When I look back at my career of more than 20 years, I connect myself with this quote from Steve Jobs-
“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.” This approach has never let me down, and it has made all the difference in my life.
Today, my association with wealth is just like this. When I look back at my childhood days, it is difficult for me to imagine myself in my present position. The mere mention of my current job at Motilal Oswal Financial Services would have elicited laughter from my near and dear ones. This is because, for us, making money through investments meant only fixed deposit. The idea of equities neither came naturally to me nor was it handed down to me in legacy.
My observation about making wealth in such a restricted sense changed completely when I took up chartered accountancy. Gradually and in a deep sense, I recognised the charm and importance of balance sheet in understanding business ideas and companies. I developed interesting investment ideas. But I did not have sufficient money to invest. Then I went to audit the books of Motilal Oswal Financial Services as part of my articleship assignment. This is where I learnt a lot and took baby steps to financial investments.
Initially, I invested in small amount in stocks and earned good return. It was a bull market period, which began from 2003 and lasted till January 2008. Working at the renowned firm gave me one big advantage – focus on quality stocks and invest for the long term.
I scarcely traded in markets. I focussed on good companies. Buy right – Sit tight is the principle I followed. And this approach paid off. For example, I have HDFC Bank and Motilal Oswal ESOPs in my portfolio for more than a decade. These stocks have reinforced my belief in the magic of compounding. Gradually, I enhanced my exposure to such stocks in subsequent years.
The 2008 fall in equities taught me the valuable lesson of researching before investing, sticking to one’s guns in unfavorable times and gaining from one’s conviction. I received some shares as employee stock option. Some of these investments fell more than 50 per cent. But subsequently, these stocks not only bounced back but they appreciated multi-fold. This helped me in understanding risks and hold on to my conviction of investing in quality companies for the long term.
Over the years, I handled various roles. As my responsibilities grew, I chose portfolio management service (PMS) and mutual funds to invest in equities. I strongly believe that investment in equities always rewards investors in the long term and is the only way to create sustainable wealth. I look at the bear phase of markets as discount offers in malls. This worked in my favour. I kept on increasing my investments as I grew in my career.
A strict discipline that I have unfailingly observed is not to borrow to invest in equities. The only time I leveraged was when I bought my home. I bought my first home in 2000 for, which I took a home loan. But I repaid it swiftly. I strongly believe you should keep your liabilities to the minimum.
On the whole, I would suggest that with the ever-changing dynamic scenario of our markets, one should spend dispassionate time in understanding the companies before investing or seek professional advice. Because a dispassionate view of a financial professional would help you make the most of your investments and create long term wealth. Finally, I would like to end with this quote by Henry Ford-
“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.”
Ajay Menon
MD and CEO, Broking & Distribution, Motilal Oswal Financial Services