Saturday, April 12, 2014

Plagiarise & be ordinary

Those were times when we simply didn't know who owned how much. I come from an era when we did not know what other investors were doing. Bombay was an investment citadel.There was an information advantage which naturally disadvantaged investors living in other cities. We didn't even know who were the large shareholders in companies. Those were times in which companies didn't disclose shareholding as often as they do now. Even if they did, the data was closeted information accessible only to BSE members. The regular shareholding pattern disclosures, SAST disclosures and block deal data are a very recent phenomenon.So, all one knew from poring over trading data was that there was some unusual activity in stocks. Reading trading patterns from the quote pages in newspapers was the only handle one had for a very long time to know there was heightened activity. Over a period, one stopped reading even the daily quotes and simply focussed on studying businesses and sticking to the findings. What others own is now widely known as shareholding disclosures and changes are now regular , transparent and accessible. Yet, my old habit of sticking to my own reading of businesses has continued to drive my investment approach and I don't even know what my close associates own in companies. Bombay - the distant city. Being a Madras boy, I had no Bombay connect or knew anyone who mattered in the stock market.I also intensely disliked the fact that stock brokers were the big boys of the stock market. The fact that the big stock brokers were wanting and short on ethics and relied on inside information made me irreverent of them. My irreverence only grew from my analytic perception the actions of the most respected names and I chose to remain distant from the mob. So, what the big boys were doing was simply unacceptable to me. So, a certain irreverence set in towards what the big boys did. I chose to make my own rules in the way I invested. Obscurity was a conscious choice. It was only between me, my investment ideas and my sounding boards. Playing out scenarios in my mind and among my sounding boards became a constant habit. In most cases, I did not even meet the managements. In instances where I rarely did , discussions was all about the industry , their business philosophy , their vision for their business and their views on competition. I was game for these rules and happily played by it. It was great fun playing in the dark. I worked from what I knew and put my investment judgements to constant test. That was how i learnt what will work. I simply didn't care about what I didn't know or was not supposed to. The very modest Bombay connect that I developed was in following the investment writings of a few, discerning investors whom I looked up to them and continue to this day. But, my list is very short and doesn't have any big names. Every body makes mistakes. Big boys aren't exceptions. I remember the nineties. Then , fellow investors would always reel out how someone big came from Mumbai and met the top management of Madras companies. I would often wonder why the big boys were buying some companies. One prominent case was that of DSQ software ,a company I deemed was completely investment unworthy. I quickly figured out that big boys are comfortable with companies which allow them act as insiders. So, the investment works on the premise of a cosy relationship rather than sound investment analysis. That is an area which gives me deep discomfiture and following such investors is consciously driven by weak investment rationale and a strong urge to profiteer through any means.This inevitably leads to mistakes. You end up following others into their mistakes as much as you follow them in their successes. I would rather fail with my own ideas and rise from the fall. Failing with the ideas of others wont even give me the courage to rise from that failure. The bigger an investor becomes , the more he begins to look for insider comfort and this inevitably leads to idea dilution and weak investment ideation. Big boys grow only to make mistakes. It is a fallacy to believe they are infallible. The few who are infallible build stories only to pawn them off on followers or institutional scapegoats. I would rather not leave my neck under the guillotine. Following should never be allowed to become my fault. A Mind of your own is all you need. I see several young investors dig data from databases on ownership of prominent investors in companies. A simple query on Prowess or any other software will throw out the entire list of ownership. I was amused when a young friend reeled out the list of companies in which a close associate of mine owned shares. I had never bothered to even track the investing of someone I spoke to everyday and discussed most of the ideas that were on that list. I owned very few of those companies. It wasn't that I did not respect these companies or the skill of my fellow investor. It is just that one should own ideas as much as one owns companies. It is idea ownership and independent thinking that one should learn to build. You need to build a framework to seamlessly find new ideas, learn own them and then watch them grow as you visualised . By doing so , you will create the foundation for a long, lasting and independent sojourn in investing.When I study the lives of Philip Fischer, John Templeton and Walter Strauss , my belief in being my own person only grows.

No comments: