Author: Aditya Rathi


Siddhartha Bhaiya, a renowned figure in the world of stock market investing with a remarkable two-decade-long journey in the financial industry. With a proven track record of success and a wealth of experience, Siddhartha has become a trusted and influential voice in the realm of investment. Throughout his illustrious career, he has consistently demonstrated an exceptional ability to navigate the complexities of the stock market, delivering over 30% CAGR since the inception of his Investment Firm, ‘Aequitas’ in 2013. And it was a great learning experience listening to Siddhartha in the event organised by CFA Society India.

Siddhartha’s twitter bio calls himself a ‘Multi-bagger’ and that is exactly where he kicks off his speech. He goes on to explaining how Sensex has been a multi-bagger since its inception in 1979, with every penny invested in 1979 would be worth 650x in 40 years, giving a return of 16% CAGR. And if you happen to select the right companies amongst them, return would have been much greater than the index itself. One of the main takeaways would be the importance of patience and a long-term view in equity investing.

Even though the Nifty/Sensex index themselves have been multi-bagger over the years, yet a lot of people don’t make money in the equity markets. Emphasizing on it, Siddhartha from his experience gives a practical guidance on how to avoid pitfalls while investing. He points out some major reasons due to which people don’t make money in stock markets, rather lose money. Foremost reason is individuals looking at stock market as a gambling arena or they are investing on tips. On the contrary, it is a game of skill, which involves examining past information and analysing available data to invest. He advices investors to avoid taking impulsive decisions and cites a common phenomenon of a new investor ‘People these days spend less time in selecting stock than selecting a shirt to buy.’

He then talks about cons of derivatives and IPO investing, where people come with wrong mindset of ‘get-rich-quick’. Historically only 10% of the traders are profitable in derivatives, which clearly tells that the odds are against you. And almost 9 out of 10 companies that lists eventually gets delisted. This greed can easily get out of hand when the market moves against you and is equally likely to negatively influence your investing decision going further. Another risk he mentioned is ‘Leverage’. Using leverage can result in much higher downside risk, sometimes resulting in losses greater than your initial capital investment. His idea of pitfalls reminds me of a quote by Bob Knight, ‘Most people have the will to win. However, few have the will to prepare to win.’

Mr Bhaiya being a proven multi-bagger explains the mindset behind it, which initially is to prioritize survival. He quotes Buffet, ‘The first rule of investing is don’t lose money. And the second rule of investing is don’t forget the first rule’. And it emphasizes the importance of protecting your capital. But by taking calculated risks and investing in promising companies, people have the potential to reap significant rewards.

He reiterates the fundamental principal – ‘Time in market in more important than timing the market.’ He explains the importance of ‘holding’ for it to give you multi-fold returns. And says short term drawdowns are just noise, and you must be prepared for multiple drawdowns. He also mentions that many of his multi-baggers took long time to pay off, often going unpaid for as long as 4-5 years. In his words ‘it is always darkest just before the dawn.’ Guiding on long term investing, he recalls that 7 out of 10 stocks with Aequitas have been held for more than 8 years. Session was full of practical applications, where he tells how GAEL has given 33x returns over last 10 years despite facing 8 odd drawdowns. Key take away was, returns are never linear.

Siddhartha gives a ground level advice to investors. Invest in a new stock every single month for next 3-5 years, and after those years pass by you’ll have 36-60 stocks, out of which some will become multi-bagger, some will lose money and some will give you average returns. But most importantly you’ll learn what went right and what went wrong. Highlights of the entire session were such practical hacks. Another hack he mentioned was to always eye for market leaders while investing in small caps. A stock with less than 10 PE and net cash balance sheet has a lower probability to fail. He talks about his preferred matrix of stock below 0.3x Mcap/Sales. He guides on to never average the stocks just because the price has gone down.

Continuing with sharing his mindset, he talks about the difference between luck and skill while making crucial investing decision. He asks investors to wait for the right opportunity by saying ‘Mistake of omission is better than mistakes of commission.’ He meant market gives us numerous opportunities, but we should be wise to know when to jump for it and when to avoid it. Further on this, he explains the cyclical nature of companies and market. Where he says to wait for the cycle to shift in your favour and that is when you will have extraordinary returns.

Apart from the investing wisdom, Siddhartha also emphasises on the ancillary habits one should inculcate to be successful in every field. He guides on how important ‘book reading’ habits are. It opens new door of ideas and prevents you from making mistakes that others have already made in their life. It is the knowledge bank which helps investors build a solid foundation and understand the principles behind successful investing. The seasoned investor likely emphasized the importance of staying informed and continually learning about market dynamics and investment strategies.

Speaker also explains about the rationale of collaborating the idea of Value investing, growth investing and mostly importantly Contrarian Investing. By which he meant Contrarian approach does not mean doing the opposite of others, rather, it means doing things differently. And according to him most significant factor to consider when buying and selling a stock is ‘Valuation’, which he also follows in day-to-day decision making when it comes to investing.

Lastly, he relates on how healthy lifestyle is also crucial to make better decisions, even under stress. A healthy lifestyle can help you thrive as you move through your life’s journey. Making healthy choices isn’t always easy. However, your efforts will pay off in many ways, and for the rest of your life. This achievable change is more likely to become a habit you keep.

Their remarkable career is marked by a series of notable achievements, including successfully predicting market trends, making profitable investments in both bull and bear markets. This he demonstrates using many real life case studies from his past which includes Apar Industries, Avanti Feeds, Jindal Stainless and Elecon Engineering, amongst others.

With an impressive two-decade history of success, Siddhartha Bhaiya continues to be an influential figure, guiding investors, both novice and seasoned, toward achieving financial prosperity in the ever-evolving stock market landscape. Their wisdom, expertise, and unwavering commitment to excellence make them a true luminary in the field of stock market investing.

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