Learnings from Sensex journey: Line between success, failure is discipline

I did my Chartered Accountant articleship at Hamam Street in Mumbai, the lane be hind Jeejeebhoy Towers, three decades back. I could hear the noise from the trading ring many a times in my office. Naturally, the noise and possibility to make quick money attracted me to the stock market.

It was a Wild West with vocabulary like company circle buying, vandho (dispute), payment crisis, galo (gap/difference), patavat (settlement) being part of official lexicon. Might was right. 

Bulls and Bears were making money, while  retail was slaughtered.

Inevitably, I rode a roller coaster ride in my early days in the stock market. Eventually, I lost all my money after the securities scam.

Frustrated, I went to an old Dagla (overcoat) wearing sub-broker for advise over many days.

I am happy to share his advise, in native Gujarati, which has helped me immensely over the years.

• Investment is about common sense, which is not so commonly available.

• Other than your parents, no one else is interested in making you rich. Listen to all, but take your own decision.

• Teji Mandi (Bull and Bear) is like Poonam and Amas (full moon and new moon). Only difference is that there is no fixed pattern. In Amas always think of Poonam. In Poonam always think of Amas.

• Trading is a very difficult way to make money. Investment is an easy way to make money. While trading, stop-loss is critical. In investment, averaging is critical.

• When Batata (low-quality stocks) trades at a premium over Tata (quality stocks) it is time to be get out of the market.

• Bhav Bhagwan. Price will reflect most things. Don’t bet against the market. Dalal Street is paved with the Paliya (gravestone) of people who went against the market.

• Be Humble. Don’t have ego/overconfidence as even Lord Ravan lost Golden Lanka due to his over confidence. (Abhimaan to Raja Ravan nu pan nahi takyu).

• While we do Laxmi Pujan on Dalal Street every Diwali, you need to worship Saraswati Maa every day. Knowledge is critical to make money in the stock market.

• Invest in Quality. You don’t take kachra/vasi (Old) Samosa of Dwarika (a famous restaurant on the corner of Dalal Street) home. Why take kachra stock home? Quality never comes cheap.

• If making money was so easy, everyone would have been rich. You have to work hard and be patient to make money.

• Greed has no limit. (lobh no thobh nahi).

• Don’t get carried away by money and fame. In Dalal Street, when you have money and power you are known as Sheth Nathalal. When you don’t have money and power you will be called Nathiyo. (Nana vagar no nathiyo, Nane Nathalal).

His wisdom accumulated over decades is reflected in the teachings of many legendary investors.

Dalal Street is where dreams are made and destroyed.

The biggest learning of Sensex’s journey to 50,000 is that discipline is the biggest differentiator between success and failure on Dalal Street.

The Author is Group President & Managing Director of Kotak Mahindra Asset Management Company