I met Swami the second time to understand how he picked up the nitty-gritty of investment at an early age.
Landing at Mecca of the Equity Investment
Swami told me that it happened by chance. When Swami completed his Engineering in the 1990s , he did not get a job immediately as there was no campus interview in those days. A good samaritan friend brought him to Mumbai to find a job. The First day in Lokhandwala at Mumbai, looking at the skyscrapers from the window, he was not sure if the maximum city would embrace him. After three-four months of gruelling search, with a vada pav lunch every day around the marine drive, Swami managed to land a job.
Right Eco-System enables Early Start
His friend’s family had a reasonably good understanding of the equity market and they used to educate and coach him in equity investment. Swami was very keen on learning the investment approach. He would follow the textbook approach of going through all financial statements in the Quarterly and Annual Report to filter companies based on historical financial data. While unwarranted, Swami used to go through the bhav copy of the stocks religiously every weekend and update his list of filtered stocks. In those days, since the internet and social media were not there, any additional information about the companies were not readily available. There was information asymmetry between retail investors and well-heeled investors. Luckily, few of Swami’s college friends with an active interest in the stock market also moved to Mumbai. The collaborative knowledge sharing and interest helped enhance Swami’s learning.
The Rise of the Retail Investor
Mumbai is a city of dreamers and you will rarely find people whose money is not working hard. Riding on the economic liberalisation and market reforms initiated in 1991 by the government, people were getting excited about the stock market and wanted to have a stake in that. In past, select investors had invested in blue chips (e.g. Hindustan Lever, Colgate, ITC, Grasim Industries, ACC..) and slept over those paper certificates to get a continuous stream of dividends in addition to the increase in the price of the stock. In the 90s, Reliance Industries (Reliance) started diversifying from Textile to Petrochemical and Telecom. To fund the expansion, they came out with the Rights issues and Debentures. Reliance generated enough excitement and interest in retail investors. The retail investors started considering equity as a serious asset class to fulfil their financial dreams.
Swami was not left untouched. With limited savings he had, he started applying in IPO and Debentures and started creating a small portfolio of stocks, which would help in learning and understanding the nuances of the market.
Move from Dalal Street to Wall Street
While the investment could be done remotely, Swami ensured that he visited Dalal Street to see BSE in person, the first government recognized temple of Financial Markets in India.
Swami was in IT and most of his friends had moved to the USA. It was becoming lonely in Mumbai. In 1996, Swami decided to move to the US to learn and invest in the world’s most celebrated stock market exchanges (NYSE / NASDAQ).
Swami mentioned that there is a lot to tell about one of the most happening decades in US financial markets when trillions of dollars of money were made and lost. He asked me for a breather but again with a promise to meet again.
Hope you will stay with me, while I capture the notes from my subsequent meeting with Swami.
To read the next narration from Swami, refer https://finmyn.com/from-dalal-street-to-wall-street/
To read the previous submission from Swami, refer https://finmyn.com/swamis-titbits-on-family-finance-ems/
To read all submissions from Swami, refer https://finmyn.com/category/swamis-titbits-on-family-finance/
The writer is a SEBI Registered Adviser and Founder of FinMyn (https://finmyn.com). He provides Fee-Only Financial Planning and Investment Advisory services. If you want to know more about him, click on https://finmyn.com/about/.