The Market Is A Great Guru Vinod Sethi

TITLE: The Market is a Great Guru — Vinod Sethi | The Long Game CHANNEL: Vishal Khandelwal DATE: 2026-04-20 ---TRANSCRIPT--- When I was a boy, my grandmother kept a small plant on her window sill. Now, I don’t remember what kind of plant it was, but I still remember that she watered it every morning the same way and at roughly the same time. I also remember asking her once she didn’t just water it a lot once a week and get over with it. She looked at me like I had said something strange and said, “That’s not how it works.” I think about that a lot. not about the plant, about the look on a face and about that idea that some things have their own pace and you don’t get to negotiate with them. I now believe most of what matters in life is like that plant. Whether it’s building wealth, raising a child, learning a craft, staying married, or even thinking clearly, none of it happens quickly. And yet we live in a world that keeps asking us to measure ourselves every few weeks, every few months. And against people who are also measuring themselves every few weeks, every few months, almost nobody seems to be playing the long game. And the ones who are quietly, they tend to end up with lives worth paying attention to. That’s exactly what this show is all about. It’s called the long game. For those of you who’ve been here a while, it’s the same show you’ve been watching as the 1% show, just growing into a name that’s that better reflects what it has always been trying to be, which is conversations with people who’ve stayed with something difficult for a really long time. Most of my guests would be investors, but over time, I would love to bring on anyone whose life is a case studying patience in doing one thing slowly for decades and letting it compound. The name of the show comes from a book, The Long Game, that I just finished writing, but the idea goes back much further than that. It’s what I’ve spent most of my adult life trying to understand. I don’t have a full answer, but I have guests and I have questions and that’s usually enough. My guest in this first episode is Venote Sati. We recorded this conversation in August of 2025 when I was preparing for the book. Now, Venod has spent more than 30 years in Indian markets. He was the CIO of Morgan Stanley Investment Management in India in the 1990s and since then he has been investing his own capital teaching and thinking about markets in a way that very few people do. He’s also one of those rare people in finance who talks about markets and life in the same breath which is exactly the kind of guest this show is built for. Here’s our conversation. I hope you enjoy it. Great. So, so first question, uh, you know, the looking back at the very beginning of your career when you were just starting as an analyst and investor, what were some of the misconceptions you carried about this profession and what did you think the job was about and how did you how did reality teach you otherwise? Well, uh personally I was very young. I didn’t uh and India was also a different country in the 80s. We were still per capita income was whatever $300 or whatever. So the context is different. So you in the late 80s you sort of felt that you were coming from a uh from uh you know in India which is under potential at that point today is a very different world and you’ve gone to um the superpower on earth so there was that as as a 26 year old 25 year old you’ll have that natural sort of bias that you know as to they’re going uh this is Wall Street and all of that. So, so more than any uh bias, it was it was just uh it was a different uh universe in a way. So you went from what was a 300 per capita country and perhaps US was at that time I don’t know forget the exact number but 25 30,000 per capita uh country so there was that uh so one had to adjust to that reality that you you’re actually in um you not only in that economy but you’re one of the premier banks working in that economy and you know uh and um you’ve been uh you’ve been chosen to manage money. So I’d say um the preconceived notions were not many. I mean you just went wideeyed. It is the way you would go if you you know went to Disneyland when you were 10 years old. So it was just a just uh you know it was a lifetime’s opportunity to walk in and work there that time. And um so yes so the those were sort of the uh I’d say the blanks canvas or you know that was the sort of context of that moment. Uh so that’s how that that’s how you went. So you know you learning everything and you just preassume that everyone is and everything is smarter than you are. But then uh you slowly realize that uh that isn’t the case. We quickly realize that actually and uh so then then at the end of the day you know the human you know it’s as human a place New York is a Bombay I mean it didn’t take long to figure out that working in Araban Point or working in New York is you know okay similar city sister cities in some way. So you got into the groove very fast. uh post that. So um but over time you realize that human uh human emotions are what they are uh markets are emotional people in higher positions are also human and uh so so over time and that’s that’s called learning I guess that you keep moving and so so that was sort of the uh context of that error and that’s how it works you know

so I think over a period of time so you had a start with Morgan Stanley and very young at your age and I think uh rightly said that uh uh there were some misconceptions I think some preconceived not notions not many but they were quickly dispelled with I think as you as you as you learned more into the into your career I think the amount of noise and information and confusion that time probably I don’t know maybe you can correct that may have been much lesser compared to what a young analyst getting into the market or into the industry today is is is that a correct assumption I’m making. Well, uh the uh ignorance of that era was lack of data. The ignorance of today’s era is too much of data. But ignorance remains. So, so opportunities remain as a result. So as long as there’s misconceptions and in and ignorance floating around, we investors have a job. So that uh continues. I would say the the earlier era of lack of information, we assume that the internet era would make us all much more intelligent and better investors and so on. But um I think is led to the error of uh of of of stupidity also. So you see that in politics extreme people get voted into power people you know all sorts of things going on in this world right now. So I’d rather not take names and so on and so forth but you know uh we’ve transcended from an age of ignorance to an age of stupidity today. So that’s okay. That’s great because if it was an age of enlightenment then you know we’d be making 1% returns. So so essentially it is important to recognize an age for what it is. So it’s important to realize that information itself doesn’t make you either a better investor or a better decision maker but it is relative to uh what is the psychological bias of that time. So making money in an age of stupidity is easier than uh in an age of ignorance. So everything you know swings one way the other and um so I think we formed self-reinforcing loops which is if your uh social media will reinforce self-reinforce if you think the earth is flat you’ll get more and more videos on how why the earth is flat and so does AI have that bias. AI also has been accused of uh self-reinforcing uh and making you feel good. So so there is uh so there is all of that. So the bottom line is that uh as long as there is if as long as people don’t see reality for what it is and if you can then you can make a good investor. You know if you had to even you know broadly summarize that is what it is which is you capture in mispricing because this sort of delta is shows up as mispricing in in in stock prices and that is your that is your edge which uh if you can hone that down if you if you can get that delta and get it right, then it’s perfect. So, so how do you do that? Not easy, but then you don’t have to capture every delta. So, you don’t have to catch every fish in the river. So, let’s assume the market is like a river. You’re a fisherman. Okay? So, you’re interested that you catch a reasonable number of fish on a predictable, consistent basis. You don’t need to know the whole river. You don’t have to beat anyone. There’s enough fish for everyone if they want to. It’s not like a boxing match or a tennis match where there’s one winner and one loser. The banking business is more like a fisherman’s business. So you know if you just do some and you catch sufficient amount of fish you’re home. So, so one shouldn’t get overwhelmed with also uh too much of data, too much you know there thousands of listed stocks, there’s so much there that you can get intimidated as a young analyst as to where do you begin? And so like most young analysts you believe that working 12 hours a day and you know reading as much as possible giving equal weight to all information that lands on your desk. It’s like an equal weighted portfolio. So like I give you 100 research suppose you you devote as much time to page one as page two and page three because uh so on and so forth then you’re in trouble because those pages are never ending. You’ll feel exhausted. You would have worked 18 hours a day. You would feel good that you’re hardworking but hard work has nothing to do with returns. I mean the correlation is very it perhaps is a slightly negative correlation. So you know it’s not that you get better by staring at uh more and more data. So the challenge in the investment business unlike many other professions is that there is some sort of a linear relationship between hard work and output. You’re a factory worker. You’re a dentist. you’re a cardiologist, you’re a lawyer, you know, you’ve been taught since childhood to be on that road, but the uh but the uh but I don’t think it it uh that relationship holds up. I remember some odd conversation that used to float around in Morgan St. I might have the facts wrong but I think there was a very prominent global strategist of ours called Byron Wi who was the head of global strategy there for decades very well-known guy he happened to be a good friend of Soros or childhood friend of some link they’ve known each other for decades so one became become you know a very wealthy guy the other was also wealthy guy but you know Soros was so Soros would apparently laugh and tell Byron, you know, Byron, the reason I’m more wealthy than you is because I didn’t have to come to office every Monday. I didn’t have to come to office every day. So, uh you know, it’s it’s it’s funny, but it’s also profound. I mean, he’s uh he is saying something meaningful. So to live with that nonlinearity is not an easy thing to do because it can I if you let’s say you worked very hard but you you know you didn’t make good returns or whatever it can uh it can stress people out especially youngsters and uh the ability ability to wake up when the woolly mammoth is in front of you and to be sleeping otherwise is an art that money managers need to cultivate and so so how you do that is a personal choice I mean there’s no I can’t say do this and that so so how would I sort of do it like I’ I’d swim every day okay because swimming is you know one you can enjoy swimming The others you can ponder over ideas, you can see patterns, you can do other things. And the great thing about swimming, you can stop swimming and start investing for instance. So I’m just giving you one example. I’m just saying you can figure out your own pattern. But in uh to be in a in a relaxed uh state where you’re not uh forcing, you know, it reminds me of people at a railway station where they they’re waiting for a train and many of them come to the edge and look whether the train is coming. You see that is an analyst. He’s hoping that him looking will make the train come faster. It’s not going to. Okay. So, you might as well relax. So, when the train comes, it comes. But when it comes, you better be awake. So, very often the challenge in working in an investment bank as a money manager is that an investment bank, everyone’s working 24 hours a day. Okay? Everyone’s not a money manager. you’re just hanging out. You’re you’re staring out of the window wondering whether, you know, you should take 5% of HDFC or 10% of HDFC and what are the pros and cons of both and uh for that you have to stare out of the window for a month, you see. But to anyone else in the office, you look jobless because I mean, look at this guy. You know, where everyone shows up at work at 7 and you’re staring out of the window or you’re just like chasing around because what else can you do? So to come to that conclusion, there’s nothing else you can do. You can’t work hard and come to that conclusion. So it is just you know modeling in your brain managing risk you’re managing you know events you’re managing you’re thinking of it’s it’s a you’re following your probability sort of function in your brain as to you know how do you uh this fine line between being heroic and you know crashing everything in markets it can happen overnight and so how do you pace This is these things out. So now in what way will hard work get you there? I don’t know. I don’t think so. So I think analysts need to know that in markets they need to cultivate that at the end of the day you will get paid for pain and patience. It’s a fair price. So they asked the there was a very interesting interview of the Nvidia uh founder recently he’s one of the you know the largest mag uh market cap company in the world and someone I think in one of the interviews asked him a question that given same question that you’re asking if you had gone back to your younger selves would you do what you’re doing he said because only I know what nightmares I’ve gone through to reach here. So if I had to relive it, I’d never do this. It’s shocking but it’s true. But at the end of the day in investments also whether you like it or not you’ll have to play pay you’ll have to the price you pay for significant returns is pain patience that doesn’t go away however bright you are and you know you’ll have to wait for long periods of time and you know and sometimes stocks give you a return in a what you waited for a decade gives you that return in 3 months. it happens. So uh so now those are skills that you need to it’s uh you need to cultivate I remember there was a there was some trade I forget the exact detail but this is part of forklaw at Morgan there was a guy who in ’ 87 shorted the the Dow just uh you know about sort of early in the year not October 87 when And there was a big crash. He was expecting a big crash. So he was seriously shot somewhere May June or something. You know about 3 6 months before that. I could be wrong a bit on the facts but the fact is less important. And um so apparently the market kept going up and uh this guy went on a vacation. He said I’ll return when the market falls. Okay. and October 87 when the day the market fell I think he made for that era he made 55 million or something for the firm and I think that quarter also Morgan Stanley was profitable the October 87 quarter thanks to one guy with insight with patience ability to take pain and hang in there and uh and get and and get it. Yeah, it happens. So um I mean the reason I’m giving some of these examples is just to give context to young people that uh youngsters sometimes feel like till that time you’ve gone from first standard to second standard third you know there’s a linear you would like to make 20% return the first year you like to make uh and so on and so forth but the sensex went below 3,000 every year between the between 94 and 2003 every year. It went below 3,000 and so now that is what 9 years. So patience. So anyway stocks did did well and so on and so forth but it isn’t it wasn’t easy. So for people who lived through the that era it was a tough market. So I think for in for analysts I think you need pain, patience as I said. You need clarity of mind, insight