Knowledge, courage, patience: Vijay Kedia's mantra for stock market success

You can borrow knowledge from others, develop courage, but patience is something that comes from within, said Vijay Kedia.

Ace market investor Vijay Kedia said stock market success rests on three pillars: knowledge, courage, and patience. In a conversation with Puneet Wadhwa at the Business Standard BFSI Insight Summit’s Smart Investor Arena, he also shared why long-term investing matters more than chasing quick returns. Edited excerpts:

 

How has investing as a journey evolved across these years?

 

If you look at the ratio of traders versus investors, things have not changed much. Earlier too, the number of traders remained at 99 per cent, and the situation has not changed much as they are looking to make quick money. Most start with trading, but once they realise it's not an easy feat, they shift towards investing. If trading were so simple, everyone here would be a millionaire.

 

 

Is it a game of skill or is it a game of luck? 

Luck, of course, plays a very important role in the stock market because ultimately you are creating something from your mind. In the market, there is no guarantee; everything is backed by imagination and creativity. I consider it a form of art.

 

Three things are essential for success in the stock market: knowledge, courage, and patience. Of these, knowledge is most important. One must understand there is limited capital, a limited amount of time, and a limited investment horizon. One needs to figure out how to make the best possible use of those resources to generate returns. For that, one should invest in shares that one believes have the potential to grow. That is the role of knowledge.

 

The second, equally important factor is courage.

 

Suppose you have ₹100, but you are always afraid. Even if you have complete conviction in a company, you might invest just ₹1 in its shares. Imagine that this particular share multiplies in value, while your other shares do not. Your overall portfolio will not generate the returns you expected because you did not invest enough in the opportunity you believed in.

 

That is why courage is important.

 

However, courage is a double-edged sword. It can also cause losses. Therefore, it must be backed by proper knowledge and conviction.

 

And without patience, nothing works.

 

We think things will turn out one way or another, but they often do not because the market is driven by two types of factors: internal and external. Internal factors include things you can study. But external factors can disrupt everything. That is why patience is essential.

 

One can borrow knowledge from others, learn from other people's experience and use their knowledge to make investment decisions. One can also develop courage, but patience is something that comes from within.

 

How should one approach investing? If you invest in a particular stock but get it wrong, or you buy it at the wrong time, do you stay invested?

 

There is no single theory that works for everyone. For example, one medicine might relieve my headache, while another medicine might work for you. There are different treatments for different people. The important thing is to find out what suits you.

 

I do not invest with a target of 30–40 per cent. But that does not mean my approach is necessarily right and yours is wrong. In this business, one have to test themselves. If one follows someone else's formula, and it makes you uncomfortable, then perhaps that strategy is not right for them.

 

That said, we must keep our minds open and learn from everyone. If someone else has progressed further than you, ask yourself what they did differently and what approach they followed.

 

Can someone become a successful investor without experiencing losses, going through the struggle, and facing difficult periods?

 

Nobody can become a successful investor without experiencing a loss. It is impossible to go through the market without suffering losses, experiencing anxiety, feeling worried, or facing difficult situations and still expect to become successful.

 

One must use these experiences as sources of knowledge, and not consider them enemies. The real test for an investor is how you behave during a bear market. One needs to reflect on themselves and their portfolio. If you understand the lessons that losses offer, you can grow as an investor.

 

Has losing money changed the way you look at risk and how you deal with it as an investor?

 

Earlier, my financial resources were limited, and they are still limited today, although the scale has changed somewhat. When you have limited money, you naturally feel concerned about losing it.

 

But making money in the stock market and creating wealth are two different things. The stock market is fundamentally a game of risk, and you create wealth by taking risks.

 

And the most important measure of risk, based on what I have learned from my own life, is this: Even today, when I invest in a share, I might invest ₹50 lakh in a particular company. But I proceed with the understanding that the entire ₹50 lakh could potentially become worthless.

 

How do you personally deal with the attention surrounding your investment decisions?

 

It increases my sense of responsibility. From the bottom of my heart, I want people to make money. But they must understand that I am human too, and I make mistakes. I might buy a stock representing just 1 per cent, 2 per cent, or 3 per cent of my portfolio, and if that investment becomes worthless, it might not change my lifestyle significantly. But someone following me might trust me so much that they invest 10 per cent, 15 per cent, or even 20 per cent of their portfolio in the same stock. If the share price falls by half, that person could suffer a substantial loss.

 

Our actions might appear identical, but the way we execute them and the way we react to difficult situations can be completely different. I might eventually be proven right after five years, but the other person may not have the patience to hold the shares for that long.

 

Suppose there is a young Vijay Kedia somewhere in the world, just starting his investment journey. What are some of the lessons you would like to impart to him?

 

Apart from long-term investing, I do not believe there is any other reliable approach to making money in the stock market. This business is not simple. It is very difficult, but it is also exciting, and it offers enormous opportunities to create wealth. You should treat it as a business, not as a platform for making quick money.

 

There is another point I want to emphasize: direct investing is a 24/7 business in the sense that it demands sustained attention and commitment. For many people who cannot devote sufficient time to studying individual companies, investing through mutual funds is a more suitable option. It can also help diversify their investments, although it does not eliminate market risk or guarantee that their capital will be safe.