How Rich Dad Poor Dad Inspired This Techie To Invest

After nearly two decades of trying his hand at stock investing along with his IT job, Basumalik founded his stock research firm Intelsense in 2019. A few months back, he also launched Shree Rama Managers LLP, a SEBI-registered, Portfolio Management Service (PMS). ) company, with a friend.

Basumalik shares his personal investing journey – from a software engineer to an investor – for ExclusiveMintSeries Guru Portfolio.Edited excerpts from an interview:

What brought you to the stock markets?

I was born and brought up in Kolkata. After engineering degree, I started working in an IT company in 2000. However, in the first month of my job, a friend gave me a book-rich Dad Poor Dadby Robert Kiyosaki. Before that I had no idea about stock markets. I was from a typical Bengali family and there was no one around me who was involved in stocks or trading. After reading that book overnight, I realized that one can quickly become financially independent either by running a business or investing in one’s business. At that time the easiest and lowest entry barrier was getting into the stock market. I remember 10,166 as my first salary and investment Out of this, in 5,000 shares. I also started reading commercial newspapers and magazines. The first three-four years were mostly spent learning and experimenting with investments.

Which was the first stock you bought?

The first stock I bought was from Hindustan Unilever (HUL) and the second was from Hindustan Construction Company. Third and fourth belonged to HDFC Bank and Pidilite. I held HUL for 10 years without any return and I sold it just before it started. It was like a stock waiting for me to sell. I learned a good lesson that a good company doesn’t have to be a good investment.

Did you follow any strategy at the beginning of your investment journey?

The core strategy was very close to that of Warren Buffett: buying good companies. Initially, I was following the Growth at GARP, or Fair Price, strategy.

When did serious investing start?

I think I was very serious from day one. The first decade, from 2000 to 2010, was a period of wealth accumulation. Then, after 2010, my commitment in terms of time and effort multiplied.

How did you transition to full time investing?

From 2015-16 onwards, I started to feel that investing was something that I really enjoyed. I didn’t like office work and scheduled meetings, etc. After some time, I was making more money than I invested and I wanted to pursue it. It took me almost two years to convince my family to leave a well-paying job at a large multinational corporation. Later, I found that it was actually very difficult for a retail investor to get honest advice. So, I decided to start my own research service Intelsense, which was launched on 1st April 2019. I was surprised by the number of people joining us.

Can you tell us about the plans you offer?

I started PMS with a friend Mohit Beriwala. One is Intelsense, which is a research service for retail customers, and then Shri Ram Managers, which is our PMS. The strategy and thought process are the same for both. But ideally, in the research service, what we do is focus on multiple strategies. One clearly is the long-term compounding type of stock. That’s where we have a one-three-year outlook. Then we have Hitpix, where we focus on Technofunda concepts. Therefore, we use some technical overlays on good fundamentals, and the holding period is around two-six months. The third strategy is quantity. Personally, I have grown into using quantitative strategies in my long-term investments as well. So these are mainly our three buckets. I also have a smallcase specific strategy called Quiver, where we use both Technofunda and Quant as input strategies.

So overall, we have more than 1,000 crore in case of assets in effect in smallcases, research services and PMS.

What is the fee structure for your plans?

For Intelsense, it begins 12,000 per annum and is maximum 20,000 for the smallcase strategy, the fee is 2% of the invested amount per annum. Lastly, for PMS, we have a 0.9% management fee and a 9% performance fee each year.

How are you currently invested?

I don’t have gold and I only have one family house where I live. Hence, my investment portfolio is 90:10 split between equity (90%) and debt, which is the money I have received from my provident fund and gratuity. This debt portfolio is in bank fixed deposits. Going forward, I expect my equity allocation to increase as the returns from debt will not be high.

How has your equity portfolio performed?

Over the last 10 years, my equity return will be around 35% CAGR (Compound Annual Growth Rate). Last year has been a little tough, so broadly speaking we’ve been up around 20-22%.

Do you look at the market capitalization before investing?

I have no bias towards market cap. For example, I have stocks whose market cap is 2,000 crore and we have stocks whose market capitalization 2 trillion. i could sell Stock 2 trillion today and buy something that is 2,000 crore tomorrow.

The whole idea is to use different strategies. I use a lot of volume nowadays to see which areas are performing well. This is a significant difference that has come to my investments in the last 10-12 years. Before, I was not looking for a price trend as a trading trend. Now I want both, I want a good business and I want the share price to be in good place. I don’t want to buy a stock and then do nothing on it for two years. Because I personally now think there is an opportunity cost of holding a stock.

One strategy that has worked for you over the years, and one strategy that hasn’t?

What hasn’t worked when you’re pinning your hopes on some change in the market. Therefore, betting on Asha trades did not work. I believe I need to focus on the trend that is already happening. If you don’t have a well defined process, you always end up making the same mistakes over and over again. If you have a system, you will incorporate your learning over the years into your system and your process. I think it has helped me a lot to constantly update my processes.

Which stocks would you identify as the pillars of your wealth-building?

Supreme Industries, Bajaj Finance, Divi’s Laboratories, Cera Sanitaryware, Astral, Mayur Unicottors, Ajanta Pharma, Vinati Organics and Aarti Industries have really helped me a lot in the last 10-15 years.

Which sectors are you bullish on?

The engineering and capital goods sector is looking really good in India right now. We see a lot of investments from the government related to railways, roads etc. Pharma is looking good again; So it’s real estate. Auto, auto ancillary companies are emerging after the recession. There has always been and will be an eternal game for consumption in India, which will be retail-centric. I’m a little bearish on IT right now.

In my opinion this will take time to change, except that a select few companies may do well.

I am bullish on India, especially where consumption is internal. I am more skeptical about export-oriented subjects as things are not looking as good globally as they were two years or five years ago.

How many stocks are in your portfolio?

Between 10-20, no more than 20 usually no less than 10.

Do you invest in international stocks?

A little on and off but not too much.

For how many months do you make provision for an emergency fund?

I do not have any emergency fund, but if there is an emergency, I will use my FD fund.

Do you have life insurance and health insurance?

I have life insurance and health insurance for my family.

Were you able to go on vacation in the past year?

We are Bengalis, so every month or two we have to go somewhere. During COVID, we have been doing short trips to North Bengal, Mandarmani, Murshidabad and Shantiniketan.

Any lifestyle changes that you took up during the lockdown that you think will become permanent?

Watching movies, web series on OTT platform. I watch a lot of movies right now, but the trend of going to the theater has subsided and I am more comfortable with online platforms now.

What does money mean to you?

Basically, money means freedom of time.

And how do you identify yourself as an investor?

Someone who keeps on learning and evolving to improve.