‘People lose money by investing in what’s fashionable’, says Motilal Oswal
In 1987, two men came together to start a sub-broking business. Cash-strapped as they were initially, even getting a phone line to interact with clients was a luxury back then. 35 years later, the duo, Motilal Oswal and Raamdeo Agrawal, are well-known for weathering multiple crises and building a truly home-grown financial services conglomerate — Motilal Oswal Finances Services Ltd. (MOFSL). A Chartered Accountant by qualification, Motilal is known for taking the business decisions while Raamdeo leads the research and investment bit. In a freewheeling chat with bl.portfolio, Motilal shares his investment journey, lessons, insights and experiences. Read on.
When and how did you begin your personal investing journey?
Being a Marwari, investing is in our DNA. It all started in the eighties when I moved to Mumbai — the city of dreams, as they call it — to try my luck. I started investing in equities way before I started this company with my long-time friend and partner, Raamdeo Agrawal in 1987. Apart from wealth, I would like to add that investment in knowledge, health, family, friends and our employees is are also an integral part of my personal investing journey.
What does money mean to you? What purpose does wealth serve in your life?
Money is necessary but only to a certain extent. For me, money is the means to provide a good lifestyle for my family. I have risen from a humble beginning; wealth is all about having the ability to help deserving people achieve their dreams.
Did being a CA help you in spotting attractive opportunities?
It is always helpful to have the understanding to read financial statements and balance sheets. And the CA degree also helped me and Raamdeo gain our clients’ confidence back in our early days of equity markets. So yes, it does help to have a CA degree, but my advice to beginners is to look beyond numbers — that is, study the quality and other attributes of management — and that is why at MOFSL, we say ‘Buy Right and Sit Tight.’
How well have you done as an investor, in your view? Have you done better as a businessman?
It is a known fact that at MOFSL, my partner Raamdeo spearheads all research and investment decisions. I decide on matters of business and execution. It has been a tremendous journey spanning 35+ years of wealth creation for our valued investors. While our personal investing journey has been very fruitful with all of our investments in the company-managed funds, when I look back, I am also happy that we have created a professionally managed company with a knowledge-based, meritocratic culture.
Tell us about your best successes in investing. And, what do you think helped you succeed in these cases?
We have always believed in the potential of India and the power of equity investing. Our proprietary framework QGLP (Quality, Growth, Longevity, and Price) has helped us immensely in investing both our own wealth as well as our customers’. However, the best investment I have made over the years is the investment in knowledge. This investment continues to reap dividends day after day. And the most incredible part about investing in knowledge is that the more you share it, the more it grows!
What have been your worst investing decisions? Why do you think they happened?
We have seen so many market cycles in our almost 35+ years journey. So my investments have also had their share of ups & downs. However, in equity, if you buy quality and are patient, downs are temporary and ups are permanent. Most bad decisions are due to a lack of understanding of businesses or patience.
Tell us about your current asset allocation pattern. Which are the assets you are most bullish on, and most bearish on? Do you have real estate or gold in your portfolio?
I have always been most bullish on equity as a means of long-term wealth creation. It is also an asset class where we have a lot of experience in investing (circle of competence) which gives further comfort. My real estate allocation is maximum up to 2 per cent towards our family residences in Mumbai and negligible allocation in other assets like gold. Rest all goes into one asset class — Equity, that too in our own funds from MOAMC & MOPE. So you may say almost 100 per cent allocation to equity.
As far as being bearish goes, as I don’t understand crypto currency as an asset class and also the underlying valuation of the same, I have stayed away from the asset class. While Blockchain as a technology has far-reaching applications, crypto as an asset class in its current avatar is not for me.
Who has been your biggest influence in investing? Any books or knowledge that helped you along the way?
During my early days, my elder brother guided me and hence he greatly influenced me, including my investing decisions. In terms of books, there is not one, but multiple books ‘Good to Great’ by Jim Collins is one of my favourites. ‘The Intelligent Investor’ by Benjamin Graham & ‘The Psychology of Money’ by Morgan Housel have provided timeless lessons on how to look at money and investing. Furthermore, I have learned many investing lessons from my partner Raamdeo Agrawal’s Wealth Creations Studies over the years — his research acumen and forecasting prowess have had a long-lasting impact on me.
What are the financial goals that you had when you started investing? Going forward, what are the financial goals that excite you?
When Raamdeo and I started in equity markets, we were focused on creating wealth for our small set of clients. We needed money to run our small business. Even getting a phone line to interact with clients was a luxury back then. Hence, my initial financial goal was to earn enough to set up a successful business. Now I do not set financial goals for myself. My long-term goal is to create a legacy of a professionally managed financial services powerhouse that far outlives the promoters.
Any words of wisdom that a reader can use in their investing journey?
While investing, one should invest as per their investment goals. And invest in knowledge. I often see people losing money following herd mentality, for eg. trading and investing in what’s fashionable. Instead, investing is about meeting your financial goals using knowledge, having conviction in your ideas, and staying the course while ignoring the noise. It is straightforward but the most underrated skill today. Lastly, investment cannot be only about earning — it is all about learning and growing during the course and also seeing how you can contribute to society with the fruits of investing.