Vetri Subramaniam, CEO of UTI Asset Management Company has shared an old article of Mint on Teachers’ Day. Subramaniam wrote, “Replug of my 2013 piece. To my teacher, the stock market. Lessons from 20 years in the stock markets”. The CEO of UTI Asset Management Company started in the equity markets in June 1994. He has called the stock market his teacher and shared his favorite learnings that he learned from 20 years in the stock market.
Some of the learnings on stock market by Subramaniam are:
1. Companies that allocate capital efficiently and earn a healthy return on capital are more likely to survive and create wealth over the long term.
2. It is okay to be worried about the market and also be positive about a company
3. You will know more about the characteristics of the company by studying its past financial history than by meeting the management.
4. Markets are driven by multiple variables and correlation is not the same as causation.
5. The challenge is not in identifying a good investment, but in committing to it in size and then staying the course even as the markets challenge you every day. A successful self-made investor told me that he has suffered 3 cuts of over 50% in his portfolio value over the past 20 years. He does not easily sell his stocks and some have turned to lemons, but the winners that he never sold have multiplied his net worth to what it is.
6. What exactly is a systematic investment plan (SIP)? It is a tool that ensures that you invest in good times and bad times. SIP does not create alpha or return by itself—it merely smoothes risk, and therefore it also smoothes returns. SIP is a dumb and yet effective solution to the problem of volatility. If you are not smart enough to trade the volatility perfectly, then SIP is a handy tool.
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Updated: 05 Sep 2023, 11:15 AM IST