What They Dont Tell You About Stock Market Volatility Vishal Khandelwal On Sonia Shenoy Podcast

TITLE: What They Don’t Tell You About Stock Market Volatility | Vishal Khandelwal on Sonia Shenoy Podcast CHANNEL: Sonia Shenoy DATE: 2026-03-29 ---TRANSCRIPT--- Hey guys, welcome to The Money Mindset. Now, on this episode I have someone who has spent over a decade teaching people how to save and invest well. Vishal Khandelwal is the founder of Safal Niveshak, a platform that’s dedicated to teaching people how to become financially literate. He himself has over 22 years of stock market experience. He focuses on long-term investing, mental models, and his learnings from Warren Buffett and Charlie Munger. Vishal is also a celebrated author. One of my favorite books of his is The Sketchbook of Wisdom that Manish Chokhani incidentally gifted me. And I’ve, you know, gone through it cover to cover and it’s a brilliant book. Vishal has now released his latest book, The Long Game, which contains reflections from 30 investors who survived decades of market cycles. So, today he’s here with me on the show to tell us how to stay in the game of investing through thick and thin. Vishal, thank you so much for being on The Money Mindset.

Thank you so much, Sonya, for this opportunity. And you’ve already had such esteemed guests on your podcast, so I hope I live up to your expectations. Thank you so You know, um it’s so interesting because uh through the podcast, one of the most um sought-after names to feature on this podcast has been yours. So, people who know know what you’ve been doing in the past, the kind of work you’ve been doing in financial literacy. But for those who don’t know, can you give us a little background about yourself? How has your journey been so far? And um you know, what brought you here today? So, I think I give a lot of importance to the idea of serendipity. So, a lot of serendipitous outcomes have really turned the trajectory of my life in a way that I’m sitting here in front of you and answering questions. Um so, I started my career in 2003 right in the middle of a recovery for the Indian markets and for the Indian economy after 2000.com crisis. And it was a it was an accident that I came to the stock market because straight out of my MBA I wanted to get into foreign exchange market, but the only job that came my way was that of a stock research analyst. And I had no idea what a stock research analyst was all about. I had seen my father lose a lot of money during the 2001 Ketan Parekh scam and also prior to that 1992 Harshad Mehta scam. So I thought that stock market was a place where you go to lose money. Right? So that that was like a casino mentality for me. But it was surprising for me that I chose to create my life and living at the same place where my father was disappointed. And he was disappointed when I got my first job. But yeah, that was the only thing. So I got into it. Luckily for me, the Indian market started doing well. I started as an analyst. And my recommendations were doing well. Though the recommendations were to all to strangers. And when the first five years of your career in the stock market is a bull market and one of the biggest bull market India’s ever seen, at the end of it you start feeling like master of the universe. You start thinking that everything you write about, everything you talk about is your skill. And there’s no luck at all. Of course, nobody talks about luck, especially when you’re an MBA in finance. So that was when 2008 happened and everything fell on ground. We were talking about the collapse of capitalism, the collapse of financial markets. I had no clue what was happening. Though I was still writing research reports, still advising people what to do with their money. Deep down I understood that this is not something which brings me joy in terms of recommending stocks to strangers, analyzing companies just because I want to recommend them to strangers. And I had started reading a bit of Warren Buffett and Charlie Munger at that point of time. Someone gifted me Poor Charlie’s Almanack, which was Charlie Munger’s book on his speeches and lectures. And that was actually a turning point for me. What Munger says and he’s always said is that rationality is a moral duty. He says he does he doesn’t say it’s a duty or we should be rational. He says it’s a moral duty. And one of those statements that really changed the trajectory of my life in terms of trying to be more rational by being in the system while being out of it. I thought that I would rather find greater joy in teaching people how not to lose their hard-earned money. So again coming from Munger another lesson. I talk a lot about Charlie Munger. He has a very beautiful mental model called inversion. Inversion simply means knowing what not to do. And he has a very famous saying which goes, “All I want to know is where I’m going to die so I will not go there.” So if you know something can kill you, you don’t go there. Right? So that actually helped me revisit my idea of a good life, my idea of a good career. I never wanted to get into fund management. I never wanted to climb the ladder of corporate finance. But 2008 really shook me and it told me that this is not what Gita says your Swadharma. This is something There’s something else that you want to do in in your life and I started this pursuit of Safal Niveshak in 2011 after paying the only liability which I had on my hand and this is something which I advise to all youngsters who want to quit their jobs and do something of their own. Don’t start with a financial liability, right? Because if there’s a bank which is banging on your door asking for EMIs you’re not going to follow your path that you wanted to follow at the start of it. So no financial liabilities, two years of savings and willingness to do something, having faith, most importantly my wife having a faith in me. I think that’s such an important idea that nobody talks about. So all these things actually worked well for me in hindsight. Serendipity, as I said, great amount of luck. So I just started walking on this journey of teaching people how not to lose their hard earned money. In the journey I I think that I have learned the most because when you are a teacher, when you teach, you are the biggest beneficiary of your teachings because you have to be very very clear about what you’re teaching your students. 100% 100% the journey has been amazing. Nothing sort of a miracle for me. And thanks to all the good people who’ve come, who’ve helped me, who’ve guided me. Thanks to luck and God’s grace, everything is so fine. Thank you. You know, you’ve said so many things. I’ve so many questions. At what age did you quit your corporate job? And you said you had 2 years of savings. Can you tell us a little more about that? How much What kind of a corpus had you built for yourself that you were confident enough to leave your corporate job? And what were the other factors that helped you do that? So, I was 33. 