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'Genius Trader', that's what they call him in his close circles.
But unlike his high profile contemporary Rakesh Jhunjhunwala,
this man is low profile. A man of few words, it took almost a
month to conclude this interview…
But when it happened, what came out was his brilliant approach
to trading. His disciplinary attitude and an absolute aversion
to risk reflected the similarities he shares with the likes of
legendary investors Jesse Livermore, Warren Buffet and Sir John
Templeton.
Simply put, he believes 'No matter what information you have,
no matter what you are doing, you can be wrong… and when
you are wrong: just take your loss and get out... That's Paresh
Bhagat, Chairman of Mangal Keshav Securities, whose characteristics
and investing principles have made him, what he today is: A Genius
Trader!
A little background
about your company?
The company was started by my grandfather in 1939. We are amongst
the oldest members of the BSE and among the top 25 players in
India. We are a complete wealth management firm catering to institutions,
HNIs, NRI's and retail clients. We are not only present in Equities
and Commodities but also market Insurance and Mutual Fund products.
Bank Muscat, the largest Bank in Oman is our strategic partner
and holds a 43% stake in Mangal Keshav.
And yourself?
Personally, I am an investor and a trader and have a passion for
equities. I believe equity investing offers the best opportunity
for wealth creation.
At what point did you
think about making a career in the financial markets?
As far as I remember I have always had a great interest in the
markets, right from my childhood. At the age of 14, I used to
take rates for my father from 'kerb' traders as also help him
with execution of trades and get market insights from him. I started
actively trading at the age of 19, and have not looked back since
then.
Do you use fundamental
or technical analysis?
I do look at technicals as well as fundamentals. I believe in
trading in stocks with high quality managements, but the timing
of buying or selling is decided by technicals.
How would you describe
your methodology?
I pick stocks on the basis of the management quality, soundness
of business and the company's track record. But I also believe
in trading on the basis of the technical position of the stock
and the market. When there is excessive exuberance in any stock,
I believe in selling, while excessive pessimism is an opportunity
to buy.
What appeals to you about trading? The short or the long side?
I go long for the long term. However, I believe in exploiting
opportunities in the short-term based on demand and supply aberrations,
which bring in many opportunities. I can go long, as well as short.
I give a lot of importance to rates. For me Bhav is Bhagwan.
What differentiates you from other traders?
I put to work my experience of 30 years... I do not get carried
away by the talks of the so called experts.
What gives you that
edge?
I have a strong risk management framework within which I operate.
I believe a trader should not get carried away by an investment
idea or over expose himself to great risks.
Is there any applicable
lesson to trading?
Every trader should develop his own strategy on the basis of his
temperament, risk-taking ability and beliefs.
How much of what
you do is gut feel?
Gut feel is very important, but it is not like impulsive behavior.
It is a culmination of the long experience of witnessing many
bull and bear markets. It is also an ability to make quick decisions
when there are rapid changes happening in the market.
Do you try to anticipate
or follow market trends?
While I do follow market
trends, at market extremes I use a contra-cyclical approach.
When you put money on a trade and it goes against you?
When the move is adverse, I do not hesitate to take a loss and
get out.
Any positions you
ever lost sleep over?
No. Thanks to our superior risk management philosophy we avoid
over-trading and have never had a situation in which we had to
lose sleep.
What would make
you wary about a trade?
When the liquidity on a counter dries up, it can be very upsetting.
Your success mantra?
Like I said before, the mantra is Bhav is Bhagvan. Price is king
and reflects all. I also believe in destiny.
Any number for the
Sensex in 2015?
I believe the markets will give returns of at least 18% CAGR (Compound
Annual Growth Rate) in the next few years. Thus we can safely
assume that the level of 40,000 in five years is very much likely.
However, it will certainly not be a smooth ride.
Any final words?
If you do not get carried
away by reckless behavior you will create wealth in a big way.
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