Highly experienced investor Shyam Sekhar shares his invaluable insights on the process and philosophy of sensible, long-term investing.
Be brave. Take risks. Nothing can substitute experience.” The words of Paul Coelho aptly summaries the journey of Shyam Sekhar. Tossing up between studying economics and engineering, he reluctantly took on the second. After completing engineering, his earlier calling returned. The hunger and curiosity of economics and business took over. Hanging around with fellow investors who shared the same passion, he spent the next few years thinking economics and stocks every waking hour. Equity research in India was an evolving discipline in the early nineties and setting up a research desk was the logical next. But, what made it unique was that he never sold his research. Research was proprietary and used by a small group of investors with shared beliefs and values.
Being an independent thinker with set values and beliefs, Shyam took a conscious decision never to work in any company. Knowing that it made sense not to work in an environment where the values mismatched, he dreamt of building a clean consulting business in investment strategy on his own. But, the nineties were early days. That left him with investing as the only option. So building a proprietary portfolio was the way to go. Researching businesses, spotting opportunities and building portfolios was all he did for a decade.
The dream of building an investment strategy business got anchored in 2003. He started Smartvalue Equisearch private limited as an investment strategy firm. Over the next eight years, he built a professional research and strategy firm with domain expertise in equity research, investment strategy, fund research and investment analytics. The firm is poised to break new ground with ithought, its wealth management division that rolled in 2008 just when the markets bottomed. The dream of building an investor centric business of scale and substance is now playing out.
In this interview with Safal Niveshak, Shyam lays bare his investment philosophy and practices and his big learning and mistakes over the past two decades.
Safal Niveshak (SN): I’ll start with a very regular question about your background, how you got interested in investing and how you evolved over time as an investor.
Shyam Sekhar (SS): I am a graduate in chemical engineering. My family had a small business in chemicals. We used to make paints. We still make paints. After my graduation, I used to spend some time with my neighbour. He was a renowned chartered accountant, M. K. Sudarshan. He got me interested in the stock market. Those days, the stock market wasn’t like these days, when you get live quotes. None of this was there. Stock market was conducted in isolation, just like the courts function. Nobody knew what was happening inside. So at the end of the day’s trade at 3:15 PM, there would be a radio bulletin which gave you the closing prices of the day. That’s all you heard. And the next morning, you had to see the papers which would give you some marker rates. No averages, no volumes, nothing. It gave you a set of trade rates/quotes which would include the low the high and two more sample rates. We got only the rate of Chennai those days. Bombay rates would come one day later, when we went and bought a financial paper which was published out of Bombay. In 1990, Chennai didn’t have a business edition of any newspaper. So we would go and buy, because my neighbour (Mr. Sudarshan) was an avid investor, and everyday he would go and buy a Bombay edition of a paper. So we would board a bus and go to some part in the CBD where these papers would be sold by just one newspaper vendor. I would accompany him during these travels because it was my vacation and I had nothing to do. During these journeys I used to pick his brains about the working of the stock market.
Mr. Sudarshan was not only a Chartered Accountant but he also understood businesses very well. So his investing was based on the understanding of the future of businesses and how it would perform. And he was an avid investor who bought and never sold. This is a rare quality. The more I am in the market, the more I realise that the quality of an investor who buys and never sells is rarest of rare.
To me, at that time, it was very amusing that he never sold actually. And even to this day, when he is no more, most of his shares are still there. His family is still retaining those shares.
Anyways, he used to explain me what each business was and what it did. This created a lot of interest in me. I was reading lot of newspapers those days and that helped me become an avid reader from a very young age. Newspaper reading was one habit which I had acquired because of my interest in politics, and in the stock market.
- Spotlight: Big ideas from Value Investing and why applying them in your investment decision making will be a great deal
- InvestorInsights: Interviews with experienced value investors, learners, and deep thinkers
- StockTalk: Thorough analysis of business models of companies (without any recommendations)
- Behaviouronomics: Deep analysis of human behaviour and how it impacts investment decision making
- BookWorm: Reviews of the best books on Value Investing and related subjects
- Free Course – Financial Statement Analysis for Smart People (otherwise priced at Rs 5,900)
- Archives: Instant access to our huge archive from the past three years