2011 I was 33 years of age. I think I I see a lot of my friends even at that point in time who were surprised that at 33, which was such a ripe age to even start thinking of doing something of your own, right? Most people say 25, 26 is fine. 33 is too You already have dependents. You have a family. How will you even survive? So, that’s the reason I I was very clear that I had to had no financial liability. So, zero loan, no nothing on my head. When I said 2 years of savings, if I were to remember a number, it was somewhere around like four or five lakh rupees at that point of time. Right. That was to run my house and with no other income sources. So, savings when you say these were investments? These were purely investments. Some gold, some family gold and some investment in mutual funds. I had I did not have any stocks at that point of time because I thought that if I’m building my career at this point of time, right, and a new and my son was about to be born, I would not have time to even look at businesses and stocks. So, I had completely invested at that point of time, specific point of time, in mutual funds. And uh maybe four to five lakh rupees of uh starting corpus if I were to say. Now, when I talk about luck, 3 months after I left my job with comfortable with 2 years of savings thinking that everything is fine. My son was born premature. And he was born in the 7th month. We were in the hospital for 1 1 month. That hospitalization took away around 60% of my savings. So, I was left with 40%, right? But thanks to having no financial liabilities, thanks to the uh habit of trying to save money, thanks to the habit of living with less, and also believing that there’s something called as destiny that you need to walk towards, you you have to build it over a period of time. Nothing is going to come and fall on your lap, right? You’ve to work hard towards that. So, thanks to all of that, right? Uh I I think it all worked out well. So, I advise people who want to quit their jobs and um uh do something of their own. Passion is good. So, one thing which I’ve changed my mind on over a period of time is that a lot of people say follow your passion. I have changed my mind a bit on that that follow of your passion should not be without looking at financial aspects of it. Only when you have no financial liabilities, only you have some amount of savings, only if you understand that you have some kind of skills that you’re going to help you earn some money, and you have a family support. These are the three or four uh parameters that you should ensure they all tick marked yes before you even think about leaving your job to follow your passion. Otherwise, you are not going to. So, today, are you Do you consider yourself financially free? Financial freedom. Now, it’s a very interesting thing. Again, financial freedom, if I were to use that term, I was financially free the day I quit my job. Right? As they say, dar ke aage jeet hai. So, I was if I had taken the biggest risk of my life at least 33 leaving my job that was because I felt free. I wanted to feel free. So two years of saving is one number that you look at right a lot of people have this mathematical equivalent of 35 times your household spending as as money in your bank account your investments to call yourself financially free. But my view in terms of financial freedom okay you there’s a quantitative side of financial freedom that you have say 35 40 50 times whatever is the number of your uh per month sorry per year household spending that you expenses that you do you can save that. Right the other way of looking at financial freedom is that because we all looking at the number we all looking at the goal that goal it in some way has become a prison for all of us. Right as we were talking earlier as well it’s like running for something in the future like a pot of gold at the end of a rainbow. Right and what has happened is because we all chasing that fire financially independent retire early right we we tend to make a lot of wrong decisions out of the fear of not reaching fire. Right and look at what fear does and I and I I have thought a lot about fear. Right this is the cause for probably most financial uh wealth destruction that has happened in the world where people are fearful of losing the hard earned money and that’s the reason they are fearful of missing out on opportunities. They always fearful of not reaching a number. Right so it’s like a tail wagging a dog. Right if you can under spend your income if you can live on less and I’m not talking about compromising your lifestyle. Right if you can there’s something called as a marshmallow experiment. Right so in Stanford many years back scientist behavioral scientist did a marshmallow experiment where they asked small kids as as as young as three or four to sit in a room with a single marshmallow. And they were given 15 minutes and nobody else was there in the room. If the child did not eat the marshmallow in 15 minutes, he was rewarded with another marshmallow. They were testing patience or delayed gratification. If the child ate the marshmallow, he would not get the second marshmallow. And then they tracked the life of all those children for the next 20 30 40 years. And they found out that people or the kids who resisted the marshmallow and did not eat it actually ended up doing much better in life because they could handle patience. They could defer gratification. Now taking that idea too far is also not a good idea. Right? We see a lot of people saving saving saving investing investing investing for a future because we are all scared of what is going to happen in the future while not even thinking about what kind of life we want to live at this point of time. Right? So financial freedom for me started when I was free to choose my own time of doing my own work with people I loved being part of. And um in terms of quantitative, I think I would have reached that maybe four or five years back. But yeah, it’s entirely your own definition. Don’t be burdened by that definition of financial freedom that social media in today’s world tells us what it is. So you spoke about a couple of things, right? You said that uh you spoke about fear. And the fear of losing money is very high in today especially because we are in a war situation. Times are very uncertain and people have not made any money in the last 2 3 years. There’s a huge crop of investors who’ve not even seen multiple bear markets. How do you manage fear in today’s uncertain times as far as your investments are concerned? See, fear just to come come back to that idea of fear, fear is not a bad thing. Right? It’s fear that leads us to save money. It’s fear, not to the extent of anxiety and panic, but it’s fear that leads leads us to create an emergency fund or to buy insurance. Right? But you need to be fearful and then you need to detach from it. Right? So, when you are fearful and you take care of your savings and you want to compound your wealth because you want to take care of your dependents and everything in the future, it’s very important to first understand what that fear is all about, whether it is for real. Right? In investing, we use the word uncertainty and use the word uncertainty. Lot of people confuse uncertainty with risk and we say market may both risk. Right? Because of there’s so much uncertainty of war and market crashes and politicians doing all those kind of things. These are completely different definitions. Risk is quantifiable. You can quantify risk. Right? You don’t know the outcome, but you can calculate probabilities. Risk is like weather. Right? If you are wanting to go out and you think that it could rain, you carry an umbrella. You assign probabilities. What’s the probability of being it being raining today? That’s risk, but uncertainty is climate change. You don’t know what’s going to happen. So, lot of people confuse risk and uncertainty and they try to inverse the entire equation where they treat risk as uncertainty. Right? Where they get paralyzed because of uncertainty and they think there’s a lot of risk and they get paralyzed not making any decision. I’m only going to buy stocks or buy investments only when everything is certain. Right? Now, there’s no certainty in investing. That’s the most underlying fundamental principle of investing. What is investing? Now, in simple terms, investing is delayed gratification. But in slightly complicated terms, but the real definition of investing is to use imperfect information. So, information is imperfect. There’s no perfect information to make probable odds or probabilistic decisions, right? Knowing that the future is unknowable. Right? If you are certain or if things are certain, valuations are not going to be good for you. Right? Everyone knows things are certain. It’s like Cinderella at the ball. Right? We all hear the story of Cinderella at the ball. We all know what happens at 12:00 a.m. when the clock strikes 12:00, everything turns to pumpkins and mice. But in the stock markets, when the party is going on, the clock has no hands. So, nobody knows when it’s going to be 12:00 a.m. And nobody wants to leave the party because everyone’s dancing. Because that’s the most certain time. Right? If you look at the history of stock markets, Indian markets, we have so we’ve had so much uncertainty, global markets, so much uncertainty. If you want to