Book Review
A bible for Indian
investors on the go
A
t the Internet
Association’s gala dinner
last year, Amazon CEO
Jeff Bezos famously
said that his quarterly results had
been ‘fully baked’ three years ago.
Clearly, at any given point in time,
he’s considering what his company’s
earnings would look like three years
down the line.
Bezos’s Amazon is just the kind
of company that investors should
be looking at because not only is it
important to report good earnings
growth, it’s even more critical to
deliver it consistently. Take HDFC
Bank, which enjoys such a huge
premium compared to its peers
in the Indian banking segment, is
known for its consistentcy.
The trick is to find a company that
uses little capital to generate profits
consistently year after year. Few
people in India invest in equities,
and even those who do, don’t
necessarily get it right. Investing to
create serious wealth needs a certain
mindset, which many of us don’t
have even if we believe we’re long-
term investors. It is for this reason
that Coffee Can Investing: The Low
Risk Road to Stupendous Wealth, by
Saurabh Mukherjea, Rakshit Ranjan
and Pranab Uniyal, is a must-read
for all – especially those who believe
they have gotten it right.
In the initial chapters, the trio
quotes real conversations that
typically happen at social gatherings,
on stocks and what to buy. It is
perhaps the worst way to deal with
equities, but the beauty is that even
the smartest of folks do it. One
economist I know sells his entire
portfolio every two-three years
when he believes markets will start
falling. This book is for all such
Author
saurabh mukherjea
rakshit ranjan
pranab uniyal
Publisher
penguin
Pages
288
Price
` 499
smart people who believe ‘long-term’
ranges between one and five years.
The book is an eye-opener
because the authors not only spend
time on how people can “invest in
equities without taking untoward
risks and generate serious wealth,”
they also talk about typical mistakes
people make and the price they end
up paying. Interestingly, while the
simple practices the authors discuss
in the book do sound intuitive, very
few follow it. Serious wealth creation
takes much longer than five years.
The authors write: “When it
comes to investing in stock markets,
greatness is defined as the ability
of a company to grow whilst
sustaining its moats over long
periods of time. This then enables
such great companies to sustain
superior financial performance
over several decades.” But selecting
such a company in India is very
tough because of the opaqueness in
financial reporting.
While many Indians believe that
they can get rich quickly by punting
in the markets, this book shows that
the price of such misadventures
can be very high. The behaviour
of the average Indian saver is best
demonstrated through the examples
of two individuals that the authors
have highlighted. Their financial
behaviour could have led them to
disastrous consequences and the
authors make their point well. In
both cases, individuals invested in
high-risk instruments like hundis
and debt paper of real estate
developers, other than physical
assets like real estate and gold.
Even though the book talks
about serious issues like portfolio
construction and choosing the right
equity funds, it is very easy to read
and absorb. While the authors spend
adequate time on portfolio and stock
selection, they also cover expenses
in detail and how they end up impair
ing returns over long periods.
There are plenty of takeaways for
both HNIs and retail investors. The
authors predict that tracker funds in
India will be huge because actively
managed large-cap funds will find
it hard to beat the market’s returns.
They have devoted an entire chapter
to expenses and their impact on
the value of the portfolio. Investing
directly is a route that high net-worth
individuals are already taking. The
book also talks about the concept
of advisory versus distribution.For
those who worship moolah, this
book could be a Bible.
Malini Bhupta
www.outlookmoney.com April 2018 Outlook Money
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