Monday, October 22, 2012

Full text of Interview with Afternoon Dispatch & Courier dated 13/8/2012

A little background about your company and yourself ?
Churiwala Securities Pvt. Ltd. (CSPL), one of the leading and respected retail broking in India with over 3 decades of experience in creating wealth for investors. The company founded by Late Shri Gaurishankar B. Churiwala in 1971, is a member of Bombay Stock Exchange and a Depository Participant with the Central Depository Services (India) Ltd. Its group entity also offers services on The National Stock Exchange and MCX –SX .Our expertise lies in personalised investment planning in Equities / Portfolio Advisory for HNI & Retail clients. Our core focus is to look for value & assist our clients to take prudent investment decisions.
CSPL is currently spearheaded by Mr. Alok C. Churiwala whose focus & vision has helped the company to establish itself as a prominent & respected player in the industry. Besides being an Ex member of the BSE Board, he has been actively involved with BSE Brokers Forum and is currently the Vice Chairman of the Forum.
At what point had you given a thought to making a career in the stock / financial markets?
Stock Broking was our family business. Alongside of doing my Graduation from H.R.College of Commerce & Economics, Mumbai, I was also learning the ropes of the stock broking business in my spare time. By the time I was through with graduation I was ready to face the challenges thrown by the world of Bulls and Bears in Dalal Street. It was a foregone conclusion that I would move in to assist my Dad in the Family Business since the time I was out of School.
How do you pick your trades/investments? Do you use technical analysis, or do you employ fundamental data?
I essentially am neither a hard core fundamentalist nor a slave to charts. But tend use a combination of both Fundamental and technical, when signals from either are not compelling. I also like to keep myself abreast of the grapevine on Dalal Street.
How would you describe your methodology?
My methodology is very simple and stems from my Investment philosophy, I look for value buys, Believe in Long Term Investments. Equity Investments are a great tool, not only for saving but also to beat inflation. This is precisely what leads to robust wealth creation. I am also of the view that for we have to have conviction in the businesses (companies) that we invest in, if we lack that conviction, we fall prey to selling a good stock when its in a downward cycle. Most of the veterans of this trade have made more money by sticking by their stocks than by reacting to every news (of which there is an overflow of, these days).
What appeals to you about trading/Investing . The short side or the long side?
I am an investor. I look at value investments. I am not comfortable trading either intraday or on the Futures and Options segment. Not to say that I don't trade at all but its extremely selective and small quantities (lot sizes). My trading bias is on the long side and that is probably the reasons that I am not the most efficient trader.I am aware that as a trader we should not have biases, either long or short, but trade the trend.
What differentiates you from other traders/Investors?
I think, the principal difference that differentiates me from most traders/Investors is that I KNOW what my weakness are. I know that I am not a very good trader, have a "long only" bias and extremely "loss averse". While you would say that are not all investors loss averse, but in this context loss averse means the ability to face the prospect of a loss, which according to Behavioural Psychologists would mean not sticking to "Stop losses".
Also, as an Investor I am extremely confident about the stocks we pick and experience has show that most of them tend to do well if the basic tenets of Value Investing are followed.
What gives you that edge?
The thrill to extract value in Investments. But to get there one requires knowledge not only of the markets but about the self. There are two ways of acquiring this knowledge - Watching the behaviour of other (learning form others experience) and observing our own behaviour in situations.
Is there any applicable lesson to trading/ investing?
Certainly. Every trader/investor must remember that with the promise of gain attached is the possibility of a loss. So the trader/investor should do a judicious risk-reward analysis for himself/herself before initiating a transaction.
How much of what you do is gut feel?
Gut Feel is a signal that the mind gives based on the individuals past experiences, eco system etc. Its triggers automatically and without cognition. I do pay heed to it and it has served me well.
Do you try to anticipate or follow market trends? What are the basis?