talk about the modern times. When I say modern time, I’m talking about say 1990 onwards. Harshad Mehta crisis, Ketan Parekh crisis, dot-com bust, you had a 2008 financial crisis, you had a 13 13 14 taper tantrum. You have 2015-16 crisis, right? Chinese yuan devaluation. You had 2020 COVID epidemic. And you have the current uncertainty as we talk about. But investors who stuck through all these cycles, right? Who understand that it’s like a pendulum. It’s never a straight line. Right? They are going to survive and do well for themselves. So, when I talk about risk, you have to assign probabilities, you have to prepare for that. Right? When you talk about uncertainty, you have to prepare for the worst-case outcome because you know that it’s uncertain. I need to go beyond risk and prepare for what I do not see at all at this point of time. So, I don’t know I Do I know what oil price are going to be for 1 month down the line? I can assign probability and someone say, “Oh, there’s a 4% decline or 5% decline in global GDP because of a 4 5% hike in global prices of oil crude oil.” Or the politicians, the kind of decision that they’re taking on a daily basis, who knows? We’re talking about We are and especially with the young crop of investors that we are addressing, right? Uh India had we know the three crore or four crore demat accounts prior to 2020. And now we have 21 crore 22 crore. Most of them are not active anyways. But assuming they are there are seven times more investors. And most of those investors have come in the last four years. They have not experienced real pain and crisis with their own money. They’ve only heard about it. Right? And a 10% correction that we’ve seen in the markets is just a healthy correction. It’s a definition of a healthy correction. 15% is correction. 20% is a bear market. Yeah. 30% is a crisis. Right? 40% is like crash. And 50% is when you panic. Yeah. Don’t panic before that. Right? This is just a healthy correction which is which is a part of the entire cycle of stock market. Now, if I were to just add one more explanation over here, the modern finance version of time is linear. You start here. You compound your wealth over the next 20 years and things generally move in a straight line, whatever it is. But if you look at the Indian version of time, we all talk of a term called Kalachakra. Now, what’s a Kalachakra? It’s a It’s a chakra of creation, preservation, and destruction. And then recreation. Right? Brahma, Vishnu, Mahesh. Right? So, you cannot really do without destruction. Because that lays the seed of future growth and future creation as well. So, people who think like that, people who understand it’s not a straight line, it’s it’s it’s a Kalachakra, it’s a cycle that they have to go through. It’s like the fee of entering the stock market. And you have to do it. The earlier they take the lesson, the better off it is. And if you’re not willing to take that lesson, the market as they say is the greatest humiliator. You’re going to get humiliated sometime or the other. But again, you have to take that with all humility. And if you talk to the most and you talk to so many wise investors, probably everyone talks about the idea of humility. Because they have seen we’ve experienced cycles over multiple decades. It’s only when you are new when you think with complete confidence that I have understood it all. And when the first market crisis or crash comes and you blame the economy or the politicians or uncertainty all around and say, “No, this is not a game which I want to play.” So, um you know, at this point some there is a little bit of writing on the wall, right? If you look at as of today, there’s no ceasefire in the war. Oil has gone through the roof. There is a second-order impact that everyone is facing, whether it’s Asian economies, with the LPG crisis, etc., etc. The impact on eventual impact on earnings. So, I would assume that this market could get worse before it gets better. That would be the assumption. Going by that assumption, what would you do with your portfolio? Because that’s the struggle, right? Do you sell? Do you buy the dip? Because buying the dip has not worked for the last at least five, six, uh you know, times there’s been huge dips. By buying the dip has not worked for anyone. So, that’s why most investors are very disillusioned right now. How do you uh counter that argument? See, I think If you talk to the most experienced investors and also advisors, we all talk about the idea of asset allocation. Right? So, all assets don’t always they are not always correlated well. They all don’t always move in a straight line altogether, right? So, it’s very important to allocate your assets well depending on when you need the money. Any money that you need beyond 5 years, most of that money is ripe for being in equities directly or indirectly through mutual funds or whatever it is. Right? Any money that you need don’t that you need in the next 5 years or 3 years, you should not put a lot of that money in equities because 5 years is a too short period of time. Again, we are talking about long long game, the long horizons, right? Now, for a lot of people, long-term is like 9:30 to 3:30. Right or 3 months or 6 months right I don’t have the latest data from AMFI but I think 50% of mutual fund investors don’t hold their funds for more than 6 months. Now if you are trading in mutual funds forget what we are doing in stocks. Right so if you can hold on to high quality businesses you’re investing directly if you can hold on to your investments in mutual funds for a long period of time while allocating your assets well across equities and maybe a flexi cap or a diversified equity fund or a balanced advantage fund or a mix of different kind of stocks if you can pick stocks. Some gold for example people are talking about asset allocation over there some debt as well. So I think that is going to safeguard you over a period of time. Having 100% in equities that not does not make sense for most investors out there. Even if you are a professional investor even if you are if you think that you know everything about the stock market side. Now the way I look at it is that we have two kinds of capital. The first is financial capital that everyone knows money the money part. The second is human capital which is me and myself and my skill. If my skill is employed in the stock market and which is the human capital and my financial capital is also 100% stock market I am concentrated in a single asset class. What it simply means that if you think that your career is like a stock you are like a stock you should have more of some of debt on your portfolio. But if you think you have stable income and if you are your income is assured and you’re financially free and everything you should be willing to take more of risk in terms of putting more money in stocks and equities. So it’s a very personal equation uh entirely depends on how much sleep how much peaceful sleep can you take at night. If you are not able to sleep peacefully with even 10% allocation to stocks you should not pick stocks at all. And I think we’ve made this stock picking as a national pastime over the past 4 years to be very frank. Right uh at in COVID at home with internet connection nothing to do what do we do? We buy stocks, we trade stocks. Right? Uh and because we made it a uh a national pastime, uh and thanks to social media, what we are now in a trap of comparison. Right? So, I always ask this question to people and especially to youngsters, “Who am I when I’m not comparing?” I am dull because I’m comparing. I am average because I’m comparing. I’m underperforming because I’m comparing. If I’m not comparing, I am none of these. Right? So, if I stop comparing, and this is my advice to all youngsters, all young investors out there, if you can live a life of non-comparison, as Buffett said, if you can live with an inner scorecard, only focus on what your financial goals are, what your dependents. You’re only answerable to your spouse and your kids and your family, your parents. You’re not answerable to anyone. But here we are all showing our P&Ls on social media. We are talking about how much corpus we built on social media. How does it matter at all? We’re talking about I I I don’t know. I I I think I’m I’m sometimes surprised by all these numbers which are so easily thrown out. 99% of Indians earn between 2,000 rupees per month to 1 lakh rupees per month. 