Vishal Khandelwal’s Interview with Stable Investor by Safal Niveshak

This is not an interview which I have taken of someone else, but my interview on Stable Investor, a website dedicated to long-term investing.

So someone has finally found me deserving for an interview! ;-)

Dev, who runs Stable Investor, has been a long time tribesman of Safal Niveshak and a friend. I have come to respect him a lot via our discussions and also via his work.

In this interview, I share my background, philosophy, and journey as far as investing is concerned, and a guided route map for anyone starting out on his/her own journey as an investor. Hope you find some value in my experiences.

Let’s start right away.

Dev: When and how did you get started in the stock market, and when did you feel that stock investing may be your true calling?

Vishal Khandelwal: It’s a long story, but let me still start.

My indirect connection with the stock market started somewhere in the early 1990s when I was just around 13-14 years old. My father and uncles used to trade in stocks then, and had earned and lost a lot of money during the Harshad Mehta boom and bust.

My father used to read the financial newspapers with great interest and I remember him telling me then how important it was to read newspapers. As an obedient son, I started glancing through the financial pages of newspapers then, though I did not understand much of what was written (I still don’t!).

Anyways, after a quiet period after the Harshad Mehta scam burst in 1992 and the dotcom bubble started in late 1999, I don’t remember stocks being talked about a lot in my household.

As the bubble was building up and the markets were rising, I came to like the way CNBC anchors talked about stocks day in and day out and how smartly they predicted the next rise. That was the only channel that was on in my house, and that is all I saw. Though I did not know much about stocks even then, I surely came to know one very important fact about the stock market seeing what was happening around me.

This fact was that you could make a lot of quick money when there is euphoria in the stock market, and lose it all even quickly because each euphoria ends up in a crash.

I saw this in the early 1990s and then in the early 2000s, around me and within my family. So that was my first brush with the stock market, though indirectly.

Anyways, in 2001, I came to Mumbai to do my MBA. So you can say that this is when I came real close to the stock market. ;-)

These two years at MBA were the most wasteful years for me as far as classroom education is concerned. I realized that, around me, everyone was running for the highest marks to be able to get the best jobs. In fact, we were asked to prepare for our placements from the very first semester of the Course, and what our professors did for the next two years was exactly that – cram into us whatever was written in books instead of how the real life worked.

Now, how did I know then that the reality was different from what the MBA profs were teaching us?

The books in my college’s library told me that. Whether it was Eliyahu Goldratt’s Goal, or Jim Collins’s Good to Great, everything pointed at something different than what was written in my MBA textbooks.

This library was where I got seriously involved in reading. And this is where I first read Peter Lynch’s One Up on Wall Street and Robert Hagstrom’s The Warren Buffett Way. I don’t remember falling in love with these books or their ideas at that point of time, but they definitely got me interested in the business of stocks.

Now, this was around 2002-2003, and the Indian economy and the job market had not recovered fully post the dotcom crisis.

In fact, howsoever I aspired to get into a stock market job, somewhere in early 2003 I lost hope of getting any decent job after being rejected by the very few employers who attended my college’s placement season.

But as luck had it, a small, unknown equity research company called Equitymaster came in search for candidates to my college for the position of “equity research analyst”. I managed to pass their interview process and got selected for the job.

I had not known this term “equity research analyst” earlier and neither did I know about my employer. But I still accepted the offer, which came at a salary that was almost what I would have earned in the role of a peon. “So much for an MBA degree, huh!” I told myself.

Apart from the fear of becoming an “educated-unemployed”, I also took up that job due to a promise I had made to my ‘would-be wife’ before joining my MBA that we would get married as soon as I got my job so that her family didn’t get her married off somewhere else. :-)

As I try to connect the dots now, looking backward, the saying that there is a woman behind every man’s success has been true in my case. In fact, the woman in my life has not really been ‘behind’ me, but has walked besides me, holding my hand through the thick and thin that life has brought.

Well, I am not going to bore you today with my life story (let me keep it for some other day ;-) , but that first job – which was also my last – was the beginning of my love-hate relationship with the stock market.

Getting into an independent research company which Equitymaster was, was very fortunate for me.

You see, I am a firm believer in the fact that our “values” are the things that are most important in the way we live and work.

For example, if you value family, but you have to work 70-hour weeks in your job, you will surely feel internal stress and conflict. In the same way, if you value honesty, but you work in an environment where the incentives are designed to make you dishonest, you will gradually kill yourself out of stress.

So, the reason I find myself lucky to have accepted that job was that, and I realized this later, it matched perfectly with the key values I live my life by, which are – family, honesty, and freedom.

While I was working in the stock market, my job wasn’t stressful, and neither were the incentives misaligned given that it was an independent research company and not a brokerage hungry for commissions.

So, I was working mostly in the interest of my clients, and not that of mine, which is so unlike how the stock market industry generally operates.

That is where I formed the belief that it was possible to do honest work in the stock market. And that is one of the core reasons I love doing what I am doing now at Safal Niveshak.

Anyways, my job as an analyst typically involved reading annual reports, meeting managements, working on financial models, and writing research reports. I found all the three parts of my work exciting – reading, researching, and then writing. And that again is what gave me the confidence that I could do something of my own based on these aspects, which also gradually became my strengths.

Now it is another part that, after 2008 happened, I gradually lost the charm in being an analyst and doling out futuristic recommendations to investors.

I realized over a period of time that I was recommending stocks into the “unknown” – to real people with real-life savings, but those I knew nothing about – and just because they had paid in advance for that research.

 

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Vishal Khandelwal's Interview with Stable Investor