and you know declutter your uh brain in whatever way you can. I think these are vital and not everyone has it. So, you know, I I I think you’re probably born with it. And if you’re born with it, you get better. So, there are many uh many pride guys I know, much brighter than me, who are poor investors. But that doesn’t mean they have but they make careers in in entrepreneurship. They make careers in other things. So, they’ve been investment bankers, they’ve been deal makers. So you know so you have to figure out early that whether you’re cut out for this. So uh otherwise it can be an extremely painful prof you know uh career path. Yes you your fantasies of big money is being made and all that but uh but the mortality rate of all the players since the 80s and 90s is very high. So there’s a very small there’s a very small universe that gets glorified but it’s probably almost like a statistical u uh auditing. So a senior charter director met me and he said he he you know he he told me like that I invest only in startups and and uh and unlisted situations. So, so I said why? He said I can’t handle daily price movement. It just like it just I can’t I’m paralyzed. So now so the great thing about him is that he knows what he’s what makes him tick and what doesn’t make him tick. And because he’s figured that out, he’s done very well. Not that he’s done badly. I’m not saying there’s uh but if you if you lack that ability to have this uh uh skills then you should reassess. So that’s what I would tell young analysts that you know Wall Street movies, Hollywood movies, everything makes it look racy. you see billionaires and you know that you know I mean a lot of Wall Street channels are like you know sports channels now you everything looks racy and so on so forth but it’s not so it’s at the end of the day uh challenging maybe boring business where uh you just have to spend a lot of time waiting very often between action points. So, so I I always caution youngsters because I see a lot of that that uh lots of youngsters get into it. Then there’s also I find that youngsters feel the peer pressure today that you know some other 20-year-old has done this and my friend is doing this and that. So there is that. So that is a big danger. The big danger is that this isn’t a tennis game. And uh if you I mean market in a funny way is like a mirror. If you suffer from greed, you’ll get screwed. If you suffer from fear, you’ll get screwed. So your biases will finally show up in your outcomes. And uh so there’s a you know so that I think is also I find among young I I meet a lot of youngsters uh I hardly meet people of my age group I meet prefer to meet 20 30 40 year olds just because you know they’re energetic and uh I learn a few things from them also as to how they’re thinking. So sometimes I feel that they unduly put this pressure on themselves that you know they should free themselves a little from this competitive uh pleasure because the guy who does well over a decade or to three decades and four decades isn’t the guy who’s winning the game every day. I mean, I think Warren Buffett probably made 99% of his money after the age of 60, you know. So, at 55, you would have just be a wealthy guy, but not a legend. So, he’s he’s been playing that game for 50 plus years, and uh he’s gotten there. So uh so that is that is you know that is uh but the statistical averages are I think the the statistical odds of young analysts and people wanting to go in Bollywood or Hollywood may be about the same the hat rate will not be materially different so every 100 people who want to do it I don’t think uh it can vary you out if you’re not self-aware about whether the skills you have are uh or your strengths align with what the market requires. So uh and very often health suffers as a result. So you know lots of people also have health issues as a result and that comes from that little distortion. you can’t sleep well at night, you know, all the everything adds up. So, and there are always events they covid came along, there was 2008 crisis, there was a world trade center, Rajiv Gandhi gets assassinated. When is there not enough reason for you not to sleep well at night? There’s endless reason. But if you can sleep well every day that you’re a money manager and you don’t miss out on your sleep, that’s very important. Two, and that’s also a litmus test whether you’re cut out for it or not. If prices make you sleepless, then you’re in trouble. Or if prices make you irrationally happy and you want to hit the bar daily, that’s also a problem. So because in both cases, you’ll get hammered if you don’t sleep well or if you drink too much. So yeah, so the ability to make a lot of money and go to a bar and drink a glass of milk like Phantom used to in his comic books, you know, a long time ago. then you’re something. Then you probably uh or if you make a lot of money and you still take the same taxi home, glory to you. So these are some of the you need to also cultivate as a young person. So one of my friends met he was studying at Colombia. He was a prominent industrialist in North India. He was in Columbia University and he was taking the subway to go downtown and then this was at night and then u he saw some guy in a suit who looked like it is Warren Buffett but he couldn’t believe it. What the hell? I mean like you know 9:30 at in Harlem there’s this guy who looks like Warren Buffett uh standing at the subway station. So he like a nice Indian went left right it peered into him. So then Warren Buffett called him and said like uh what’s it you know what’s up son. So this guy asked I’m sorry but are you Warren Buffett? He said yeah I am Warren Buffett. So so he said what are you doing in the station? He said I’m going downtown just like you. So uh now a guy who can do that is uh is probably fit to be a billionaire. So that is uh so all these things there are some certain qualities that many of these people do share the ability to be grounded at all times because unless you’re grounded you’ll make a poor man money manager. If you if you’re not if you don’t see the human situation, the human condition, then uh then you’ll pay a price in uh some other businesses possibly you can get away in a manufacturing and setup. Maybe you I don’t think you can but anyway I don’t know enough about other uh professions but this is a common um theme I’ve seen. So for instance I had uh and so this is what I tell young analysts also that uh so my whenever I used to go to London I used to uh meet my final meeting was always with a friend of mine who was I think the heir to a 500y year financial empire of Europe. I won’t take his name, but he’s his family’s been having good wine and food and wealth for five centuries. And so I would always end by my last meeting of the day would be in his office. So I’d come in a cab and you know get off in his office and and so you know we chat about the heing chat and then he would say so how are you going to the airport so I keep quiet because I know he’ll recommend me to take the subway with him the underground because he lives somewhere on the way. So I say, you know, my car’s waiting, but I’m saying like, you know, I don’t know what I’m doing. So he’s okay, let’s let’s let’s take the underground. We’ll get another 45 minutes. And uh so this air to the fortune of um it’s a crowded underground train. I’m just laughing at the fact that no one in the train knows who I’m talking to. But this guy’s unaffected. He’s sitting there and he drops off and uh then I go to the airport. So I think analysts should make an effort to step out and meet interesting people because you can’t learn by reading. you can learn these things change you fundamentally when you uh when you live that. So, I I did the same thing dozens of times. And I’d say that taught me a lot about uh how you should be when you’re wealthy. And uh and unless you you touch and feel situations like this, you know, it might just sound like fantasy and that you think every guy the first thing you do is to buy a Mayback and float around. But um yeah, so uh I mean one uh so many well-known the top money managers of our business would take the train home in New York and live in rented homes and walk to the office from the station. I mean it’s uh so in Midtown Manhattan you you could you would meet the who’s who walking to the office. I mean I’ve seen I’ve seen like all the legends I’ve seen them walking on the streets. So, so being grounded, being real is uh and know well that money is a is a flow. It can disappear also. So don’t identify yourself too closely with wealth or or don’t live under the delusion that it’ll be forever. So I remember Pervinder Singh uh was in her office ran back seat old grand chairman I think it’s four or five years before he passed away and uh he had great plans this that and the other and then look what happened I mean his children landed up in prison lots of things happened I mean it’s very sad But that’s the nature of money, nature of And why talk that far? I mean, let’s talk about Rahand Data. I mean, I’ve seen him uh I don’t know whether I’ve spoken about this before, but like is raining very heavily in Bombay, you know, right now. I think this was in the late ‘9s perhaps. It was raining very heavily and this was after the Asian crisis and I was sort of managing the Singapore office also and so uh all traffic came to a grinding halt about 3 kilometers before the airport total stop and so my option was to wait in the car or go walking in the rain and catch the flight. So I said okay clear decision no debate. So, I got off the the the car and I went uh walking to the airport fully drenched. I see no one in the airport. There’s one guy in a suit about 50 m ahead of me looking carrying this and walking. And as I come closer, I think I thought it was Radhandara. I got up with him and I said like why are you working? So he told me why are you working? I said listen I I have a job you know I’m an employee of Morgan Stanley. I just laughed. So he said no no I I also have some important work. Uh so there were two of us walking all the way to the airport which is 3 kilometers and then we got into the and Singapore Airlines was waiting there and so they had towels ready for us because they heard that Ratna is coming and thanks to Tada I benefited also. So I got a shirt, I got a towel, I got upgraded to first class so on and so forth. But look at Mr. Tata I don’t think even employees would do that walk 3 hours I mean 3 miles in the 3 kilometers in the rain and uh but he was doing it and carrying his own luggage. So, so you know these kind these these are marks of greatness in my view and uh so I can tell you many such incidents of the of Mr. Tata. So youngster should know that that it isn’t about glitz and glamour and being uh seen at the right places but it is having being so well grounded and self satisfied that you can do all this that you can walk to the airport. So I think people should put themselves in situations where they uh they can witness such things. So I think going getting out of the office, factory visits, going here and there is helpful. Meeting other money managers, getting out of your comfort zone and then you’ll see greatness all around. You will not see I’m not saying greatness exists only among the wealthy money managers. There is greatness all around. But I remember once I again talking about dream once I got into Bombay airport and there was like the old Santa Cruz airport those days it was like 3 ft of water outside and this is like 1:00 a.m. So there is nothing my car no car nothing and there’s this one girl at this one of these cap companies you know Akbar travels or whatever so she was there some young kid 22 year old girl and so I went to her and I said can I you know is is there any chance of getting a taxi even I’m laughing she’s also laughing and then she says okay let me try so she got on the phone. She went out in the water. She hustled and screamed and shouted and got me a taxi within an hour. Somehow she doesn’t know me. I don’t know her. She’s just the ordinary Bombay citizen doing a fairly low-end job. But I was amazed at her commitment you know and only good things can happen to such people. So a greatness exists at every level and your ability to see that is important. It need not come in a Mercedes. It can be just that one person out there and uh and there are many such people. So I think a good job of a a money manager’s good job is to see how the inner DNA of a person is. So I remember uh looking at a company I’d gone for a company visit where I found the promoter spoke very rudely to the security guard you know he was wait around and so on that is enough for me not to invest in him you know and uh and the company the stock also went to zero and I also went with bridge and munjal for the hero Honda plant visit with and at least 500 workers touched his feet while we were walking around. Yeah. Now that tells you something and we took a large stake there. I in fact went to the Haldi Ram in Kolkata when it first opened. They had opened one big uh what do you call it? Uh food court. I think it was some one lakh square feet. It was some It was very big. First of its kind in India in a large city. So he had set this up and um so I I went to his office. I I had heard about it, you know. So I said I I want to go there. So those days I used to wear a tie and so on and so forth. So when I walked in the Ali owner thought there’s a raid on him. there must be some some income tax, some ED, who the hell, some guy has come to raid him. So he panicked. I said, “None of that, you know. I mean, uh, I just felt like I want to see you. I heard you’re great, so I’ll just come to see what you’re doing.” So he he I realized because we had some common friends. So he quickly understood that, you know. Then he took me around his facility and the amazing thing about this guy was he didn’t speak a word of English by the way. He didn’t even know hello but he a super bright guy. I absolutely admired him. But as we were walking around every repeat customer he saw in that store he was touching their feet. The owner of Almir was touching the feet of his customers. He touched the feet of at least 25 or 50 odd regular customers he saw in the food court while he was taking me around. I didn’t I didn’t have to I was pretty sure that day this guy is going to become very big. No number can tell you that. But I just knew in my gut that this guy is going to be big time. He just sold some a stake at some fancy valuation. He’s earned every penny of it. He was that way when he started. I mean, amazing. So uh so you have to have a certain pattern recognition. You got to have you got to be able to see under the skin of the matrix. You know you just can’t see you just can’t see numbers and say this will happen. So, uh, so your ability to to see things a little more as to what the intentions and the motivations of the investment that you’re making, the of the person driving that investment, I think you’ll have a better idea. Your odds of making money will be higher. So in this clutter as you said you know there’s so much of data there’s so much of all this but who’s going to tell you this unless you step out of your office and you actually I didn’t even have a appointment with them I just walked in because I just saw that building and I think youngsters should know that the world is much more receptive than you think you know where youngster no one stopped taking my calls I mean Rahul Bajage will also speak to us Mr. Chidamra would kindly speak to us Mr. One more saying what kind of speak the world is helpful. There are enough people whatever you say whatever you know you say at the end of the day uh this will be a common experience of people who’ve uh who’ve you know broken out in early age. They’ll always say that they found everyone helpful, you know. So, youngsters should should make that should not feel too reticent about uh making that phone call. An accomplished guy gives a discount to a young kid. He’s happy that he’s caught. He’s okay to He’s okay if the young kid is stupid. He’s not