99% of Indians. Only 1% Indians earn more than 3 or 4 lakh rupees per month. Right? Now, if I were to be in that top 1% of the 99% who are earning, say, 1 lakh rupees per month, right? And if I’m saving 50,000, 50%, which is very difficult in a city like Bombay, I’ll take an 8 12% rate of return. I’ll take around 30 years to reach a 10 crore corpus. It’s not easy. It’s so difficult. But because we all aiming for that number, right? We all are imprisoned into taking actions which are detrimental for achieving that actual financial freedom. Right? So, You know, this topic of comparison and it’s very beautifully written in your book as well in the long game where you talk about this one chapter about Stanley Druckenmiller, right? And how he he was one of the greatest investors of all times, but there was one period where comparing himself and his peers, he took a very wrong investing decision. If you can just take us through that example and what your learning has been. That’s right. So, I think Stanley Druckenmiller is a legend, right? He’s He’s one of the best investors out there who’s probably has has a flawless track record. And this is something where he was working with the George Soros fund during the 2000 dot-com boom. And he said that we were out of dot-com his portfolio, the portfolio that he was managing, we were out of all tech stocks, all dot-com stocks because he knew that there was bubble busting bubble about to go bust out to bust out there. But then he had a lot of young money managers who were sitting next to him at that point of time. They were managing their own independent portfolio and they’re rising 10% 20% every day. And he said, “I could not take it and just just at the cusp of the stock that dot-com bust happening, I invested a lot of my money and probably a lot of clients’ money that the portfolio that he was managing into dot-com stocks where he knew that it was about to go bust, but just because he could not withstand his colleagues making a lot of money in that point of time. I mean, and he’s been so humble to even accept that mistake. So, knowledge one thing is not same as understanding. That Stanley Druckenmiller proves, right? So, we know a lot of things and that’s one of the chapters in my book as well. It’s very important to differentiate between knowledge and understanding. And we are in a world which is full of knowledge and information. But the question is, do we really understand that? One of the chapters which I write the initial part of my book is about a story of Max Planck. Now, Max Planck was a famous physicist in 1914 who won the Nobel Prize in quantum mechanics. And he was touring the entire Germany giving the same lecture on quantum mechanics in different cities and nobody knew how Max Planck looked because there was no social media. His photo was not available on the pages. And he was driving he he was taking a chauffeur along all those visits and chauffeur was sitting on the front row listening to the same speech again and again. And by the end of the 10th speech or 12th speech the chauffeur had learned the speech by heart on quantum mechanics and he said in Munich, Mr. Planck, I’m going to be Max Planck. I’m going to give the lecture on quantum mechanics and you wear my chauffeur hat and sit in the front row. And he said, “Wonderful idea. I’m tired of giving the same speech. I’m going to become a chauffeur.” So in Munich, the chauffeur gives the speech and nobody knows that he’s not Max Planck. But after the speech someone asks a question. And when someone asks a question and because he was Mr. Planck’s driver he was very smart. He said, “I could not even understand that in a in such a wise city like Munich someone can ask a question like this that even my chauffeur can answer.” And the chauffeur won Mr. Planck. Right. So I first heard this story from Charlie Munger who said that we all have two kinds of knowledge. The first is chauffeur knowledge. The second is Planck knowledge. Planck knowledge is actually doing the thing. Actually experiencing cycles as far as investing is concerned. Knowing what you are getting into, the kind of business that you’re getting into. Chauffeur knowledge is someone only knowing the names. Right. Oh, I know the NIMs of banks. I know what is CASA. I know what is phase one, phase two, phase three trials of pharma companies. Surface level knowledge. Surface level knowledge. And you can communicate Not a lived experience. Not really lived experience. So can you get over that chauffeur knowledge? Can you differentiate between that and really go towards the Planck knowledge? I think that is where understanding starts. It takes time. You have to go through a live through a market cycle. You cannot expect the stock market to make you rich. Nobody who is not a professional investor should look at stock markets to become rich. They should look at stock markets to keep themselves rich after they have saved money, after they’ve invested sensibly, and then they are they understand what compounding is all about. Compounding is not about making long-term returns. Compounding is about not interrupting those long-term returns. Right? Anyone can make long-term returns. That’s That’s That’s what mathematics is all about. Everyone knows the mathematics, right? We all know the mathematics. But real compounding is when you don’t interrupt that. That is how you actually put that into practice. What’s very interesting to me about your journey is that you started off as a research analyst. You started off selling stock stories to people. You built your own portfolio of direct stocks, but today you’re sitting largely on a corpus of mutual funds. I have a mix of stocks. I would say I would have probably 40% stocks, around 50% mutual funds. If I only talk about the equity and the financial portfolio, I would have 10% in PMS, which is run by a friend. So yeah, three three buckets for me. And even in mutual funds I’ll have maybe I think three funds, one balanced advantage fund, one flexi cap fund, and one large cap fund. So 50% of your money is in mutual funds. 50% of my equity financial money equity money is in mutual funds. But that’s interesting to me that you still rely on mutual funds through the SIP route despite having so much knowledge about direct stocks. Is it because you don’t want to do it full-time and you think that, you know, it’s better left to fund managers? So this is another aspect of I think how life has evolved for me over the past 15 years of being on my own. I have as I say, been been through that or been there done that kind of thing for stocks and equities for the past 20 years now. Like I’ve been in the market for 23 years now. But over a period of time, especially the past 4 5 years, I realized that I find greater joy in writing and teaching and reading and spending my time over there, right? So what I’ve done is in the initial part of your career when you’re starting, right? You always want to earn the highest returns. You always want to have the best investments. But, I think for a lot of people like me, and I’m not saying for everyone, right? A lot of people love the game so much, they always want to be in the markets. They want to pick stocks. They want to become fund managers of their own fund or someone else. That’s perfectly fine. It’s not so much about loving the game as much as it is about disproportionate gains that you might make. I remember this conversation I was having with Ramesh Damani, where he said, “Sonia, you can make create wealth for yourself through mutual funds. But, to create disproportionate wealth, generational wealth, you need to do direct stock picking.” So, I’m it’s interesting to me why you still choose a large chunk of your portfolio in mutual funds when you have the knowledge and expertise to build disproportionate wealth for yourself. See, in America, there’s a saying called shirtsleeves to shirtsleeves in three generations. So, the