Notes from the Sanjay Bakshi Podcast on Moneycontrol

So in the appendix, he was amazed to see this particular passage:

Post returning to India, he collected around Rs. 20 lakh from few of his friends and promptly lost around 40% of it. However, as per him, losing money in the initial part of the journey was painful but teaches a lot of things.

Prof. Bakshi also talked about the power of framing. He framed his losses the following way:

According to Prof. Bakshi, safety of principal is extremely important. He quotes this definition of investing as per Benjamin Graham.

So safety of principal is paramount and only then comes adequate return. This is also substantiated by what Will Rogers says.

As per Prof. Bakshi, the most important thing is luck. He goes on to say assuming one isn’t unlucky, there are 3 ingredients.

The first 2 can be easily acquired according to him. However, the 3rd is the differentiator. According to him, it’s partly genetic and partly learnable. He goes on to say this:

Initially, Prof. Bakshi says he was quant-oriented ala Graham without being concerned about the quality of the business or management. However, over time, he became aware of the softer factors viz. management factors that are harder to quantify. So over time, he developed this framework of segregating investing into 3 buckets:

So the process he follows now is to love the business. Without this, there is no point thinking about management or valuation.

According to Prof. Bakshi, there is no set time as such in researching a company. As per him, it’s better to focus on the process and follow the checklists for business, management and valuation. One thing that he advises is to avoid FOMO — Fear of Missing Out. This is essential in a bull market, where the stock price runs up when you are still researching the business.

The nature of moats is changing as per the Professor. As per him, standard moat businesses come from these 4 categories:

Out of these, the only one which is unchanged is the desire for customers to pay low prices.

Prof. Bakshi gives 2 examples of value traps:

Here, Prof. Bakshi talks about anchoring bias which is the tendency to anchor around a certain number. Certain stocks viz. MRF and Eicher Motors trade at a high stock price and investors are reluctant to buy considering the price. The way to avoid this is to look at the aggregate market value of the company.

Prof. Bakshi’s personal preference is towards businesses that can fund growth without the need for outside capital. This, of course, doesn’t apply for financial companies.

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