you know he will give you that uh he will try to help you if you can if he can I mean there’ll be some arrogant guys of course but my own experience is that uh people are more helpful than you think. So I remember writing a I mean I had very little pocket money as a kid. So I I developed this crazy habit about uh writing letters those days postal letters you know there was no email of course in the ’ 70s and so on I remember writing a letter to Indra Gandhi time I don’t know what I wrote also something some I was high school student but the funny thing is she replied so I wrote on Monday and my mother opened the letter on Friday she was shocked that Indra Gandhi is written to a kid who’s like just gone to school. My point is if you make the attempt the the world is more helpful than you think. So that optimism should be there among youngsters and don’t hesitate to reach out and this is a common theme even if you hear Steve Jobs and Gates and everyone they they’ll all tell you that teams got an apprenticeship at unit Packard when he was a school kid because he got his number from the yellow pages from the white pages you know there used to be telephone directories those days and he found that Mr. Packard’s number is is the thing. So you just called up Mr. Packard and said like I’m Steve Jobs and I want some chips or whatever. So the guy gave him a job. So so break out of the mold, you know. So in this clutter, I mean I’m saying all this because these are your these are sort of your breakout points if you will, you know, if you make that a dent. So yeah, I went on a monologue. No, I think that covered that covered a lot of questions in fact. So I had a lot of questions on that. I saw I saw some of your questions. Yes. Yes. So I just sort of since this is for the young analyst uh I was just sort of trying to say things that uh and giving them real examples rather than preaching you know about this and that as to uh how uh you know I mean these are some of the strengths you need to have and this is how you need to break out and create opportunities for yourselves. Mhm. And great. I think you mentioned about Steve Jobs. I was uh just reading uh I think one of his biographies where they talked about the and I think it was Steve Jobs who talked about the power of being naive right uh when you’re starting out because when you’re naive you uh you are not sure that something cannot happen and because you know that something cannot or something uh you’re not sure whether you are going to do it or not because and because you think that you’re well equipped to do that because not you’re not really scared about that this thing cannot happen and I cannot do it and nobody can do it and that makes you well equipped to do with it. So a lot of stuff absolutely absolutely I still ask the dumbest questions and uh start from you know building blocks you know even today I’ll ask if I don’t know something I will ask what it is and go by building blocks because to me it’s a mark of confidence if someone can ask the dumb question because he knows he can figure it out block by block. So, so never get intimidated by what you don’t understand. And there’s a big mistake uh investors make which is uh especially if you are say for for in for instance I was recently uh meeting a defense company which was organized by a lot of the the big names on Dal Street. So the guy had come to meet me and so we were talking and I realized that sometimes investors when you don’t understand for instance say tech or you don’t understand you know uh uh basic laws of science and so on so forth. you hesitate to uh to ask the simple questions and you run the risk of since you don’t understand you take it as a given that he they might be right and uh so I found that to be the case in this and you know it’s better to ask dumb questions and know that if something something can’t be explained to you then there’s either a catch or uh you shouldn’t invest. So always be naive enough to ask the simplest of questions and you know simplest of questions can you know you ask a series of half a dozen questions you will you will either get the answer or you’ll know that the other person doesn’t have an answer. So u yeah simple never hesitate to be alive as you said I think you mentioned in the previous response that a lot of these things are unlearnable or unteable because you’re born with them like the idea of curiosity the idea of being grounded right so most of the time we are not we cannot really learn them as we grow up we either born with that or we’re not born with that specifically about see being an analyst uh in an institutional setup and most analyst work if you’re not your own investor Right. You’re working in an institutional setup whether it’s a sell side or a buy side right and you take and you mentioned that it takes a lot of uh pain lot of patience uh uh to come to this kind of an idea that it takes at a lot of patience a lot of pain to really uh become great at your art whatever you’re doing as an analyst right how does uh in your experience so you you start you you started work with modern Stanley institution setup in today’s world I think the incentives are all I think a lot of misaligned incentives that institutions work with the short- termism. Given that setup and also the failure rate that you mentioned about that being successful after long many years is a statistical oddity. Given all that setup, how does an analyst working in an institutional setup really create that patience or have that luxury of time to go through that pain to become a good observer or good thinker or uh do you need to seek out mentors? uh do you learn from experiences? Is it pure luck? How do you deal with that? Good question. It’s tough. It’s uh very tough. The the incentives all misaligned and the bigger danger is that you might get uh uh you might learn the wrong lessons, you know, or you might you might just uh burn out as a result. So I think a few things are important. Uh one is try to find a your bosses need to be a little more longer duration. If you work in a setup which is looking daily enemies and so on so forth then you’re sort of doomed. Uh so you you need to get lucky also to have a a wise boss. So uh and very often you know people learn uh from you know so I would actually give credit to my bosses at Morgan Stanley not me to be honest and I really mean that for being patient with me and uh I mean hats off to them really. So that uh that is the missing side of the equation that you don’t see that there is your uh your environment is important but there’s a contra example to that which is like someone like Julian Robertson worked on the cell side and started tiger only at the age of 49 and uh so he took the he took He he concentrated that short- termism experience of being a sellside broker learned enough. So it’s up to you. You can sit in a gutter and also learn and you can sit in a t and also not learn. Okay. So he started tiger at the age of 49 or 50. I mean I could be wrong a little bit here and there. And I think he went around trying to raise money barely managed to raise 8 million out of which I think four or so was his own money and so on. I mean my facts may be a little fuzzy but the broad stories along these lines. So if you want to learn uh as they say that you know satyoga is so much better than kalyoga right but they say your chances of spiritual development are higher in kalyug than in satyug because happens every day okay in kalyug it happens once in a thousand years so now you can take two ways you can get enlightened by it you know okay if you develop velop an inner silence. You see the comedy of it all. Okay, it’s stressful if you partake in the game. If you just It’s a movie, you’ll learn and you’ll become very good investor. If you’re born with it, you’ll learn one way or the other. So yes, it is what it is and it’s a mad house and let’s face it, the market is a crazy place. Everyone’s the collective the question is basically how do you profit from a situation where millions of people want to get rich overnight those are that’s 90% of the market okay so it is a madhouse so so how do you create that stillness in you wherever you So it is in the borrowed piece of of the of Mount Everest or Tage Hotel or somewhere that you’re sitting. But if you can sit in this chaotic fun house of yours where everyone’s crazy and you could get fired any time, okay? And you can still create a stillness and uh see the either it can make you a very good investor. You’ll understand psychology better than others. So so there is no excuse and nothing can stop you know uh you can’t you you can’t stop a lie basically. So it’s up to you. So it can be in school, it can be stressful or like Julian, you can become a you can put all that to use one day. So so that but also in sort of a uh what do you call it? So Buddha famously said no. So he uh so apparently Buddha got enlightened and he chose to be silent. That’s the story. Then all the gods descended on him and said like listen you know you’ve you know you should you should preach and talk and help humanity. So then Buddha said that listen I don’t see the point of it because uh a person who has to get there will get there anyway. Yeah. And how much ever I have preached a person who doesn’t have to get there will never get there. So then the gods came up with a nice answer and they said that uh yes what you’re saying is absolutely correct but there are some people who are in that intersection set who might benefit from you know these are not mutually exclusive sets there is a small segment of people who will benefit from your teaching so that’s when Buddha apparently started preaching I think same thing applies to markets You see? So yeah, you can live by excuses or you can live by outcomes. So I think very poorly of a guy who starts off meeting me say I was poor, you know, I struggled and I’m like and you know puts me off right away. He thinks excuses will generate sympathy and therefore I will invest. Never. I’m looking for a guy who looks for no excuse. Only outcomes matter. So once you get into that mindset then uh then so that’s the other thing that people invest in excuses especially young anal young people so some guy came to raise looking some money some in some potential one investor who want to set up his own uh PMS or whatever he spent 45 minutes telling me how how uh you know his family lost everything. He came up the hard way this that and the other. Then after 40 minutes he asked me do you have any questions? I said none I have no questions since you’re so much into your own greatness. This is really patting yourself on the back that you are uh that you have everyone is a hero. Everyone has adversarial situation. So drop off. Uh so this is what I all my young analysts who worked for me I would say that I want no excuses. I don’t want to know whether something worked or not worked. not interested only interested in outcomes. Whether you come to office at 9:00 in the morning is also of no interest to me. Whether you come at all is also of no interest to me. I’m just interested in outcome. I don’t want to know you. I don’t want to know your wife. I don’t know want to know your kids. I don’t want to get into that. So I think if you start creating that that uh that attitude I think that is uh that sets you this shortens your uh learning curve. You’ll get there faster. Excuses tend to uh uh give you the wrong incentives as you said it miss you know these are the wrong incentives basically because it doesn’t really uh so so lots of people who I’ve worked with are still come meet me and all that you know they might have thought I was very tough at some point than the other but at the end of the day uh many of them still All of them, many of them talk to me and uh are in touch with me still. And so I think uh you you must cultivate that attitude because only then will the world take you seriously, you know. So uh so stop living on excuses that I have a handicap because you know I was poor and I was rich and I was this and that and the other. Drop all of it and you will uh you uh you’ll also end up destroying your ego. It’s good. Yeah. Your self-created greatness. So yeah, and I think young animals should also know that their job is to make sure that they uh make their boss’s life more comfortable rather than you know I mean the boss is not a school principal. You say you’re working on a fund management now your bosses what makes the boss comfortable you come out with brilliant ideas you know and uh everything else is a story so you know let’s be clear so your your incentives are sometimes misaligned because you’re fuzzy also in your head and um you’re using all these strategies to to survive and that’s not really helpful. You’re better off. I mean, if you’re a straight shooter and you come out with powerful ideas over time, I mean, you’ll be sought after. So, so there are two ways to survive. One is to be so good that no one can live without you. Or then the other way is to live by excuses. So is the blue pill and the red pill. Automorphas’s great line. But it it is I think that is what it is. I mean I love to tell this to young young youngsters because I think uh it it you know it it clears the clutter in the brain very often. It can that everything else doesn’t matter you know so much. So so this uh And I think I think youngsters would be would benefit from from decluttering themselves and walking on a courageous path like that, you know, and they will I think I think they will reach their full potential faster if they take that risk. I think it’s good. I think you mentioned about decluttering and and that’s I think where my next question was coming from. Uh especially in today’s world. I think you mentioned that uh when you were starting out uh it was the scarcity of information or right uh in today’s world it’s abundance of stupidity because there’s too much information out there and not many questions and not many people willing to really sit with their questions because everyone of us is wanting to seek instant answers and we’re getting confident answers from people. we’re getting confident answers from AI and that adds to our own confidence that whatever AI says whatever we think as the first idea must be the right idea. So there’s too much confusion out there, the amount of volume of data, opinions, right? Uh out there, right? So uh when you talk about decluttering uh uh in given all the situation all around the confusion and data and opinions, are there any specific mental habits or disciplines uh that probably you’ve learned to cultivate and you see around in those good analysts that can really make a difference between someone who either drowns in information and opinions versus someone who learns to filter and focus on what really matters. So any mental habit or any any ideas on that front? Yes, I think uh couple of thoughts on that. One is what you said is absolutely correct. I think education gives us the wrong incentives. It we have to answer questions. Whereas the real skill in life is to ask the right question. you know to ask the right question and the other is so in all this data asking the right question will give you the multibag as to what is it so what do I mean by the right question so right question can be how do you prioritize on a totem pole how do you prioritize what is most critical separated from important separate to necessary separate to would be good to have. Okay. So you equally waiting everything is a big disaster. So I don’t need to know the last final number in a balance sheet. I’m not interested in that. I’m interested in just that one critical firstly the critical important firstly I’m segregating what is the critical what is the important what is this I do all the time not only in balances in everything in life as to what I should do in the day also the critical because there are only 24 hours in a day there’s cluttering everywhere so you have to abandon ship you can’t do everything you can’t attend your your your grandfather sisters brother’s marriage and also there are only so you there are many things you cannot do. So you start with uh a hierarchy as to what are the most critical things which has the highest delta that uh I need to do today or even when you’re studying a balance sheet or company what is that one thing what is that one critical thing which can be the breakout here or which the noise is hiding you see and so leave the answers to the world. Everyone has that information. So I’m not impressed by someone who says I know the debt equity ratio and the average inventory days of a company. Okay. DK. So uh but that you equal weighted everything. You had that half an hour. If you can figure out what is uh what is the key driver which if you get an answer to can make this a profound investment or you know that this is going to not do well. So the ability to declutter comes from a state of mind where you’re looking for hierarchy of choices to make. Okay. And you’re not getting confused by the 20page reports and 30page reports. You’re not. So now if you read a 50page presentation with this mindset, you’ll be able to read it in five minutes and you’ll also find the fault in the presentation. You’ll find where the flaw is. So very often people would like get shocked that they would have worked a week for a presentation to me and that one flaw in that whole 50page I will point only at that and I would have read it only 5 minutes. Everything else they’ve done well. So now it’s not because I’m a genius. I’m not. I’m just saying because I uh I’m looking to uh I’m looking at that key question and whether I’m getting a clear insight out of the presentation. If I’m not it is very imp GBD produces a great presentation today. So it’s not going to make you a better decision maker. So uh so these are habits you need to cultivate. So you you also can’t get into the habit of enjoying reading for its own sake. So I’ll read a a mean force myself I I’ll give myself only 10 minutes say for instance to say read the Wall Street Journal okay and I’ll read it cover to cover but I can also spend two hours reading it and enjoying it and having a cup of coffee and uh and get nothing out of it. Okay, it might be fun but then you know you have to decide those are the choices you have to make. So so you know I’m I’m giving these suggestions because we live in a world of clutter. There are 100 podcasts to watch. There are 100 you know self-improvement uh things there are books and this and that nothing going to help you. But uh but if you realize that the real shortage in life is time okay and that uh so so you don’t have the luxury of getting the last piece of information digested and so on so forth and feel you’ve achieved something you’ve achieved nothing okay so give up this completion habit like you have passed an exam. There is no exam here. Okay. So your your so you have the only your only shortage is time. Your only weapon is time. And so how do you put it to best use? Uh and you need to sleep 8 hours a day. You need to rest for relax those 8 hours a day. So you basically have how much time do you have? So return of time that is more important than uh anything else. I’d say more important than money return on equity is return on time. So so if you cultivate certain if it you’re conscious of it you’ll do something about it otherwise you become a 40y old before you know it. Life will take over. So if you’re aware of the passage of time and then you have that sense of uh criticality and that that it’ll never come back then you’ll do something you’ll you’ll read a balance sheet differently you’ll read all data different G and the odds are you won’t spend half a full day watching cricket then because what you You just chased a ball. Okay. So if you ask me I watch cricket no. Do I watch a movie? No. Because that adds 20% to my uh so to me time is important. So whether India won or Pakistan won a cricket match I mean a day is lost. So not I’m not criticizing people who it depends on what you want to do in life. I’m saying if you’re a young analyst there are there’s so much leakage of time that you can in a world of so much clutter. You contribute to the clutter by having habits where uh like I remember I was I was told uh the channel of the firm had told me that you should learn golf okay. So I was actually taken to a coaching lesson. This is really funny that uh I remember it was the I think the chef was even standing there you know the coach is teaching so he asked me to hit a ball. Okay. So, I hit the ball. Then I stared into the sky and I flung my golf club and I told the chairman I don’t want to do this because suddenly I thought about this that I’ll be hitting a ball six hours gone just so that I can get to know someone. Okay. Okay. I mean, it’s I’m not saying it’s a good I’m not criticizing the sport. Don’t get me wrong. I’m just talking about what you my priorities. So, you know, it was uh yeah. So, unless you actively work at decluttering, first you have to declutter your time. You have to add expand your your time to the best possible because that’s your only nuclear weapon in your hand. Okay? And what compounds is the the way you spend your time. So it doesn’t I think that has to be a conscious habit that young should create. Earlier the better because I think employability now is between the age of 20 and 40. I think we entering an age where most people will be unemployable at 40 unless they really uh practice some of the things we’re discussing now because there’s AI, there’s commoditization, there’s everything. So you can’t just cruise along and retire at 65 anymore. They’re irrelevant if you don’t. uh so I would frankly argue that uh some of the things that we’re discussing are probably the way to survive the the new era you know this is I think so uh so how do you make yourself relevant where so an analyst had the time to I had the luxury of three days to come up with a report on an idea that I gave And uh I mean I I’ll give you an example. So I just I was very curious to know for many for a long period of time that uh what is the history of the East India Company and what did its stock price do and link it to events in India. what actions in India to the stock price of East India Company right from 1600 to 1860 when it shut down. So it was always in the back of my mind that this is like a thesis you know that and so my idea basically was my suspicion was rather is that all actions of East India Company in India were were really motivated by the its stock price in London. That was my basic thesis. So I was declaring the entire history of British India and you know you say there was a battle of Plasi Panipad this that and the okay fine but I wanted to look at it from a capital market point of view. So I struggled for years. So I I was always struggling key like how do I get this done? So but now came AR So, so I was thinking you know maybe it’ll take me 3 months a year to figure this out and this and that and I always tell people that do this as a PhD thesis you know wherever you are you know suggest this to your some university and do it no one did it for years I told people then I got into AI then uh in a so I it’s you know I went to multiple AI engine and basically what I did then is the this question I’m saying is from the sharp questioning point of view. I’m I’m saying this to explain how sharp questioning is more important than information. That’s why I’m telling you the story which is uh I just started by sharp questions. Okay, that first breakdown in decade by decade 16 to 1610 1610 1620 and so on so forth. So like 26 slices of time and tell me what major events happened every decade and what did the stock price do in that decade? Okay. So you you cluttered 260 years of time. So AI being a being a useful slave will do exactly if you what you ask to do if you ask it sharply. So, so I I I did all that and then I I I I got a great insight into East India Company which I probably wouldn’t have got by reading three books on East India. There are many books on East India Company. have seen them but you know they’re they’re descriptive they’re no one’s linking I was looking for a different causality you know I was looking for what I’m basically saying that the stock price was was the motivator for actions of East India company in India but at least I would like to research that I’m not saying I conclude it now after all of that research I got a fair I got an insight into East India company that you know I I think it’s pretty interesting again why because of sharp questioning proper questioning and so then the AI so then I asked yeah so you know what do you think makes the stock price tick so let’s look at that why do you think when did the prices go when did it go down so then it you know it went into a bit of a tizzy but then the conclusion were pretty obvious that when they were expanding their their coverage of India, the stock price was going up and when they stopped expanding in India, the price would go down. So what’s my point of saying this? My point of saying this is not to describe about the East India Company but I’m saying we are in a different world where if if you are I if you can translate some idea or or hypothesis of yours into uh into sharp questioning and don’t bother about reading too much and looking at other people’s answers and in a scattered way trying to find your questions answered today. Those tools are available for you. I mean the same thing to come to this conclusion. I probably have to sit in a library and be reading all sorts of stuff to come to all of this conclusion. But today all of that is possible if you uh ask the right question. So basically what would have taken 10 analysts to give me this data over 3 months uh 260 years of financial history, its linkages and so on and so forth. All that job has been eliminated by by the new tools in our hand. So for a young analyst, the option of just comfortably working on collecting data on East India Company is no longer a guarantee of $100,000 job is what I’m trying to say. So they better up the curve and learn how to So you’re better off uh learning to use the weaponry that is now in your hand and make that a useful slave and put it to use and the young analyst’s job is also reinvented in a way you know or will get reinvented in a way. So, so I I gave the example of the East India Company just to say that you know because this is a classic example of what a financial problem an analyst would face. you’ll be asked some questions about you know whatever ITC Hindustan lever so I was frankly looking at another question which is why has uni lever Indonesia and why the ITC equivalent of cigarette company in India Gangaram it’s a famous so these are sort of the equivalent of the uni liver in India and ITC in India both those stocks have collapsed 90%. So I kept asking analysts like why is that happening? Can it happen in India? I mean if an in if uni lever or Indonesia can fall 90%. That like I really want to know why because are they that’s an emerging market India is an emerging market you know there are commonalities. How can something fall 90%. Then uh the same with the cigarette company. Uh I asked many analysts they couldn’t they couldn’t figure it out. young analysts and uh then finally I I I figured out let me use AI and you know again ask sharp questions and like you know just see if I can uh I think I got I got some answers. I wouldn’t say it’s complete. I’m not saying the research is complete but I’m saying that this art of as a young analyst either your boss or you will come up with some you want to see a pattern recognition. Pattern recognition is at the heart of picking a good stock. So it’s very important. So there’s clues everywhere. So any good analyst should this the shocking thing is no good analyst has looked at uni liver Indonesia and why it is down 90%. It’s the same uni liver in India which you are trading at 50 100 times earnings or whatever it is. So uh so the uh so for an analyst to be valuable today he has to have this sort of he has in this age of clutter you still can parallel process and see patterns where ne where uh and now you have the tools to exploit it. So you you know you can become a super analyst if you give such ideas to your fund man wherever you’re working buy side sell side or you’re an investor yourself or whatever I mean I’m just giving some of these examples to stretch their minds to thinking that way you know that uh the old typical job of uh I’ve been given a question I will go linearly at it has materially changed and uh so today you can you need to uh keep constantly uh be curious and develop this habit of so let’s let’s put it the other way around. So we spent uh we spent say an hour on a question and then we spent 20 hours finding the answer. Now in a way that’s reversed. If you ask the right question, AI gives you that answer in an hour. So you freed up 19 hours of your time theoretically speaking to ask even sharper questions. So some guys are going to you put this to devastating effect. Think of a world where where you you have a 8hour working day where you spend 5 hours asking really insightful questions and the answers are just clinging away. I mean that’s like me having 100 MBAs working for me. And then the question is are you capable enough to to ask smart questions of I was then you’ll be invaluable. So I mean I’m just like thinking about it like when I’m talking to you but you know I didn’t come uh but that’s really what it is. I think the dilemma is that you’re caught in this world where it was one hour of question and 20 hours of work and I think it’s it’s it’s the and education hasn’t prepared us for this sort of so an analyst if he starts thinking along these lines a young guy that would be the future I think so a future where you spend an 8 hour day asking sharp questions is a powerful word. It’s a very powerful word. So that requires conscious training and all of that. So that’s what I think that’s what the new should do. H are there any questions? So just thinking a bit aloud. So uh one of the inspirations for this book uh letters to a young analyst comes from a very old book called letters to a young poet uh rea and uh I think one of the one of the very important insights which I and it was written in a different era for sure. So one of the very important insights and the advice that the rea the author gives to the young poet is to uh not seek instant answer to the questions that lie within you and sometimes let time answer those questions. So you have to learn to live with your questions. Now we are again living in a world again with AI and uh instant answers. Even if you uh uh ask the right kind of questions and the answer appear immediately a lot of time is freed up. But are there any questions according to you um uh which probably AI cannot answer currently and you only need to let time handle that you sit with that question deep down and as I say when the when the student is ready the master appears right in the same way when the question is ready this when the question is really ready the answer will appear for someone rather than you going and asking AI to have instant answers. Is there any question that you can think of that probably only time can help the analyst answer that? Absolutely. No, no, let let me let me rephrase what I was saying. What I was saying that I still say AI is a useful slave. Mhm. It isn’t your it isn’t a colleague or your peer group or your boss. He is a useful slave. And that’s how I see it. I’m not enamored by it but I can put it to use but the but the questions always remain and uh life is the so time is the canvas on which your questions get framed and answered or your questions draw. So that job of time AI can never take over. So your so the uh the fundamental questions that have dogged humanity will always be and uh that only I mean time is the time is the lord in that sense. So time is the great revealer. It is the great equalizer. It the whole canvas plays out on time. Karma plays out on time. The time is the grand canvas. nothing replaces that. So that AI cannot help you in that. So your your core questions um as Socrates always said that all that