first generation creates, the second generation preserves, the third generation destroys. In India, in Marwari and Gujarati business family, they’re saying “Haveli ki umar 60 saal.” So, the the life of a mansion, havili, is 60 years. Again, the same first generation, second generation, third generation, it’s gone. So, the So, I have a different view on generation wealth, right? The question is why do you want to spend your life building generation wealth? Right? So, it’s it’s it’s Okay, it’s always good that you want to leave something for your successors and all those kind of thing. But, life is too short to And I here I would agree go more with a Charlie Munger point of view than even a Warren Buffett or anyone’s point of view who focused a life on building wealth passionately like Buffett. Buffett and Charlie Munger completely contrasting beings. Buffett became one of the richest people in the world. Charlie Munger probably would be like I don’t know, 50th or 100th or 200th rank, right? He didn’t have enough wealth. Charlie’s life was about finding joy in learning and living a life not by buying stocks but by just spending the time becoming a better version of themselves. I find greatest amount of joy as I said in writing and teaching and learning. So, and I trust a few fund managers. So, like we all do and this is something which I also advise you people who say how do I learn about picking stocks? I said and I I maintain this stance for many years now. You should give yourself 5 years. Learn about stock picking. Want to pick stocks, pick stocks. Right? At the same time also create a portfolio where you have portfolio of say two or three good mutual funds where you have your fund manager is managing your money. After 5 years find out who performed better. Right? If your fund manager is performing better, give your money to that fund manager. If you have done better, probably pull more money towards you. But more than optimizing for returns again, right? So, with complete respect to all those legends who made big in the Indian markets. I think each of us have their own journeys. Right? So, you can create disproportionate amount of wealth, I agree with stocks. Right? And a lot of people have proven that. But it totally depends on what your focus and what your priorities in life are. So, my priority in life at this point of time is to spend as much as as much time as I can do in terms of reading, writing, teaching because I find the greatest joy in the idea of becoming over there. Right? So, uh there’s a very famous uh uh author called Kurt Vonnegut. And he was invited to uh high school. Uh a lot of kids wrote letters that please come to our school and they wrote a lot letters to a lot of authors. Nobody came. Even Kurt Vonnegut did not come, but he sent them a letter. And he said that do anything, create any art in life, good or bad. Right? But it should be an art where you become something. Not become in terms of possessions and in terms of their designations, but you feel becoming. And do something that makes your soul grow. Right. So, investing has made my soul grow because I have the byproduct of investing or being an investor of learning Buffett, Munger, Philip Fisher, Howard Marks, Monish Pabrai, all these people out there. Such great privilege to be and learning from them. Right. That has made me, I think, a better human being over the past many years. I probably I would not have been a as good a human being or whatever it is I am if I were not an investor. Right. I would have been doing some some work. I don’t know what life where life would have taken me. So, that has been the byproduct for me as far as being an investor is concerned. I agree that you can create disproportionate wealth out there. But, I also agree in the idea of survivorship bias. Right. For every one Warren Buffett, there are 99,000 people who invested in the same way like Warren Buffett, but who did not really come out survive, right? Because of some family reasons, some personal reasons, some reason because they had lost interest or they lost big big money in some important point of their life, right? So, that’s the reason I always, even when I teach people, I always focus on the idea of focusing on the survivor bias survivorship bias and not really thinking that if someone can make it, I can also It’s a It’s always good to think that way. It’s all I’m not saying try to be average in the world. But, in a world where everyone is trying to create alpha, being average, I think, is a very good idea. Right. Because everyone wants to be on the right side of the normal distribution the bell curve that we draw. Everyone wants to be on the right side of the normal distribution curve. Right. But, if you even if you look at the Indian financial market or global financial markets, I’m not sure what the statistics are, but there are like 60-70% mutual funds underperform the index or something like that, right? Across different market cycles. You can beat them by just buying an index. Because they underperform the market. So, how do you outperform 70% money managers? By being the market. Right. You will not be creating disproportionate wealth, but you will also not be spending disproportionate amount of time building that wealth. You would rather be spending time on something that brings you greater joy than picking stocks. So, you have to find your own path, and that is my path which I’m walking on. Amazing. So, when you talk about survivorship bias, right? Both in the market as well as in life, what are the qualities that you need to survive through the ups and downs parallelly both markets, investing, and in life. One is equanimity. Right? So, I was I hosted Leander Paes on one of my episodes of the podcast. And Leander Paes, then you you also listen to Roger Federer. So many sports people out there. Right? Kipling has a very beautiful poem called If. Right? He talks about if you can deal with triumphs and disasters and treat those impostors alike. Right? So, both triumphs and disaster are impostors. Right? So, Leander Paes said something very wonderful. He said that whether you win or you lose if you win, you are happy. You lose, you cry. And the next moment, that gap should be very short. Right? So, whether you’re losing money in the stock market or you’re making money in the stock market if you understand the idea that this too shall pass, we are in a cycle, always in a cycle. I need to look at the next thing. I need to move to the next idea or next investments or next thing that I want to do in life rather than remaining in the glory of your stock market endeavors and the kind of returns that you made in the five years or feeling self-pity, “Oh, I have lost a lot of money in the past one month one month or two month, and I’m I’m a loser. I’m not going to become anything in life.” I think investing and living with the equanimous state of mind that this is all samatvam, this is like stable. I have to to stable when the world is moving around. If I can be internally stable when the world is moving around, I think that is the way of dealing with all the ups and downs in life. Right? So, and there’s this mantra called this too shall pass. If you can remember that this too shall pass, I think you are going to survive and do well. There’s a There’s a very I think there’s a known Japanese quote which says that you should If you fall seven times, you rise eight times. Right? I think fall seven times and I rise eight times. So, I’ve always thought, okay, every time you fall you rise. But, the equation does not fit in because if you fall seven times, you only rise seven times, right? Why eight times? What is the eighth time? So, when I studied more about it, I realized that eighth time is actually the first time. When you know that you’re going to fall seven times, even then you rise. So, when you know that the stock market cycles are going to be there, and someone has told you probably if you’re not educated, but someone has told you you’ve read the books and you’ve learned from the masters out there, you’ve listened to podcasts and all those kind of things. Someone tells you that there are cycles. It’s like a pendulum. You still rise