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Nilesh Shah's most precious investing lessons

Nilesh Shah, Group President and MD, Kotak Mahindra AMC, shares investing insights from his career to help you become a smart investor

Nilesh Shah's most precious investing lessons

dhanak हिंदी में भी पढ़ें read-in-hindi

I did my articleship at Hamam Street, behind the BSE Tower, three decades back. I was attracted to the stock markets, like my colleagues, to make quick money. In those days, the stock market was the Wild West, with terms like 'company circle buying', 'vandho' (dispute), 'payment crisis', 'galo' (gap/difference), 'patavat' (settlement), 'bad delivery', etc. Might was right. Bulls and bears were making money and retail investors like me were getting slaughtered.

Luck guided me to an old sub-broker wearing traditional dagla (overcoat). I am happy to narrate his advice, in native Gujarati, which has helped me immensely over the years in managing money.

- While we do Laxmi Pujan on Dalal Street every Diwali, you need to worship Sarasvati Maa every day. Knowledge and wisdom are critical to making money in the stock market.

- Investment is about common sense, which is not so commonly available. You don't need to wear tie and suit (professional degree) to make money. Dhoti-dagla (knowledge and wisdom) is sufficient.

- Other than your parents, no one else is interested in making you rich. Listen to all, but make your own decisions. Don't blindly follow the tips.

- Teji-mandi (bull and bear) is like Poonam and Amas (full moon and new moon), albeit without any fixed pattern. In the darkness of Amas, always think of Poonam.

- Trading is a very difficult way to make money. Investment is an easy way to make money. In trading, stop loss is critical. In investment, averaging is critical. In trading, discipline is critical. In investment, patience is critical. A trader has to be fast. An investor has to be slow and steady. Remember one can make mistakes when in hurry and avoid when steady (Utavala so bavla, Dhira so gambhir)

- When batata (low-quality stocks) trades at a premium over Tata (quality stocks), it is time to get out of the market.

- Bhav bhagwan - price will reflect most known things. Don't bet against the market. Dalal Street is paved with the paliya (gravestone) of people who believed that they knew more than the market.

- Be humble. Don't have ego/overconfidence as even Lord Ravan lost Golden Lanka due to his ego. (Abhimaan to Raja Ravan nu pan nahi takyu).

- Invest in quality. You don't take vasi (old) samosa of Dwarka (a famous restaurant on the corner of Dalal Street) home. Why take a kachra stock home? Quality never comes cheap.

- If making money was so easy, everyone would have been rich. You have to work hard and be patient to make money.

- Greed has no limit (lobh no thobh nahi).

- Don't get carried away by money and fame. On Dalal Street, when you have money and power, you are known as Sheth Nathalal. When you don't have money and power you will be called nathiyo. (Nana vagar no nathiyo, Nane Nathalal)

His wisdom accumulated over decades is reflected in the teachings of many legendary investors.

Dalal Street is where dreams are made and destroyed. The biggest learning from three decades of participation in market is that discipline and patience are the biggest differentiator between success and failure on Dalal Street.

As I enter my Vanprastha ashram, I have started believing that as an investor my duty is to do good karma (invest in good companies run by good managers coming from the conviction of good research) and leave it to the market to reward. As in God's world, in the market also you may have to wait but there is justice. (der hai per andher nahi hai).

This interview was conducted in June 2021

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