I know is I don’t know. So that uh this is something that transcends question answer dialectic and that remains that I don’t think that’s the glory of life and they say that one day your question sees they just drop they don’t get answered so questions just drop and uh you are that emptiness that that is beyond question and answer. So the ultimate questions I’ve always had uh I mean that always ends that way has to end that way. I I just imagining going to AI and asking what is the meaning of my life and I remember four years back when I asked you that question you said there’s no meaning of life and I think that’s probably one of the question that ceases to exist because once you find the meaning of your life that the question does not exist anymore and you don’t no then life is utilitarian if life has a meaning you mean that you’re just a cog in the machine right okay you’re much more glorious than that that’s okay well I’m not saying life is meaningless I’m saying life is beyond meaning you see you’re complete So why should you have a meaning? Meaning means you know it’s like you know it’s like a dog washing your clothes and so life at the end of the day is uh is um beyond meaning which is much more profound than so the pessimists take it as meaning meaninglessness. No I would say it it transcends meaning and uh meaninglessness both. Mhm. So it’s a like you said there are some questions which cease to exist after a certain point of time. So probably that’s one of the questions out there. That is the only answer. The only final answer is that questions have to drop because every question leads to an answer. Every answer leads to 10 more questions. M and so there is no uh answer but to uh drop into where the question drops and you just you’re just uh you’re just that emptiness or that silence or whatever you may want to say. So what question can you answer? I mean now there now now now the enough now now uh so even the big bang theory is now being questioned by modern you know a lot of new so there there are all sorts of extreme views floating around I mean one view floating around is that this universe is is living inside a black hole so there are all sorts of uh so questions never really get answered I think the the more I hear you I uh also the last time and also this time um uh what I really probably get to and probably also my experience is that uh it all starts and ends with knowing yourself whether you want to become a good analyst or a good poet or a good writer or good investor and I think that is one task that uh we generally when we are young we relegated to okay I’m going to know myself once I am 50 years of age once I’m retired out of this life and active life currently I don’t have time to answer that question about Who am I? Who am I really? Right? So I think I am not sure whether you agree with that or you also have that point that it’s whether you want to become a good analyst or a good investor. It starts from that self-awareness of do you really know yourself and uh if you know that if you know really that and I think then there there’s no other question which really exist uh in that line right so um you know so so probably becoming a good analyst is more of a study education in knowing yourself and philosophy and oh it is it is sad I would say it is a meditation it is a meditation and many professions are I’m not saying this is the only profession that is but every profession and uh be but uh I won’t postpone the day because life is cheating and there’s no guarantee 50 you have 50 years or you have 50 minutes and if you don’t get it now you’ll not get it 50 years from now either so it can’t be the rules have been set by the by the universe which is it you don’t know how long anyone lives it can go today or it can go in our years but it will go and uh so uh the luxury of postponement is is not available. You might delude yourself to believing that it exists but uh it really doesn’t. And if you do that at 50 you will postpone it to 60. And uh yes it I mean to lead a fulfilled life and to experience the magic of life and I think being in capital markets actually can make you very uh I think it can uh make you materialist and destroy you totally or it can make you objective and detached uh and help you evolve. So, so both are both both I think markets following markets is a great accelerator can be because you are seeing uh history every day. You’re seeing companies rise and fall. You’re seeing many things. So, so what you would experience in 50 years the market if you follow it for 50 years I mean like you would get a much more denser compressed more data points in that period of time because in a way every company is also a history to itself and some patterns repeat in every company and so on. So, so for instance, East India Company also died. So will every other company that you’re following. So uh so basically end is also certain for the largest of companies. So uh so there are the so markets can help you. So nothing stops you from learning about a 260 year old company and learning the gist of it and that lesson is valid to a large cap company today also some of his lessons rather. So you can learn a lot uh I think markets make you wiser if you survive. So yeah. So so you know analysts have a I think it is it’s an exciting uh I think analyst should also have some interest in history uh to see patterns uh and to see and none of these patterns have not been repeated in the past. So, so the other thing I would encourage analysts to do is to look at 30-year charts, 50-year charts, 10 year charts, 20ear charts. You know, one good way to spend an hour every day is to just uh just look at uh charts long periods of time for various companies, various commodities, whatever. And uh you’ll be you’ll see and then let your pattern recognition mind uh learn from it. You know that uh because history may not repeat but it always rhymes. So with a different twist it comes back with a different twist. So uh so I think analysts who don’t have a sense of history uh can get caught up in a bull phase or a bare phase and totally miss the miss the tsunami something repeat so I think that’s the other thing that analysts should keep in the back of mind and they should have a sense for history financial industry events and you know so for instance uh Trump putting tariffs on India the same thing was tried by the first George Bush in ’ 89 I think uh so patterns repeat so it isn’t like what Trump is doing is happened for the first time so that gives you some perspectives then gives you some perspectives is that that uh how things turned out or that India was sanctioned in 1998. This is not the first time you be analyzed and the market did well despite that. So all these things help you come to a control otherwise a instinctive young analyst will sell the market because tariffs went up. You see negative news should drop. It hasn’t dropped. So uh so understanding your history and linking it all to is helpful in uh so there are many counterintuitive things you can see in the market. So for instance even um in this recent skirmish with Pakistan the both the Indian market didn’t fall nor did the Pakistan market fall. So it’s interesting the market seeing some uh I’m not saying what the conclusion is but I’m saying analysts should look at these things and uh because there’ll be some there are some you know you’ll get got to be curious because you will come to some some insight or understanding that will be helpful that sort of like when uh article 370 was removed the Pakistan market went up 45% in a month or two. It’s just curious. I mean everyone the Indian media was going about how Kashmir is going to burn wrong decision this that and the other. I was tracking the Pakistan market and the Pakistan market said that Kashmir was basically over because it went up 45%. So one headache is gone. I mean that’s how the market sort of reacted and market has been broadly right. the market sometimes. So, young analysts should have a sense for history and then they won’t panic in crisis situations. So like uh so like covid came lots of people sold you know or for instance there’s so many such cases like when the world trade center fell every Islamic market doubled you would have thought uh otherwise but the market basically said that this is sort of the peak of Islamic extremism and is probably going to dip from here and over time that has turned out to be broadly sort of right. No big September 11th like world trade center event happened after that. So it’s just interesting for financial analysts to wear that little and look for look for various uh patterns you know it just make them better investors because it’ll because the risk young analysts run is that so I remember when the rupee devalued I mean I’ll give my own example uh in you know when Singh in early ’90s devalued the rupee. It went from whatever 16 to 30, 26, 30 or I forget the exact number. I was a young analyst. So I sort of froze, you know. Then I spoke to uh some of the wiser people. I spoke to the chairman. I spoke to one of um you know some of our top investors and all and they seem surprisingly non uh unaffected. I look pleasantly surprised and they they told me the market will go up okay as a result which is what happened. So then you had the 92 rise you had the 94 rise and all of that. So, uh, yeah. So, when you’re seeing it the first time, a young analyst freezes. So did I for a short while. But I was lucky to have uh wiser people who were just laughing at it. I thought I’d lost my job maybe because you know basically rupees depreciated, right? So uh so your values aren’t what basically but uh it was interesting how so I think that gives you a backup so when some crisis unfolds you can place it in a historical context as to what markets did in similar situations in the past so you don’t react in uh you don’t react in a negative ways. That’s I think that perspective is so important and I think also like you mentioned being lucky to have the right kind of mentors around you that kind of bosses around you’ve seen that thing. I think that’s is such an important no that is heaven that that is grace I mean that is you have to be blessed I agree I mean I think that is a uh to be surround basically be surrounded with good people is a is the ultimate blessing your bosses your colleagues and everything and I would urge young people to select that rather than a bigger pay package and go for the biggest salary and you you know beyond that because surrounding yourself with good people and uh so going so if you have an option you would rather work with with such people then work with people where uh where you just get a higher salary. So uh so yeah so I remember I remember I there’s some some offers much higher than Morgan Stanley came up when I got hired. Okay but you know the the best thing I did again advice from seniors at Morgan Stanley they said like all laughable so you know and which it turned out to be true. So, so I think some of actually some of the one of the biggest misleaders can be high salaries for youngsters. That’s the other point that uh I don’t think they should go by they have to treat the first 10 years as university that you’re still learning. So what you learn in that decade is what will make you a good investor. So you’re really getting paid to be a student in the first 10 years. So walk with that hat in your you know walk with that thinking cap. Don’t get so obsessed with your bonuses and salaries because whether you like it or not it is university. You’re learning and as long as you’re learning stay on the job and uh if you learned a few things you’ll you’ll anyway make money. But very often burnout lots of things go wrong because of uh you chasing the the I mean for for a for a sophisticated investor uh he will never hire a guy who’s just looking for a higher salary. He’ll be fired. That’s clear. So I would never hire someone this salary is his motivation. Never never because uh you’re just giving the wrong incentives. You’re linking it’s not going to work. And very often I mean this is my other experience that young analysts should know. I mean because papers carry this this IIT guy got a 1 cr salary and this guy got I am Ahmedabad some guy got a 3 crore salary and so on so forth. I know lots of people who have gotten that and if you take a longer view of their careers very often it it disrupts badly because in a bad time that’s the first guy to get fired. expectation from him is skyhigh and then uh the person doesn’t get a comparable job because no one else pays him that that salary. So you lose time you become unemployable over time. So it’s better not to sometimes the best thing that can happen to you is uh is a is is a gradual rise rather than a spectacular. You become a one-trick pony. You know, you become a one hit wonder pump from often because what happens? It plays with your inner psyche. You you get a very high salary. Then your psychic expectation, your psychic, your self-belief goes out of whack and uh you know you’re taking needless stress also too early. Your ability to make mistakes comes down. I mean many things can go wrong basically. Yeah. So the longer career is one which is built on learning well and you know treating the first decade really as uh and I say this because I’ve lived that I’m not I’m not saying it because uh that’s exactly what I did. So uh and this is what I recommend everyone that uh because it will take you at least a decade to see various aspects of uh markets. You’ll be in situations. You’ll be in crunch times. You’ll be in a crisis. Lots of things will happen. So and you’ll be better off every time a crisis happens actually. So you’ll get better. So there is no shortcut. Mhm. Yeah. And AI none of that is going to change that time in the horizon. I mean nothing will help beyond a point. Of course it’ll it’ll aid your it might accelerate things but you know you sometime it just takes that much time to ripen and uh become mature in your thinking you know. So, so let’s say these are some of the things that I think are important for young analysts to be aware of while they make their career decisions and the paths they choose. So I’ve seen that uh because sometimes I look at uh so we have this Morgan Stanley alumni u you know uh it’s a very it’s become a very big and a very uh impactful alumni because uh many of the alumni then you know went into Oracle they went into soft bank you know they Black Rock, Blackstone, I mean you know CFO lot of these are all so all these guys basically because they took this sort of they went through that university grind for a decade or two and they’ve uh they’ve had I would say extraordinarily long and uh impactful careers. So I’m I’m literally surprised how you can find one Morgan Stanley alumni and virtually any fortune company or any large private equity for fund and so on so forth. So I think there is some value to getting you know spending a decade getting better. I think same thing in India. I mean so many people I find who are XSSBI in in Indian corporate circles you know XSSBI State Bank of India less so now but like a decade or two ago many many guys came from few institutions like that. uh um I mean I remember a lot of people who were at SBI care uh when we first came to India we had a relationship with SBI cap so we were working with them I used to sit in the SBI cap office and how many of those people have who were youngsters Prashant J many of them I mean many of the people uh in the mutual fund industry even in India they were all working at SPR CAPS as young analysts and uh you know over time they’ve really matured well and gone far so they’ve had long fruitful careers and uh so I’d say you know significant percentage of that bash is done very well. Uh so you know these things I think uh while analysts are seeking out they need to have perspective as to how you know the background of lots of today’s success stories were because of the choices they made many decades ago. So, so uh not moving on to the actual analysis of part and again not about how to analyze but uh the real uh part