and you still invest knowing that the pendulum is going to swing either ways. I think that is the way you deal with all the kind You cannot control the outcomes. Right? Investing, it’s all probabilities. Cannot control the outcomes. Even the best kind of research analyst or best kind of investors have made a lot of mistakes. And we all understand that. So, nobody can control outcomes. The only thing that you can control is your reaction to the outcome. And moving on to the next game instantly rather than just staying there or self-pity or ecstasy. Just don’t be there. So, equanimity is a great lesson. Another lesson that you have in your book, there’s a chapter which is called the discipline of waiting. Yes. And I do think that in life as well as in investing, patience is a competitive advantage. And I learned that lesson the hard way during COVID. When I sold part of my portfolio, and in hindsight it It one of the biggest mistakes I made. But, it was a great learning because then you know for you know future cycles that you just need to be a little more patient. You know, it’s literally like the darkest hour is the one before dawn and I sold in that darkest hour. But tell me a little bit about how one can build patience because I notice in your interaction with all the experts and all the legends, the one trait that they have cultivated over time is patience, but it’s not easy. It’s difficult. So, see patience is not like waiting for a bus or a train. Even they are impatient, right? I think I I was talking to Vinod Shetty and he was telling me that people are impatient there. If you are waiting for a train, we all want to look around and see whether the train is coming, right? We want to like bend over the railway tracks. So, we all want to bring that future early as if it happens. It never happens that way. But I think the art of waiting is it’s it’s it’s I think it all starts with what kind of information, what kind of people you’re surrounding yourself with. Information has shelf life. It has short shelf life. What is going to happen tomorrow? Nobody knows. But most medias is filled with information which has very short shelf life. If you only consume or if you largely consume information with long shelf life, if you zoom out and things, right? On the idea of zooming out, so I was just reading about Carl Sagan. I I tell a lot of stories, right? So, and these are not stock market stories, but I love telling because I have two kids at home. Right? So, Carl Sagan was a famous astronomer. In 1990, they had this space probe through a spacecraft called Voyager. So, Voyager 1 was coming back to Earth after doing all the space research. And Carl Sagan requested the astronomers to turn the camera towards the Earth and take a last photograph of Earth from far and show how the Earth looked like. And that photograph was taken from 6 billion kilometers away from Earth, 6 billion kilometers. And in the vast expanse of the universe, that earth was looking like a pale blue dot as the name they said, pale blue dot. It’s like a size smaller than a pixel on a computer screen. He said that’s a pale blue dot on which humanity lives. We are fighting wars, we are fighting for land, we are in imposing tariffs, we are losing money, we are being unkind to people or we are being kind to people on that pale blue dot. Nobody is going to come from outside to help us. We are to help ourselves. When you compare when you zoom out and you look at earth as a pale blue dot. And when you compress the age of the earth which is 4.5 billion years into into say 1 year. Right? The first man walked on earth just 24 minutes back. Agricultural revolution happened just 2 minutes back. And industrial revolution happened just 1 second back. What are we talking about? Right? So if you can think in terms of zooming out, if you can think in terms of long long ranges. If you are looking at charts, look at 100 year charts. Look at 50 year charts. Not of stocks but of economies of markets. And if you if you juxtapose the idea of cycles over there, you realize that the most important skill to cultivate in life is as I think Morgan Housel used a term called shut up and wait. And we say shut up, shut up means shutting up your monkey mind. Right? We are all over the place. Right? Even when I know that I have a podcast to give in the morning, I have 100 things to think about. Of how how am I going to look on camera, whether I’m going to fumble in front of Sonia, what am I going to say wrong something wrong. All those kind of fears which come to us. But when I look at it from a point of view of on the podcast which I’m doing where I have to be the real version of myself, right? Everything disappears. Right? So when you’re looking at in terms of zooming out on your portfolio, zooming out on your long-term financial needs, and not focusing on the daily volatility of the stock market, which we equate with risk, which is not risk, it’s simply volatility, right? When you zoom out, you see that if you do your work well, if you identify good business, good investments, good stocks, good mutual funds, good fund managers, you just have to put your focus on having patience and not doing anything. And not doing anything which is inaction is also an action. Right? We always want to be acting something, right? Because now we have social media, we have uh mobile apps, we have 4G, 5G connections. It’s so difficult to sit in a room alone doing nothing. Since because because we want to be doing something, and because we have a casino-like structure everywhere, right? Where the friction of transacting is almost zero. There are no no transaction costs and everything. It’s like a game that we are playing. Right? And it’s certainly not a long game. It’s very important for us to define, and again something which I tell people, the beginning of wisdom, as Socrates said, is a definition of terms. Which means, if you want to start playing any game, you know, you should know how to define the most basic elements, the first principles of that game. Can you define investing? Investing is not buying and selling shares and making money out of it. Investing, as I said, is using imperfect information to create probabilistic outcomes about a future that is unknowable. Right? Or delaying gratification. Long term does not mean linear way of time. It’s Kalachakra, it’s pendulum. Right? So, Max Planck versus Schoffer. If you cannot define terms of the game that you’re playing, how do you even know whether you win or lose? And the final thing about patience or waiting is that it comes when you are not looking at the scorecard and just playing. The moment we look at a scorecard and we see losing portfolio and a losing stock or we are losing the match, all those kind of things. We all want to either finish the match or do something rash, do something fast so that we win. Right? But if you stop looking at the scorecard and if there is a scorecard that’s completely inner scorecard. That’s not an outer scorecard. I’m not playing by what the world wants me to play at. I want to play the game because my financial needs, my financial goals, my family’s needs and everything is dependent on that on that scorecard, whatever it is. I am going to play it that way and that will make me more patient and more waiting in nature. So after all your learnings, what is it that you practically do when the market falls like this? I’m not even going to say market crash because it’s just a 10% fall that we’ve seen. yes. Uh with your mutual funds, do you generally use this as opportunities to put lump sum money in? Do you just take a pause and say, “Let me wait for this situation.” Because you know, a war is not something you see every day. It’s something that you see maybe once in five, six years. So what do you do at a time like this when your portfolio drawdowns are say 20, 30%? But you have this wisdom of so many years of investing. That’s right. So I think we all wise, right? Even when a youngster who enters the stock market for first time, they understand the idea of patience and waiting. Everyone says, right? Right? So we all know that it’s it’s the only problem is that since we’re surrounded by so many so