full time. I read Jim Rogers where he said he wanted to retire at 37. So I said even I will. And 2010, I am 37. 
●        In 2000, my family business went bust due to political reasons. We lost all the money and I had to relocate to Calcutta. I did not  know what to do because we were losing money fighting court cases with the J&K government I thought the best way to earn more money is to buy DSQ and GTL. because the gains would have been faster, those stocks went up 10 times between 1999 and 2000 and then fell 99%.
●        Then I started teaching because I thought this will ensure independence as well as earn money to invest. Got introduced to One up on Wall Street and Warren Buffett and tried understanding their philosophy, meanwhile made quick money buying the beaten down SSIs and the HCL Techs post the WTC crash, and a quick multibagger in E-Serve Mphasis, Mastek and built up some base capital. I borrowed and surrendered all my LIC policies and fortunately the cheques came in the week after the WTC went down.

In 2003 came the real big one, a student told me about Pantaloon and I had read One up on Wall Street and all I thought was a 100 bagger I bought it really early and then leveraged on them (margin funding) and bought more of it in an infinite loop bought lots of Trent and then TV 18. All these stocks went up and so did the leverage and my position. It was all a matter of chance. I did not  do anything. Pantaloon did it. I used to see NASDAQ every night . “ke  jyaada na gir jaaye varna margin calls trigger ho jaayenge”

Also I had nothing to lose. But given a chance I will not be able to do the same thing again. 
When people say, I don’t have anything to lose, they generally keep on loosing. It was a kind of a good solid random event that happened with me. 

If you have a steady flow of income you are one of the most fortunate people on earth because you can invest every month. If the amount of money that you are putting in the market is manifold your monthly income, only then it makes sense to become a full time investor. Else it might not be worth it

Try and get a job where you have to work for 8/9 hours and not 16 hours. I strongly suggest that don’t leave a job unless you have a big amount at hand. Before you become a full time investor, you should have 50 times your annual expense as surplus. 

Edited by basant - 01/Sep/2011 at 8:33pm