Recently, I was interviewed by Abhijit Chokshi and Soumya from the “Share Bazaar” team for their series “An Hour with an Investment Superstar”. Share Bazaar is an upcoming financial portal aiming to be a source of information about equity markets and investing.
The current article contains this interview, which was originally published at Share Bazaar.
The interview mainly focuses on my journey as an equity investor, investing philosophy, portfolio management, views about Indian equity markets and advice for new investors.
You may read the interview on Share Bazaar here
Interview with Share Bazaar
To introduce Dr Vijay Malik in a single line would be a herculean task. Our attempt: “Dr Malik is a superhuman on a mission to Simplify Stock Market Investing for retail Investors.” Addressed by Professor Sanjay Bakshi as ‘Dr Stock’, Dr Vijay Malik is one of the most humble persons we interviewed in season one of our series called “An Hour with an Investment Superstar”.
Dr Vijay Malik is an MBA Gold Medalist from IIFT Delhi (one of the premier business school), has successfully completed all three levels of the Chartered Financial Analyst exam from CFA Institute, USA and Financial Risk Manager (FRM) from Global Association of Risk Professionals (GARP). He is currently working for one of the leading Indian private sector banks as a senior credit risk manager (real estate). You can reach out to him via his super-famous website, www.drvijaymalik.com. In a conversation with Share Bazaar Team, Dr Vijay Malik shared his amazing journey in the world of investing.
1) Share Bazaar Team (SB): Can you tell us a little about your background, how you got interested into the field of investing and share your journey towards investing?
Dr Vijay Malik (VM): I completed my MBBS from Govt. Medical College from Solapur. After that, I was working in Tihar Central Jail as a medical officer. The bureaucratic setup in the central jail made me realize that it is the economics and management part of an organization that I enjoyed the most. During my MBBS days, while most of my peers were engrossed in academics, I used to enjoy reading about global economies and finance via magazines like Outlook Money, Business Today etc.
So after completing my MBA from IIFT (Gold Medalist), I started my career in finance. A leading Indian private sector bank hired me from campus and now I am a senior credit risk manager (real estate) in that bank.
I started investing in stock markets in 2006 by learning technical analysis, which I continued to follow for 2 years until I realized that I was going in the wrong direction. It took a few huge lost opportunities, a lot of introspection, some unlearning and a lot of new learning before I realized that fundamental analysis is the direction that I should follow.
2) SB: Can you shed some light on how you shifted from Technical Analysis to Fundamental Analysis?
VM: Initially, I used to study different chart patterns, moving averages etc. Based on a particular chart pattern which I had religiously studied from a book, I had confidently exited a share at ₹1,450 and a few months later it was quoting over ₹4,000. This experience taught me a fundamental lesson that it’s the underlying business that drives the price of a stock rather than some chart patterns.
My attempt to find a solution to what was wrong with the technical analysis approach led me to the discovery of fundamental analysis. On recommendation of a friend I read The Intelligent Investor by Benjamin Graham. I started applying the principles from the book in real life. Those lessons in fundamental analysis from the book gave me conviction to hold the good quality business over an elongated period of time.
I believe that fundamental analysis is ideally suited for any investor who has a daytime job and wants to generate wealth by investing in stock markets. I have tested both the waters and do not think that I would ever want to turn back to technical investing. I often say to people that, “Technical analysts they nibble, while fundamental analysts they bite”
3) SB: As you have made your portfolio public, it is evident that you believe in concentrated portfolio. We wanted to know your reason behind the conviction to have very few and concentrated bets?
VM: I do believe in concentrated bets and the reason is, if you have worked hard identifying a story and you believe it will do well, then your hard work should benefit you in a meaningful way. I’ve several friends who happen to have over 30 or 40 stocks in their portfolios. Now, even if they were able to spot and invest in a multi-bagger stock, their overall portfolio level returns would have a negligible impact due to over-diversification and allocation constraints. Also having a diversified portfolio makes the effort-reward equation against you. Now to have that deep conviction for making concentrated bets, one needs to do their homework in a profound way. You cannot make a concentrated portfolio on borrowed conviction.
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4) SB: As you cover real estate, what is your view on the real estate market in India at the moment?
VM: Real estate as a sector has been sluggish lately. Since the past few quarters sales have been stagnated but commercial space may see an uptake in the coming quarters. However the residential space is in a pretty dull phase with heavy unsold inventories. In fact, yesterday, I heard an advertisement on the radio stating that you can buy an apartment at 2011 prices, so one interpretation of that can be made that at places there has been no appreciation in the last four years in property prices. Whenever an economy starts to revive from the ground level, the real estate sector would be among the first ones to shows a lot of improvement. However, I’m a bottom-up investor and thus don’t really bother about sectoral shifts and cyclical turns.
5) SB: Can you tell us the story behind the name Dr Stock given to you by Sanjay Bakshi?
VM: One fine day, I got a call from one of my seniors from IIFT mentioning that Professor Bakshi really admired my work on Ambika Cotton Mills Limited (on my website) which he came across while doing research about that stock. Mr Bakshi liked my analysis and requested my senior if he can put me in touch with him. After that, we had several friendly chats and during one of those chats he gave me a pet name called “Dr Stock”.
6) SB: What would be your short advice to someone just starting out in the realm of investing?
VM: I would say learn to inculcate patience as it is one quality I see lacking in this fast-paced culture. Patience to hold on to stocks in troubled times plays a huge role in long term wealth creation. If you have done correct homework in analyzing a particular stock then that conviction builds up by default, but if you buy just because some famous investors have bought you have invited yourself for trouble. Also, I would like to emphasize the significance of the habit of reading daily. My simple message to young investors is to remember a short quote: “Leaders are profound readers.”
7) SB: Where do you see Indian Equity Markets going forward?
VM: I have full faith in India growth story and believe that in the coming years, India is going to prove its mettle as an economic superpower. Investors in Indian stocks are going to benefit from it. Until now majorly foreign investors have benefited from Indian growth. I would suggest the readers have faith in Indian markets and invest in companies that have grown well while keeping their debt levels low. Investors in current times have the benefit of looking at companies’ performance since the start of the global economic crisis in 2008, which is one of the most stressful periods in markets’ history. I would advise readers to invest in companies that have shown business strength during the recent crisis without falling into debt traps.
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