much noise and we allow ourselves so much noise, right? That we don’t really remember those lessons when the time actually is required. So everyone knows investing rules, right? So Buffett, Munger have so have said it so many times, “Investing is simple but not easy.” Now what is simple? The rules. Everyone knows the idea of patience and waiting. What is not easy is actually practicing them. So when a market corrects or crash crashes or whatever it is, if I have capital, I’m to deploy. I am not in a camp of I’m not on the extreme camp of being 100% invested all the time. If I see fraud in the market and I see okay, this is like too big a bubble. I’m not going to sell my stocks or sell my funds and take money. I’m going to slow down my investment into equities. I’m going to probably allocate more to liquid funds or more to on the debt side. I’m not going to sell my stocks because I cannot time the market. Nobody can. Assuming I have been holding high quality funds and stocks. Right? Thinking like a business owner. Well, how does a business owner think? If you’re a business owner, you are not worried about your stock price volatility. You’re worried about where the business is going to go next year and 3 years or 5 years down the line. Right? So, if you think like a business owner, whether it’s funds or stocks or whatever it is, whether it’s equities, right? You’re going to deploy more capital if you think that the long-term return on capital are going to be good net net. Right? I learned from someone the idea of DCA frame of mind. So, we all do discounted cash flows. But, if you make it as a mental model, is this war going to impact the long-term cash flows of my company? If yes, I’m going to take a relook. If no, this is an opportunity. It’s like price versus value. The value remains, the long-term value remains, the price has come down. When the gap gap increases, it gives me an opportunity to buy more of the cheap same stuff cheap. Why why why why would I not be buying? Right? So, it’s But, this could be also a time where nobody knows what the second order impact is, right? Nobody knows anytime what the second order impact is. Did we know in 2008? No. Did we know in 2020? It was like the end of world. Do we know it now? Nobody knows. We can as I said, we can as experts, as the so-called experts, we can make calculated guesses or probability-based guesses out there, right? And we can apply that to your to our to our models and everything. But, all models fail in in in the face of what really happens on ground as Lennon John Lennon said life happens when you are making other plans. That applies so much to investing. You make all the models, you make all the spreadsheets. I used to make spreadsheets as an analyst and I don’t really believe in the idea of spreadsheets because if a spreadsheet tells me that I should be buying or selling the stock, that stock is not worth buying. Right? It has to be obvious. I need to understand the business. It should be in my circle of competence. I need to buy at a great margin of safety and then I just need to wait. Thinking like an owner that if the business does well in my idea of business doing well for the next 20-30 years, right? Now, when I say risk, when I I was talking about risk, right? Risk is about not knowing the outcome but assigning probabilities. But now there are two kind of businesses. One where a lot of stuff is dependent on say foreign currency. A lot of stuff is dependent on foreign raw materials, right? The probability assumption that you’re making, right? It’s also clouded with a lot of uncertainty because you don’t know where the currency is going to go. You don’t know where the oil prices are going to go, right? But if there’s a local business which is selling to India, which is manufacturing India, which is buying from India, or it’s a small scale small size business which is really local, right? The amount of uncertainty is lesser even when the world is going through uncertainty. You can You still need to make risk-based probability decisions. What is the probability of this consumer good company earning a kind of earning per share for the next 5 years or what is the kind of return on capital employed? You still need to make those different bets out there. But the amount of uncertainty which this business is shrouded with is completely different from something else. So it entirely depends on your risk appetite. A lot of people who have that PE private equity or a venture capitalist kind of mindset are going to go with something which is highly uncertain, highly risky because they’re taking a bet. Right? But for most investors out there, they should be acting defensively. Defensively in the sense that you still take a bet on the future, right? It has to be a well-thought-out bet on something where the amount of uncertainty is not so high. Got it. You have to look beyond the fog. Got it. So, um you know, we’re talking about uncertainty, there are there there’s a chapter in your book where you also have spoken to a lot of market veterans, but one of them is about independent thinking and the loneliness of independent thinking. I really enjoyed that chapter because I think, you know, waiting for your thesis to play out if you’re against the tide. For example, what S. Naren has done had done, right? In the recent past where when everyone was buying into the market, he was cautious. When everyone was buying silver, he became cautious on silver. So, waiting for your thesis to play out can sometimes become unbearable. But, how do you kind of navigate that? So, the chapter that you’re talking about is actually penned by S. Naren. Okay. Right? So, it’s called loneliness of independent thinking and he’s given multiple examples from his life cycle, from his career in fund management, right? And he’s been a great voice, a sane very sane voice, lonely voice sometimes to say things are not right or things are right. I think uh So, uh uh I think it’s a very tricky thing where uh your thesis and you’ve done all your hard work and you think that you’ve created a wonderful thesis and this business has a high probability of doing well for you. Sometimes it happens it doesn’t go as per your thesis. And that’s the reason I always believe that buy and hold does not mean buy and forget. It’s not patience, it’s active patience. You still have to review your thesis maybe once a year or if there is a event, right? For example, you bought a business where there’s a as per you there was high probability of earning a 20% ROC for the next 10 years or the next 1 year or year or the earnings were expected to grow at 20-30% because you had factored in a lot of different variables. But because of now war situation, now because of oil price shock and all those kind of things which are happening, when you take a re-look at your thesis and you’ve lost some money because you bought at certain level and the stock has corrected. When you take a re-look at your thesis, you have to redo your discounted cash flow. You have to redo your valuation and you should be open to changing your mind when the facts have changed. Facts have changed. Now, are you willing to change your mind or not? And that is what I think Naren’s idea is all about, right? It’s it’s very important to have independent thinking, but it’s also very important to change your mind when the facts change. Then you cannot say, “I have to be a forceful contrarian.” Contrarianism does not mean that you do for the sake of it. And he says, I think he said it in one of your episodes where you have to be contrarian with a calculator. Right? So, you have to have the math right or the probability right, whatever it is, behind your contrarian bet. So, you have to take a review, you have to take a re-look. Sometimes you realize it’s a it’s a mistake, it turned out to be a mistake and it’s a long-term the war or any kind of eventualities a long-term deterrent on the cash flows of the business. You take a call accordingly, you probably sell the stock at a loss. A lot of times things go against conventional wisdom also, right? Like for example, what’s happening with gold? The conventional wisdom is that when a war escalates, people