where a lot of analysts struggle in the sense the there’s like an existential existential crisis that a lot of people face and we understand that there are very few things which are harder investing than watching your thesis fail especially when you’ve defended it in public and a lot of analysts are public analysts right so they take a call they announce publicly that this is the call and then the thesis fails How how do you deal with that inner pull to be right at all cost? Because we are thought to be right and as analysts you expect it to be right all the time, right? Which I I going by your answers is not true, right? You have to make some mistakes. You make some mistakes along the way. But being a public analyst, right, in the eye and your incentives are structured that way and you need to take that 10 years of university education uh to to develop yourself in the interim. How how do you deal with that inner pool of being right at all cost? Um, and has letting go of that uh need to be right all the time improved your ability to make better, faster decisions? Absolutely. I mean, you have to decide whether you want to be right intellectually or you want to uh u have money in your wallet. You want to make money or you want to be. So, you have to be very clear. So uh if you think you want to defend your ego against the market, you will be destroyed. The market will take you for a ride. So you have to be clear. If you want to be an investor, you have to put your ego behind. If you’re wrong, you’re wrong. And take it and turn around. I mean I remember there was a Stan Bracken Miller I was at you know this is years ago he was in some conference Marvel Stanley conference where uh he was giving an investment thesis on one of his large holdings. Okay. And uh so we were quite I mean I was a youngster uh we were quite uh so there was you know coming from Stan Draen Miller everyone took it pretty seriously and then uh the stock later I remember the stock collapsed or something. So there were lots of people who were also very gleeful that you know Stan Brock Miller’s got his comeuppance now and uh so some of us did homework as to like you know how did how did it what happened to Stan and then we realized that so what I think one of our bosses is relative or something so they spoke to Stan and he said he spoke about this thesis at the investment conference And from the from the looking at the audience, he realized he’s totally wrong in his thesis. So he sold everything and he went double short. Okay? So where we thought he would have lost money, he made tons of money because he did not put his ego in the middle. He didn’t care that he told everyone this idea. He sold the next day. He went short the day after. So, so you decide you want to protect your ego, your wallet. It’s a very clear decision. So, in the market, you you cannot have a rigid point of view. So, let’s face it. So you you don’t have to you should not ideally have a very rigid viewpoint in the market because market’s changing every day. There is new data. There’s everything. So I don’t uh you can never win defending your ego against the market and that inner turmoil and all is is set up because you want the market to obey your intellect. Okay. So, this is like uh the tail wagging the dog. So, you are you you’re guaranteed to have blood pressure and sleepless nights. It’s it’s because of the choices you make. And so, you think your small intellect is going to figure out the market. No way. No chance. So if you go as a humble devotey to the market, you might be able to figure it out. If you think you can sit on a high chair and figure out the market, no. So I mean most money managers therefore I mean we we laugh at our strategists and all this because you know of uh opinions and opinions and opinions and investors have a blank mind. We just we’re waiting for the market to whisper something in our ear. So we are not waiting to have an opinion and so the market better follow my opinion and otherwise I’ll I’ll be upset. I mean my god that is uh that’s blasphemy. I mean that’s my view. So one shouldn’t be one should keep one’s ego aside and focus on the wallet. So I think a lot of time it also happens that we we connect or we probably equate the idea with our identity. So we come out with an idea and then we we we defend it so much that it it becomes our identity and it’s so difficult to let go of that. Yeah. But then life is a life finally you have to let go of your body also. That’s the truth. So, so the problem then is your inability to let it go. So, nothing else. Life is flowing, market is flowing. So, when you create this unnatural barrier and you think it’s important for you, then you limited yourselves. Mhm. So, so that’s why markets will either destroy you or make you very uh detached. So markets are very good because you get slapped every day. The great humiliator as they say. Yeah. He’s the great equalizer. Great equalizer. So he’s like an enforcer. The day you have uh you think you’re making things happen is the day you’ll get hammered. That’s such an important lesson. I think uh again if I were to just bring in that stoic philosophy or Epictitus right talks about the dichotomy of control. We think we control a lot of things even when uh reality is something else right we are controlled by something else a lot of things are not in our control but we still make predictions we still want our models to be perfect and we still want to get that last decimal place in the DCF that we do for a company that we have no idea about there’s some Zen story you know there there’s a lizard on the wall so all the lizards are going out it’s the weekend so they want to go for a party or go to a bar or something so they as the lizard also to come and he said I’m holding this roof up. Oh god. We think uh so it’s better to better to be better to be light on yourself and let it flow out. Let it uh not don’t take yourself too seriously basically. Charlie Manger uh where he spoken about having that five minute mind where decades of accumulated knowledge allow him to size up a situation almost instantly. How has your own intuition? So I think it’s more about intuition after you’ve done the hard work. So how has your own intuition evolved over the years these years and do you remember when you first started trusting your gut and can you share an example where that intuition saved you from a poor decision? I would say that uh I have actually always gone by my intuition since I mean that was a decision I made early in my life. Uh so uh I think in I made that decision in high in school. So I have I have and uh the in a way it there was I thought no good advisor around me. So, so my default option became that and on hindsight uh I would say that is the only that is one of the key things I sort of uh pat myself the younger self that he did the uh that I think has saved me uh most of my life. So yes, but your intuition gets better. Your intuition gets better uh in markets especially because you become you see patterns you become very good at interrogation too. I mean I think uh when you meet lots of people and so on so forth. So I think we’d be very good in we’d be better interrogators than many many agencies I’d say because you know you’ve seen so many in fact you recognize physical facial characteristics of entrepreneurs also so um so yes it gets better but uh but I think having a an open mind and uh not being um not setting yourself up for targets and so on and so forth or setting yourself in a time bound grab that I need to double my money in 6 months or I need to do this that and the other. I think that’s when your intuition sort of leads you wrong because your feverishness sort of is like a cloud. It’s like rain falling on the windscreen of your car. So your feverishness, everyone has intuition in my view. It’s not like intuition is a unique preserve of someone or the other. So the universe sort of I think communicates with all of existence. So intuition is a channel that I think almost everyone has is the noise in your brain is the feverishness in your brain. you challenging time that I have to you know that uh it’s my way or the highway and all of that is the reason why people uh don’t listen to it. And so when you see scams where some regular person parted with three crores and lost three crores because of some phone call he got for whatever reason. At the end of the day, these reasons work because this cancer taps into some feverishness in you. That desire to either get rich fast or you get seduced by some voice or you get blackmailed by some voice whatever but at the end of the day that feverishness exists in you which causes you to or the fear of jail. So you part with money. So there you know sometimes you wonder why all this happened. I mean because nowadays it’s there in the papers every day and in the market you see that all the time. So your uh I would say your very often your underperformance and your misjudgment is uh when you are there’s some some sort of feverishness or turmoil in your head. It’s either emotional, it is you feel you’re missing the boat, you want to hit it big, you want something that causes you to flutter. And that fluttering in markets is lethal. that fluttering is uh is lethal because it can really uh so there are some you know really smart guys I know who uh I know a recent guy who’s taken a big stake in a company which it’s got all the right elements it’s got good promoter it’s it’s you know it’s a good business but they are getting into sort of they’re sort of reinventing their own Okay. But uh this person probably wants a huge home run. So he made this um I don’t know I mean I’m guessing some 20% of his uh portfolio and uh that’s caused great agony because uh that’s only gone down. So the company fits all the sort of traditional elements good promoter he’s hired people from Asian paints and you know all the multinationals but you know you some of the pro some of the elements doesn’t make a you can’t put carbon hydrogen oxygen together and produce a human being you know it still requires a lot more which is which for whatever reason his desire to to hit the ball out of the stadium caused him to take u so he he’s taken away sign and I think that’s that’s uh he works hard I mean fits all boxes but you know some feverishness in you will cause you to see reality a little you’re imposing your view on reality or you wish it to be that way or you want or you’re challenging time you want to get there fast you don’t have that uh so you got to be a little timeless you got to have a little empty mind I think everyone will be able to see there see what the what the intuition is saying and I think the market whispers in your ear market is being generous daily deceptive daily uh generous daily, forgetful daily, efficient market has five, six personalities that keep uh floating in the market, but one of them is generosity for sure. So, so sometimes you get stocks that were, you know, you get a price what it was 10 years ago and um so if you’ve done your homework, then it can be an extraordinarily generous moment. you’ve saved 10 years. It’s like you’ve seen the end of the movie and you’ve been taken back to the front of the movie. So, but for that you need to be uh you need to have a uncluttered mind to be able to see things the way they are. And uh I I’m not saying that’s an easy thing to do. uh but but I think if if you don’t uh have that then you run a risk in markets because in markets unlike you run the risk you did that in life I mean a lot of entrepreneurs I’ve seen have skidded away because of one or two wrong decisions made out of uh I mean I mean you know for instance Malia also ran a very good business I mean you know I know him I feel sad for him. I mean, he was a great entrepreneur, made mistakes, whatever. But at the end of the day, getting into the airline business was uh I mean, only he has to explain why he did it, but you know, just that one decision made out of, you know, hit him badly. So uh so keeping your clarity going um and if you don’t it can hit badly entrepreneurs, market players, you know, people in life, you know. So and markets is much more pronounced because you’re playing with real money and uh things things can uh slow down. So like for instance today I was reading I don’t know how true it is but I was reading some uh people said that the chat GBT5 that came up is underwhelming. It isn’t the the leap that people thought. So now this is a data point. Now this is a data point because uh I mean a lot of the health of the American GDP is resting on the backs of the capex which is driving AI. So these are facts. I’m not I’m not saying it’s good or bad. But if you if you box yourself in a corner and think that AI is going to change the world or it is not going to change the world, both are not helpful. We just have to see things as they evolve and and uh sometime decision points come as a result. I mean like we had a give you live examples. Uh we had a large stake in Z television those days. So we had come in during the IPO. So we had we had a significant stake. We had taken it at par. It had gone up a lot. It was like 1600 and so on. It was the only private television channel and you know dominant Kashandra and a great show. Uh and talking about the ‘9s 80 uh ’90s. Then one day we had a 4-hour meeting with Sony Entertainment. It was unlisted. So I spent uh you know four four hours there with I think Kunal Daz Gupta Kunal Daz Gupta was the MD and uh uh uh I came out and we started selling next morning Z. So now till yesterday we were large holders but intuition changed because you saw also Sony entertainment and you clearly saw a future where private competition is you know breathing down the neck it’s all going to emerge. So this dual rashanz sort of option is going to and you know you could clearly see star TV would be there and you know many other things would come came in a flash. So uh so we did so now uh and there were lots of analysts at 1600 who thought I mean most analysts thought this is going to go to much higher. it was cheap. And so uh so your ability to uh to change is a function of your open-mindedness and you not getting attached or in love with or in a self-reinforcing loop with yourself. You can argue everything is cheap. You know there are people who think land at 100 crores an apartment is also cheap and even if it was 150 they think is cheap because they think go God doesn’t make extra land and so on and so forth. So there are all sorts of characters in this word but all that reflects in prices. So your ability for instance okay we had uh take in Asian paints lovely company you know great track record we had it for years you know it went up multi multiffold for us until grassim and GSW announced that they’re getting into uh so I was waiting for one day like that because no high roe stays forever compet competition is bound to enter. And so Asian P is just very lucky that no one read his balance sheet 10 years before we did. That’s all. They’re in the cement business. They in the construction business. They distribute that. They could distribute paint. Their business is 10% RO. This guy had 40 50% ROV. So it was a wonder why it took so long. But in the meantime, so then I did a test. I called up all my wealthy re smart investors and I said, “So what do you think of Asian B? I’m thinking of selling. I do this often. I mean like it is still a great company. I’m not saying it isn’t but prices are independent of companies often because perceptions are in the middle now. So so I sold and this even made me much more happy that everyone still loves it. So we sold and on hindsight it was the right thing to do because even today the prices ever since the grass and JSW announced the prices have done nothing and then even the promoter announced that he’s selling some 500 crores of uh you know shares something like that you know I think a few years ago that announcement also came so my point is that if you keep your your windcreen clear. You’ll be able to see the road ahead a little better while you’re driving your car. And the windscreen