Investing is a story of vision, courage and patience: Raamdeo Agrawal
Staying invested is a tough decision, especially when money continues to lose value in a falling market. However, as Warren Buffet rightly puts it, “The stock market is designed to transfer money from the active to the patient.” Equity markets are subject to cycles of volatility, and patience is among the most crucial factors for success in stock investing.
Raamdeo Agrawal, Chairman, Motilal Oswal Financial Services Limited lives and breathes this philosophy, and is a firm believer that wealth creation will happen despite market volatility.
In a candid, insightful conversation with YourStory CEO Shradha Sharma, he reflected on the 25 years of his Wealth Creation Studies, his investment journey, what keeps him optimistic and more.
Although we have faced a tough year, Agrawal is an optimist. "In my 35 years of investing, I've seen that every year things get better. I've failed, but always get back up and become optimistic that growth will happen. If your health and head is good, you'll be fine,” he said.
The journey to being a billionaire
What started out as a small stockbroking firm, is now Motilal Oswal Financial Services Limited (MOFSL), a well-diversified financial services company that is helping create and grow wealth for several thousands of its customers. Recalling what worked for him when building the business, Agrawal said that one must be honest and truly want good for one’s customer. "Our vision was to genuinely help people make money in the stock market, And in that process, I made money too." Honesty towards all stakeholders, he said, compounds over time. "Be it with income tax officers to creditors to your family, being honest and having a good value system will take you far. Also, you enjoy the process more when you're honest."
Agrawal, who has a net worth of $1 billion as of 2018 had a humble beginning to life. Born in a small village in present-day Chattisgarh, he moved to Mumbai to pursue a Chartered Accountant degree and began his career as a sub-broker in 1987. While the future lay unknown in front of him, Agrawal said that goal-setting in the early stages of life helped him. "Set goals for the long term, the rest is the journey of life," he said.
Agrawal further said that while you may be at zero when you start, you need to keep these four things in mind if you want to become successful - have ambition, don't compromise on values, give it time and remain focused. “What really matters, is making your passion your profession. I was nuts about stockbroking, so I never felt like I was coming to work,” he said.
The QGLP philosophy of investing
According to Agrawal, who started investing back in 1987, if you start investing when you're 25 years old and continue to do so, you can amass a lot of wealth by the time you retire. "Remember that you're buying for the next 30 years, not the next five years. 'Buy Right, Sit Tight' is the way to invest in the market; not investing is the biggest risk," he said, drawing from his own experience of not withdrawing from the marker, even in bad times.
Shedding light on Motilal Oswal's investment philosophy QGLP (Quality, Growth, Longevity, Price), which helps investors pick quality stocks at a reasonable price, Agrawal said it's a checklist for the minimum you should look for when buying a company. Understanding the competency and integrity of the management is equally important - both needs to be top quality. If one isn't it, it affects the overall equation. Once you have quality, you need growth, and growth that lasts a long time. And value is what you get in the long run. "Price is what you pay, but the value is what you get."
Advice for investors
As a market veteran who's seen both the boom and bust cycles of investing for over three decades, Agrawal said that stock markets can never be fully understood by anybody, yet there is a method in the madness. According to him, it's an art and not a science. "It's an unlimited canvas and only a few things work. If your earnings grow, your stock price will grow. You can manipulate the stock price without earnings, but it won't last."
Investing is a story of vision, courage and patience, he said, and in in the long term, you need the vision to see what's going to happen, the courage to bet on it and the patience to hold on to it. "Have the attitude to envision the future of the country and then the company, put your net worth on the idea and remember, nothing big happens overnight."
What’s Agrawal’s advice for first-time investors? “Have fun investing, but not too much fun. Don't treat it like Las Vegas and speculate for quick money - you'll lose money quickly. Treat it like the Mecca of wealth creation. If you learn the basics, over time you can make a lot of money," he said. "Don't invest until you understand the concept. It's like jumping into a swimming pool without knowing how to swim. Someone needs to hold your hand, take you through the tips and tricks, and you'll soon be a great swimmer," he added.
Straight from the heart of the investment guru
When asked if he's satisfied with the money he's made, the market veteran said he has enough, and that the game of money making has evolved. "Now, it's more of excellence in investing rather than seeing your net worth growing."
However, if there’s one thing we all should do for growth - be it the country’s or our own is to pay our taxes on time."The quality of taxpayers defines the quality of the country. Everyone, especially the rich, shouldn't dodge from this responsibility."