rush to safe haven assets like gold, but we’ve seen a huge bear market in gold. Gold is down 20% from the peak. How do you react to a situation like this? No, I I don’t really have I’ve not really studied the gold markets at all. Gold again as I I think uh when when I talk about gold, I think it’s more sort of a asset allocation play for me. So, maybe having a 10% allocation to gold in physical form or demat form is all something which I have practice and something which I believe in. But not as a large part of my portfolio, especially when you have say 10 or 15 or 20 years horizon in front of you, because gold is not a productive asset, it’s a safety asset, it’s like cash, right? You when you when there’s an emergency, when there’s a run on the bank or run on the economy, you want to have cash under your mattress. In the same way you need to have gold with you. That is the mentality which with which I invest or I keep my money in gold. Otherwise for me I think it’s purely an asset allocation play and and of course when you have family in India and you have daughters, so that’s only You have two daughters. I have one daughter. I have one son. Yeah. Okay. Uh it’s been a great chat, Vishal. I must say I’ve learned a lot, not just about investing but about life as well. Uh we have a couple of minutes to spare, so I wanted to ask you since you’ve spoken to so many wise investors through your books, through your journey, you know, um over the decades, what has been the biggest learning for you and what do you think is I mean you’ve spoken about spoken about many things, equanimity, patience, etc. But if you had to identify the biggest lesson that investors need to take away from these legends, what would it be? I think from multiple people I have I’ve learned a similar similar kind of lesson because after a certain point of time, right, once you’re in the markets or in the industry for many years, you all converge to same kind of lesson because the same things work. But this idea of humility or this idea of detachment or this idea of of treating market as the greatest teacher out there. So uh the idea of patience I think is something which I have taken from everyone. The idea of humility and humility does not mean thinking of yourself as less. Humility simply means intellectual humility. That the more I know that the more there is to know. Right? So uh whether it’s Manish, whether it’s Vinod Sethi, whether it’s Ramesh Damani, whether it’s Warren Buffett or Charlie Munger or Howard Marks, right? They are still learning at this age or at the stage of life. They could have retired from active money management or fund management or trying to become rich or whatever it is several generations back several decades back. But the reason they play the game is because they are not looking at the scorecard. The reason they are playing the game because they find the greatest joy in just playing the game. Right? So, that has been the biggest personal lesson for me in life and investing is that if you want to really win at a game you have to learn to rise above it. You have to learn to rise above above winning and losing. You have to as Kipling said treat winning and losing or triumphs and disasters as impostors. And you have to keep walking on the path that you think is the right path for you. Here I and I’ve I’ve said this couplet many times. I think I probably my kids would have are bored of this saying and and this is very beautiful poem from Harivansh Rai Bachchan. Right? Which is which is Madhushala. Right? So, Harivansh Rai Bachchan Madhushala is a beautiful poem and there’s this part which applies to everything that we do in life or in as investors. And this part reads something like this. So, he says he writes Madhiralay jaane ko ghar se chalta hai peene wala. Right? To the house of wine the seeker goes starts walking. Kis path se jaaun asmanjas mein woh bhola bhala. Which path should I take? He’s very He doesn’t know the path. So, which path should I take to reach the wine house? Alag alag path batlate sab par main yeh batlata hoon. Everyone is telling me a different path, but I’m going to tell you a a path. Raha pakad tu ek chala chal pa jayega Madhushala. Which means know your path and keep walking on it. Whatever the world does. If you can just find your own path that brings you the greatest amount of joy and you keep walking on that, you will find your Madhushala, not someone else’s. Now, that’s a 10 crore coppers or a 60 crore coppers or a 5 crore coppers or a 1 crore coppers or nothing at all, just the bare minimum. That’s your Madhushala, because that is the that is what you call home. So, financial freedom is is the home that we’re all searching for. Probably it is now, it is here. Not in the future. So, just do that, and I think you’ll be happy, you’ll be sane, you’ll be detached, you’ll be equanimous. You’ll be blessed in life. What else do you want? Wow, that’s amazing, and that’s a lesson for life, right? Not just for your financial coppers. be a good investor if you are not a So, investing and life are not separate. You cannot be a long-term investor if you’re not not a long-term human being. If you indulge in transactional relationships in life, you cannot be a long-term investor. Because everything you look at is from a transactional viewpoint. So, don’t look at it that way. Lot of lessons, and yeah, I must say you’re an amazing storyteller. So, I hope your books continue to do very well. I’ve really enjoyed reading a couple of them, and you have a new one, which is The Long Game, so I encourage all our viewers to take a look at it. It’s not available though on yet, right? my books. I enjoy As I said, I enjoy the process of doing that, so I do everything from writing to editing to except the printing part, or illustrating, or designing the cover, everything I do by my hand. Because I just love the process. So, it’s only on my website, safalniveshak.com. I always end the discussion with asking our guest what is his money mindset, the one thing that, you know, helps him or has helped him cultivate his money mindset. If you had to attribute it to one thing, what would it be? I think delay gratification, but not everything. Yeah, okay. Live in the present as well. So, money is just a medium of exchange. Money is just a way of giving you options in life. If you can find those options right away, don’t defer it for the future. There’s a wonderful book, I don’t know don’t remember the name of the author. It’s called Die With Zero. Right? So, Die With Zero does not mean you splurge at all your money just because you want to die with zero. You fulfill all your responsibilities, give money to your kids, and create the generational wealth that you want to create, and give money for social causes, whatever it is. But the underlying idea is not to leave everything for the future, but also to live in the present. So, this is where I probably think a bit different from a lot of people who talk about compounding, long-term compounding. I am a believer in compounding, but I also am a believer in enjoying your life at this point of time and not delaying all gratification. I think I see a lot of investors who become morose over a period of time, right? So, they they Maybe because of stress or work or age or all those kind of things, and if you were to talk to Buffett and he says that one thing that he cannot get back is life. Right? So, time. If you can If you have that time, if you can enjoy now and rather than running after money and compounding, compounding is a Western concept. Compounding is not an Indian concept. So, it’s good because it has taught us something. But life is not just about compounding. It’s also about living in the present. So, that’s my money mindset that I want to talk about. Thank you so much, Vishal. It was a pleasure speaking to you, and hopefully we’ll get to interact a lot more with you on the show as well as personally. It was really, really lovely having you on the show. Thanks so so much, Sonia. It was my pleasure being here and talking about my stories, and you giving me this wonderful platform to talk about this. So, thank you so much. Thank you, and thank you guys for watching.