here is your own chaos in your your own main cause jumping in your brain. Even Vishma fell for it. Okay. So we are nobody. Okay. So if Vishu Mitra can get seduced by main cars then like everyone is susceptible to main cars. I mean I’m using it metaphorically you know just to main car doesn’t necessarily mean a main car but money is a main car power is a everything is a main car dancing. No. So uh so if that I if that disease is in your brain then then the odds are stacked against you in the sense one day you will uh it’s snake and ladders just like snake and li it takes nothing to go all the way back to square one and in markets more so because you’re dealing with real money and the ball is coming at 100 miles an hour every day. and and the bowler is new every day. It’s not the same bowler. So the pitch is different every day. So uh you increase your odds if your windscreen is little more cleaner that uh you can buy also, you can sell also. You can you can be detached and attached at the same time. You’re like detached attachment but you know frankly the Gita after 18 chapters has tried to tell you the same thing which is the market you face it every day. So and I think life also why only market if you’re running a business also is the same thing. So, so this this is um so I think intuition is a very powerful weapon to have and one should uh own it and basically you have to trust yourself. Basically life is digital. You either trust the universe or yourself or you don’t. And if you don’t then uh bad health is inevitable because you feel you have to do everything that the universe is untrustworthy everything. So then you pay a price in terms of fatigue, health, diabetes, hypertension. At the root cause is a fundamental distrust in your uni in your own intuition and that the universe is a kind compassionate energy doubt inevitable digital choice actually. So you either trust your intuition and universe or you don’t uh and if you don’t then the universe also steps back. Your intuition also steps back because you want to be in command. They’re very kind and compassionate forces. They let you be. They give you the freedom. So then you’re off on your own and then you can’t sleep at night. But the these are classic these are classic uh a person need not say more if someone says I can’t sleep I have diabetes I have blood pressure I have this and that you know the road he’s taken. So um so that shows up in grade outs too. So for instance where I used to meet uh one of the reasons we had a big stake in uh Hiro Honda is whenever I met bridge manal he his phone would barely ring his he would never end the meeting. He was a polite man. So when he had great uh what do you call old fa old old world uh grace and politeness he would end the meeting. He would look at his watch and get away. He let you finish and you finish the meeting you would leave. So um at those uh so if a promoter’s phone is ringing all the time in your meeting though that itself tells you quite a bit you know so I’ve seen uh I’ve seen great promoters where uncluttered if you meet them last it uh they’re available in a sense you know so uh so I think much of these habits can be cultivated in your life so uh phone constantly rings it tells me that uh I don’t know what it tells But it tells me that there’s some there’s some uh some chaos inner or outer I don’t know which it can be it can happen one day two days but if it’s a pattern then uh yeah someone can be in a crisis on a daily basis but uh but I see people whose phones ring they ring every day and there are people whose phones barely ring and that is how it is every day. So it’s just a small analogy but uh yeah so if you think the whole universe is against you then your intuition has very little space to to flourish and uh so you’ll panic at the bottom you’ll get exuberant at the top and if you do well you think you made it happen that you’re a genius Yes. And so all the wrong lessons are being learned. So so even bright minds like Isaiah Newton went bust in the market. That’s the fact. I don’t know whether you know what happened to Isaac Newton. Yeah. So he f first put I mean just to give prop ratios and proportions he first put a small amount in lousy bubble this is the guy we invented gravity calculus considered one of the greatest physicists of all time uh he put a small amount in South bubble then went up I don’t know three four times and so so he sold and felt He’s I mean like I’m I’m the inventor of gravity. I figured this out also. So then the price goes up further. It goes up five seven times. Then what does Mr. Newton do? He puts his all his savings at the top of the price. Not 1% or 2% of his wealth. He puts all of it into the market and loses it all. So, so what can you say? It’s uh so clearly markets are not for everyone and it’s not for the brightest or all or the dominist. So that’s no criteria. It’s uh it’s a sort of having a uh a combination of uh intuition, ability to take pain as we discussed yesterday, uh patience, insight and uh and getting psychology right. getting psychology right you know are you on the exuberant is the stock at an exuberant point or at a depressive point. So uh yeah but there are people who are momentum investors who you know play the momentum game and so on and so forth. Maybe maybe they’re cut out for that. Maybe they cut out for that but God bless them. I think you know I mean I couldn’t be able to I wouldn’t be able to do it. So so intuitions I think is an important faculty to create for for living a full life. I think so not only markets a long runway also provides you that ability to believe your in trust your intuition. If you have a long runway like the patience right like you mentioned you’re talking about someone who has that patience of not doing something every day but waiting for that market to whisper. So having having the flexibility of a long runway or patient mindset or patient capital at hand that also is one of the ingredients in terms of trusting your intuition. So intuition everyone may have but when do you trust that once you have some some setting or the environment really helps you in that way that you are allowed to trust your no I would go even further if you don’t have patience you are going to be a disaster however bright you are so I know lots of very bright people who are impatiented ends in disaster because the act of challenging time that this has to happen my way or the eyes. I mean in in my scheme of things time is the lord it does when it wants to do so so you can’t challenge it. So uh and if you do and impatience is basically a game of so even taking on debt or being impatient all these are challenging times. So you can go seriously bust when you you make a challenge with time that I will be able to pay this debt in 2 years or 3 years. It’s uh you challenge time and so we’ve seen so many companies go under uh yes some succeed but uh but that keeps the game going you know that’s why others also fall into the same trap because uh statistics is wonderful because uh it’ll always give you that hope that’s why people gamble right that’s all online gambling and all of that people money so statistics is uh is is is a is a fantastic what do you call uh depends on your favoritism you’ll see the positive side of statistics or the negative side so that’s what I did um but I I go further that I think one should uh learn uh patience is almost like a prerequisite so you go to Harvard, you may go to Wart and Bisha impatient. So there was there endless stories. I was reading about some guy who was a garage attendant or something and he was I forget his name and when he died he he had $8 million in his stock account that he uh that he donated to the library of the town and so on so forth. So being patient and being out there on a daily basis is more important than earning a high salary or being very bright. So this guy used his time as a park attendant or parking attendant or something to read the Wall Street Journal barren and so on. He did it for 30, 40, 50 years and did very well. So, but patience is also something that I don’t know. I mean, maybe you’re born with it. I don’t know. Some I find that lots of people are just uh are just impatient by the very nature, you know. So, very qualities have to uh align for for an entrepreneur or a market man to be wealthy for uh long periods of time. So I I also liked GD Bizla’s letter to Adita his advice I don’t know whether you have read it is worth reading. So um he says it I mean I I mean I can’t summarize everything but uh he says things in one page but he says profound things he says like treat food as medicine you know then uh no greed don’t let uh ostentatiousness get in I mean it’s quite amazing that in one he summarizes health, secrets to wealth and how he how his grandson should conduct his life. I’ll try to pull it out. It’s somewhere it’s uh but it’s it’s it’s worth a read. So uh basically if money seduces you then you have a problem. If you somewhere you get it wrong, you know, I’m saying over long periods of time, you might do well for 10 years, 20 years and so on, but uh there are certain patterns where you know multigenerational wealth is is there. There are certain patterns that you see in how they conduct themselves and uh and that exists in some of the old families of Bombay also you know tatas mayas and all of that it’s it’s obvious it exists. So what about the idea of writing I’m sure uh do you believe in writing down your investment rationale uh because I think uh it’s one thing to carry an idea in your head and there’s another thing to commit it to paper. So has writing down your investment rational ever changed the decision you were about to make in the past? Do you believe in that? Yes. Yes. I used to write my shareholding letters at one time and it would rarely be more than a page or two and so I would always encourage people to write everything in one page and or two and never in a 20page report because the uh so so I believe that if you cannot summarize your investment thesis in a paragraph house or maybe two is not worth investing. So if you have to give me a uh a long uh history about what uh this is the reason you’re not going to make money. So I would uh in my investment letters I would I would summarize my holdings like HDLC in three lines and it would take me sometimes a week to write the one letter or one page because every word had to be uh uh but you know what when you do it that way the the reader gets it Somewhere the energy transference happened that you could summarize all your ideas in like not one idea but all your ideas in a page or two and that discipline is fantastic. If you have a mediocre investment you try to summarize it in three lines or four lines be very difficult. It’ll be obvious to you that you’re fooling yourself. So it is a good idea to write but if you can write it in a few lines or if you can explain the investment thesis with great clarity in a minute or two both are sort of the same thing then uh you’re good you know so yes I I think the act of writing can distill your thinking and crystallize your uh your uh what do you call and by writing I mean it need not be physical writing too I mean just clarity in your brain that you know can you can you expound on it in the middle of the night in 2 minutes even if you’re sleepy then uh but if you have to pull up charts and you need to show me a whole report and then I may or not get convinced after half an uh it’s uh yeah so I think writing is a good way to distill your uh your idea and I would take it further that you don’t write a thesis but you write a para and if you can do that I think it’ll help sharpen your uh and it’ll also help you to figure out what is the most critical and what is the lessant important and you know and you’ll suddenly realize that you’re equal waiting average the big hitter and the small hitter you know giving it equal amount of time that’s not good so that way you will come to the heart of the matter he’ll help you any research report is just 10 page law never made me worry so any thesis fat saying never but uh uh sharp so I would encourage all my also to write max one page although I’m not reading it maybe you can spill into one and a half pages but no if if you just have to write that much so it suits the ego of the writer it suits the ego of the analyst But frankly, it’s, you know, it doesn’t impress the or it doesn’t make you money maybe. So yeah, volume of data doesn’t help and hard work and spending a lot of time studying too much doesn’t help. I think relate that to there’s this note written by Buffett long time back about Geico where he titled the security I liked best. It was a single page note on Geico which is I think the only one which is published on a stock analysis done by Bob himself. It was a single page where he laid out very clearly like you said right in a single page entire thesis of investing in G for that. No, absolutely. That also helps you in terms of the writer as well, right? It it also helps you clarify a lot of things uh in your head. Yes, it’s it’s it’s uh because the it’s very difficult to write a a short sharp idea in few lines. So in the emphasis first annual report they asked me to write a letter. So I just happened to read it recently. So I also wrote like three paragraphs on on why we invested in Infosys but that was also only three paragraph and I think the main argument was one paragraph the other was I was just wishing the company well and so on. So uh so I happened to read it on hindsight you know this was written whenever I don’t know 93 94 but uh the habit of writing to uh to the point is is is helpful and all the main drivers of why emphasis came out in that one paragraph. So I was also pleasantly surprised that uh I’m not saying it for my own self-glorification. I’m just saying that the uh putting an the core points down on paper and summarizing your investment argument is probably a very good discipline to have. is better. It’s good to have a notebook that an investor might carry where what he invests if he just uh you know one page that’s it. This is why uh I used to do that at one time and then I would uh revisit it uh 3 years later, 5 years later and so on. So I went through that phase. Now I do it mentally but um it’s it’s good to have a diary which and you know or you can make notes on uh I mean there’s so many more options now technology avoids you you can just do a a small recording or a whatever it it it is a good discipline because if you see it a bit later 3 four years Later you will uh you will learn what mistakes you made or what you did right and you know you will get some you’ll see your own report card in a sense that you have evolved you had some because not only have you written that but then the stock has performed in a certain way and then we look at it five years later. it it gives you a sort of a report card as to uh how your thinking is evolved. So that is a good way to actually also that analysts can do to keep an investment diary rather than like people used to have diaries an investment diary of uh of ideas and and it can be it can be very helpful uh to him and to if his grandchildren and also want to be investors they’ll also get something to it’ll be it’ll be a noteworthy diary to have I remember in our last interaction four years back you talked about the idea of being in flow when you’re not obsessing over outcomes but you’re simply playing the game for its own sake now the question is how can a young analyst who’s working in a professional setup can cultivate that state of mind where life where all the work itself becomes rewarding and not just the results where you’re playing the game just for the joy of it and not to carry a scorecard in your head. How I I’m sure it’s difficult when you’re working in an institution setup, when you’re working as an employee, but how can an young analyst even cultivate that state of mind which he or she may practice if not now maybe 10 years down the line after that university education gets over or yeah difficult to start. I agree. But then uh I mean this is what I would