As is often said, "Trend is Best Friend"... it is always safe to follow market trends, but anticipating the trend is what can differentiate between normal profit, super normal profit or a loss. The markets always tend to discount future, hence at some level it becomes imperative to anticipate the movements in the future. Some of the factors that need to be taken into account are obviously Economic (both Macro & Micro), Political last but not the least Social.
When you put money on a trade and it goes against you, how do you decide when you're wrong? What do you do next ? Reverse the position, average or just take your losses and stay out ?
This is where our conviction in the business (company) invested in comes into play. There are occasions when the stock moves in the opposite direction, the classic dilemma is should we take a loss, buy more of the same (popularly known as averaging) or do nothing.
Each decision would depend on several factors. Has there been a material change in the dynamics of the Industry? Is there aspersion cast on the quality of people managing the business? Is the company found wanting on Corporate Governance standards? Some of these factors are non negotiable, and if the answers to these are not palatable then the decision (albeit a tough one) is to exit the stock. But if its just a function Dynamics of Global Markets, Political Uncertainty or Normal Business Cycles then the call would be to either buy more or at best do nothing.
Any positions you ever lost sleep over? What happened...?
As I mentioned earlier, I am not much of a trader and very rarely indulge in speculative activity. Even if it is done, it is in moderation. Hence there has been no occasion to lose sleep over a trading or speculative position. Even when investments go wrong, the conviction carries us through (could be totally misplaced at times) But still not an occasion to lose sleep.
What would make you wary about a trade/Investment?
The current scenario is distressing. Most youngsters are falling prey to the lure of Intraday Trading, Margin Trading, Speculating on the futures contracts and not leveraging on the use of intelligent strategies whilst playing options. The Investment culture is missing. The fact that Equity Markets can be effectively used to save money and act as a hedge against inflation is totally lost on our youth. Also the falling level of Corporate Governance Standards amongst the second and third tier Companies is a concern.
Do you have a scenario about how the current bull/ bear market will end ? Where do you see the Indian markets five years down the road ? Any number for the Sensex in 2015 ?
Markets tend to provide opportunities at every juncture. Bull or Bear markets need not bother the investors?traders. The challenge is to spot the trend and play it accordingly. Also our preoccupation with trying to guess what the markets will do, is meaningless. We should be more concerned with what we will do in the markets in a given situation.
Now to crystal ball gaze... First let me share some facts and that should give the readers some perspective Sensex in 1990 was 1000, a decade later in 2000 it touched 6000, in 2010 it kissed 20000, so its anybody's guess what it ought to be in 2020 but I will put my foot in the mouth and say it here, that it will be in excess of 50,000
Of the tens of thousands of trades/investments that you have done, which was your best trade/investment?
The first Multi Bagger stock, that I picked, still remains as a fond recollection. It was a PSU stock in the Metal space and it turned to be a 40 bagger.
What was the story there?
No story really there, it was a stock neglected at the time and at quoting at abysmal PE of 2. It was not long before it caught the attention and fancy of investors, aided and abetted by bull markets and the rest as they say is history..
What makes a trader/investor successful ? Your success mantra ?
I would say knowing yourself or where your strength lies and acting likewise, meaning, if you know that you have the ability to trade successfully then one should continue with it. Also having realistic expectation of returns from the markets help because with higher returns are attached higher risks. I know that I am not a good trader, hence desist from it.
Any final words?
While the rest of world looks at India and takes advantage of its Capital Markets its time that the Indian Investors too turn their attention towards Indian Equities, else a great opportunity would be missed.
What is his take on the current market scenario, Indian as well as global?
Indian market space is offering multiple avenues Equities, Currencies, Commodities, Mutual Funds. The environment is well regulated. The technology used is efficient and cost effective. All these augur well for the investors. The economy is still showing a growth of 6% despite the drought like situation, which, is much better that American & European economies. The India story on Demographic Dividend is still on and shall remain for the next couple of decades. The challenges before us, too, are manifold corruption and governance issues can still be road blocks that need to be negotiated. The markets continue to wait for reforms.