do. I would uh as I would take the elevator up to the 20th floor and uh uh to my office in Morgan Stanley, I would remind myself that I’m at uh I’m entering a cremation ground. Okay, try this out. and that nothing touches me. I’m like uh you know nothing offends me. The chaos is not my chaos. So I’ve already separated myself from the chaos. I’m okay. I get fired, I get fired. If I get promoted, I get promoted. Idea works works. Doesn’t work. Doesn’t work. When it gets into your skin is when the chaos affects you. So just a small thing where you just uh remind yourself that this is all uh this is not me, this is not real, this is not going to be me 10 years from now. So then you’ve created some space for for being uh at peace and chaos also. It gets to you because you think you can’t live without it. your title, your job, your credit rating, your loan, your car loan, your house loan, your wife, your children’s education, everything will run away because then it gets into your skin. So uh otherwise you can uh so in in Zen in samurai training so so there is this um famous samurai was written 26 points I think it’s worth reading Musayashi I think Musayashi I may be pronouncing it wrong Musayashi he never lost a battle in his So then he gives you 26 tips on how to do it. Musayashi. So it’s worth reading because what whatever I’m saying is sort of actually uh rhymes with that to some extent. So he um he he clearly says that uh the I mean in samurai trading it is said the person who who gets angry or gets emotional will lose. The guy who gets a thought in his brain will lose. A guy who’s in flow and is in no mind has no desire to win or to lose. is just fighting the battle for what it is can never be defeated. You see, so these are some of those things that he says how the internal state of a guy who never lost profound things. He says absolutely profound things. So he he says uh even uh so he even says that okay you may believe in God but don’t count on him to show up. Okay so he gives you very uh very practical all of them are absolutely bang on and also applicable to markets. So yes chaos is there. So the only place you won’t have chaos is in death. Okay. Life means chaos. Even Ram, even Krishna had a murder case on. Okay. Krishna did not have one day of so-called peace in his life. Although he was in equilibrium at all time. That’s why we call him a navar. No. that through it all there was no equanimity of a Ram and a Krishna was unshaken through everything you think in your office you have chaos look at the chaos in Ram’s life or in Krishna’s life everything is moving every day so that’s the beauty so don’t think that the chaos is the problem chaos is just giving you an opportunity to detach and find yourself there you’ll be walking. So don’t give yourself the excuse of chaos. Don’t give yourself excuses at all. Just look at outcomes because you can make many Bollywood films. You know, because you have to deal with a deck of cards that you’ve been handed out. It’s like a game of bridge. Life is that you can’t cry about the fact that you didn’t have this and that. Either don’t play the game or play the game with what you have. And the odds are you’ve been given a set of cards that if you I don’t think you’ve ever been given a set of cards where if you play well you can’t win because in that way nature is extremely fair and is a great communist and a great socialist. It doesn’t beyond a point favor anybody. So, so you look at your look at as a deck of cards that you’ve been handed out and then try to play your game well. So, instead of whining about the fact you didn’t get an A or you didn’t get a king, but um you do it. So it’s it’s your attitude that also plays a huge uh huge role in you know whether your job is stressful or not. So very often you have to ask whether this job is stressful or the super structure and permanency that you’ve created in your brain that is causing you stress. more likely it is your own stress is clearly your own uh and actually when you ask for no stress you’re asking for death. Yeah. So be careful what you’re asking for. If you want life, you can’t have life at peace also what you figure out how to live in peace in the chaos. That is the that is the solution. So you in a way you so that’s what the opishas also say you know that you have a jivea the desire to live and you also have a mutation which is you have a desire to die and this is when you ask for peace so you want to life is too much you know so you got to be careful what you’re asking actually uh Yeah. So escaping stress is also like escaping life. I mean these are billions of cells talking to billions of cells. Being heard by billions of cells. Okay. How it all works is a is a miracle to start with. It all happens. So, so just enjoy the miracle. Yeah. And uh and goar is a very short miracle doesn’t last too long. So, so don’t set too many preconditions on on something which is a wonderful magic show here. Let just enjoy it. So outcomes will be better if you’re h I a if you are in that sort of positive peaceful state you’ll be happy with your outcomes also. Now it’s tempting to believe that our wins in life or investing being an analyst or anywhere they are that our wins are brilliance and our losses are bad bricks but over time the luck as a constant which is an invisible force in life. So how has your understanding of luck versus skill evolved both as an analyst and in life over the years? I think uh the luck is a probabilistic view of life and skill is is you know your insight. Uh I think you need both clearly no no questions about it. But I think the probability function uh works better if you uh if you maintain that non-feverish state that I mentioned very often bad luck is also solace that we give ourselves and uh I’m not saying luck is but I think the probability function is not uh set in stone. You can influence it and it influences with I mean things like greed and fear uh the probability function works against you for instance very clearly. So if you’re independent of greed and fear your probability function in markets will be different. So what you call luck will also be different. So, so uh so if you are very greedy, you will blame it on bad luck because the probability function will will change just like quantum mechanics says that probability function changes with the observer. You know the observed is influenced by the observer. I think that’s sort of true uh with with with things also. Yes, you can have periods of bad luck and good luck and so on. I’m not saying that is not important but over a span of life the only thing you can do with luck is try to to improve the odds you know that hopefully good good luck follows you and so which is one of the beliefs of dharmic living and uh good karma and all of that is essentially at the end of the day improving the odds for you to have a more fulfilled life and that if you lead a dharmic life if you do int if your intention is bad your outcomes will be bad. So at the end of the day yes luck can decide when things come but at the end of the day I feel that your uh your ultimate intentions drive the ultimate outcomes. So you might have flashes of brilliance and so on so forth but your intentions finally catches up. So to that extent although the luck may vary on a day-to-day basis I grant that but over a long period of time the outcome is a function of your intentions. So, so Raan was a great guy. I in many ways he was a siddi sidd purush and you know he was a he was a brilliant guy and everything and uh but intentions ultimately drove outcomes and he was a master astrologer. So you could play with the stars, you could play with luck, you could you could do all of that, but it still didn’t ultimately it didn’t work. It worked for a while. So yes, I think fun, you know, luck and scale, all of that is good. But I think some of these uh the Indian philosophy of karma, keeping intentions good, not trying to I think all these have been said to because it it ultimately impacts the outcomes in your life. That’s all it said. And so if so luck isn’t Luck might you know change whether it happens at the age of 40 or 50 or 30 or 60 that could well be but uh outcomes happen I mean like Swami Praupara went who started the Iscon movement went to the US at the age of 69 to start the Krishna consciousness movement. So nothing much happened in his first 69 years. But then he wanted to save the uh pla generation you know the drugs and all of that of the 60s and 70s. So he went to uh the US at the age of 69. And so so while he was going on a boat to America he got two or three heart attacks on the way. So you could say it’s all bad luck but he reached America then he was living on literally on the streets of Brooklyn and New York and so on so forth and u then one day he decided it’s too much so he decides that he wants to go back to India so the day he decides to go back is that night he gets robbed so he loses his passport money and so he can’t come back to India. So from that dayish the Krishna movement starts is gone starts and I think he died at 78 or 79. So he died within 9 years. So within those 9 years 108 temples were set up by him. The movement came alive. It’s still running. It still feeds millions of people. So the reason I’m telling you this story is intentions ultimately drive outcomes. So there were patches of bad luck. You had two heart attacks, you got robbed, many things. But his work continues even now. So that tells you that at the end of the day one shouldn’t give uh what do you call too much uh weightage to luck bad luck talent no talent and so on. You know your intentions and what you wish to do and you know how you what you want out of this world and what you want to give for this world has a big influence on outcomes. So those things are in your control. So what is not in your control don’t bother much. Okay. Luck. Yeah. I mean, you know, who knows? But your intentions are sort of in your control. Your your discipline is sort of in your control. You may not be the brightest guy, but who the hell says that the brightest guy gets ahead? I don’t think so. I know lots of bright people. So no, it doesn’t work that way. So I think we overrate luck. We overrate uh talent and we sort of underestimate what is in our control which is uh spacing discipline you know getting up every day and you know practicing your trade your skill whatever keeping your intentions clean in a rough and tumble world where everyone looks like a thug and only thugs like look like they’re getting ahead but uh but you know Those are things under your control. So as I’m saying, it’s a it’s a deck of cards given to you. So what is not in your control don’t bother much. Your talent is also a gift given to you. So treat it like a dowy given by God to you when you were born here. So these are the things handed over to you. Make the most of it. Why blame lady? Why blame that you are not talented? Someone else is more talented. All of that. Why you looking outside also? Why are you looking at your peer group? So, and don’t create peer groups and so on that actually that actually clouds your your your destiny, you know, because at every point you want to be ahead of someone and uh that’s not helpful. That’s not uh so so if success means that you have to beat up another human being or you have to win by crushing someone I don’t think that’s such a helpful thing my view but you know so I would never like to be boxer on the M and be the world champion because I beat up 100 guys and I’m the best. I mean I would I would treat that wealth and success as uh would disturb me but anyway that’s me need not apply to everyone. The second last question. So if you were mentoring say a 22 or 23 year old analyst right now and you could uh only pass on say three timeless lessons what would those be? Pain patience intention. All these three things in your control. Your talent is not in your control. Nothing else is in your control. You cultivate these three things. Nothing uh nothing will happen without pain. Nothing will happen without patience. Nothing will happen without. But if you’re patient, your ability to take pain and you keep your intentions right, the heavens will descend on you one day. You uh you’re eligible to be on the dining table of the universe. That’s the entry pass. I’m talking about things that you can do that you which you can it’s in your vition to do. So these three things I think you know I mean that’s what I would say because uh uh I’ve seen that people who do have a low tolerance for pain or who are impatient or whose intentions are sort of murky finally uh I mean at the end of the day you’re okay life is about playing chess with the universe at the end of the day you can’t win okay you’ll be checkmated for sure. It’s just a matter of time. I mean, he’s pre-ordering that you’ll be checkmated because at the end of the day, you’re playing chess with nobody but the universe. So, so you have these three thing the order you’ll win. So that’s what I think hard to implement but you know frankly these are timeless lessons I think. So I think in your long career you’ve you yourself lived through lots of booms and busts and crisis and bubbles and recoveries right when you zoom out across these decades. Uh what has the market ultimately taught you about life itself? I think market is a great compressor of history and time in the sense in in a in in one decade you’ll see a lot of history you learn lots of because in a way each each company is a story it’s a beginning end and a middle so it’s it’s it I think it can accelerate your your uh your your your evolution I think over the Because what I’ve learned is that market is very profound that uh you’re better off uh worshiing or respecting the market for what it’s telling you and then you talk down on the market and think that what you think is right and the market is foolish. People say that the market is bunch of insider traders manipulators beta. This is like every you go everywhere you hear all this. I take a different view that the market is a great master. He’s a great guru, a great deity that if you uh if you treat it with that sort of uh in a way we worship Laxshmi with that same intention you see. So market is Laxshmi. So if you treat it that way, you learn that you become a wiser person, you become a balanced person, you become a wealthier person. Uh so so I think it’s a it’s a profound force. It’s like a divine force. That’s what I feel. So I don’t ever try I would never encourage anyone to manipulate the market. I always want people who people who raise IPO money at higher prices to rip off the market. So there there’s a whole bunch of investors who want to either manipulate or rip off the market in some way or the other. But I always caution that you shouldn’t do that because uh it’ll it’ll come to harm. You will come to harm. So and there’s so much evidence there also. So I think I think yeah I think that those are some of the things that uh that markets uh and they do that every time like market prices even when they confuse you they uh they are telling you something you know. So uh so going as a going as uh going as a humble student is far better with the market than going as an arrogant smartass who has done some spreadsheets has gone to business I’m Ahmedabad and so you know uh so that’s what I would say great thank you so much for your time uh you know I think it’s very inspiring as always. Uh always enjoyable Rishal with you. Thank you so much. You know, thank you for listening. If something in this conversation stayed with you, please reflect on it for a few days before you decide what to do about it. I think that’s usually when good ideas turn into something useful. And if the idea of playing the long game is something you want to think about more deeply, I’ve spent the last few months writing a book about exactly this. It’s called The Long Game and it teaches 30 investing practitioners sharing what they’ve learned from playing their long games of their own. The link of this book is in the description below. I’ll see you in the next episode. Thank you so much.