From The Horse’s Mouth: Pankaj Singhal Investor Profile

Pankaj is the author of the blog Anybody Can Fly. He has a background in Mathematics and has worked in IT for 15 years. He has been a student of the markets since 1992. He has some regrets in life like taking leverage & tried F&O and has a very clear cut mapped out process he follows in his investments. It was a fascinating talk with him. I got to know about his life, his journey in the markets and also his greatest regrets and some worthy achievements and got some advice at the end of everything for people like me. The quote I most enjoyed from his interview was Some stocks may be expensive at 10 PE while some may be cheap at 50. Study well to plan well.

So, without further ado, lets begin.

1. Tell us a little bit about

Pankaj: I am a simple
human being who is living a second life after surviving a near death
experience. I am a brain tumour survivor. I have retired from the rat race thru
my hard work when I was in job & thru investing. I believe in values,
ethics, respect. My current thought process is to Live, Love Laugh, Eat,
Travel, and Motivate.

2. What were you doing before
you were in markets? What inspired you to come into markets?

Pankaj: I studied
Mathematics & computers and worked in IT sector for 15+ years. I worked for
many big MNC clients & have led big teams across geographies. My job taught
me significantly & I am proud that I spent 15+ years doing great work while
learning many aspects of technology, innovation, businesses & customer

3. How did you start your
investing journey What got you to the markets?

Pankaj: My investment
curiosity towards stock market started during my school days. Those were the
times of Harshad Mehta days in 1992. It was fascinating to see the way stock
prices used to move within the span of a short duration of time. I started
reading business newspapers & few business magazines in order to understand
what Finance, Economics and Stock Market is all about. I started going to a stockbroker
next door to see how people used to trade and react based on volatility.

I must mention that those were
the days when there was a real euphoria, which I am yet to see it again. People
used to buy stocks as if the stock market was going to vanish sometime soon and
prices would not have any limit on upside. Without knowing anything about the
fundamentals, every individual had turned into an investor while buying
anything coming on their way.

I kept reading and learning on my
own while moving from school to college and then to job days. I invested negligible
amount as I never used to have any spare money to invest. Since then, the
market has evolved considerably in a way that:

a. SEBI has been formed that has
streamlined many processes and is still working continuously to safeguard small
investors as best as possible.

b. Availability of information is
in abundance today.

c. Individual economies have
moved on to connect with other well-established players around the globe. This
has made the global economy an important subject to study and analyse.

d. A few domestic and
international crashes have happened in the stock market. This has turned an
investor more cautious than ever.

During this period, I had
developed a deep passion towards the stock market. It became my default hobby
to read and research as and when I had some spare time. The downsides in the
market helped me understand the importance of Behavioural Science and

After a while, when I had some
money to take risks, I finally started practicing the real investing. A year
later, when I reviewed myself, I found that I had done extremely well with my
investments. I immediately decided to quit the job and pursue my passion as my
career. I became a full-time investor. Since then, I have never looked back and
achieved amazing returns for myself. As of today, I can say that I am
financially independent in every aspect. I am not in any rat race.

I call myself a value investor
because I give utmost importance to the business. Value is a function of
business growth, company fundamentals & ratios while picking stocks. The
factors that helped me in generating excellent returns are:

a. Entry timing / Luck

b. Deep experience in Reading
& Research

c. Matured mind in terms of behavioural

d. Giving macros a priority
rather than an individual economy

e. A dynamic & flexible
approach towards maintaining a portfolio

4. What are the basic metrics
you look at a business when you are valuing or looking at it to invest?

Pankaj: I give utmost
importance to business while following my stock picking approach. If we read
economies well, world now is a way different than world in history especially
before 2000. Technology and innovation have taken over the consumption in a
significant way. Hence a visibility on business potential is highly important
to understand. In order of priority, I follow below metrics

1. Business survival

2. Business Growth potential

3. Business Growth sustainability

4. Company fundamentals (debt,
pledging, cash flow, promoter stake, equity dilution, etc.)

5. Management credibility

6. Forward thinking / Innovation

7. Dividend pay-out

8. Valuations comfort

9. Exit strategy

5. In your investing journey –
one thing you did which you think you did great and one thing you regret doing?

Pankaj: What I did &
what I am doing good in my view is I follow concentration amidst
diversification approach towards my portfolio. If right concentration is
useful, enough diversification is the most important aspect to make it more

What I regret doing is I tried
taking leverage & tried F&O. Since I realized & learnt from it, I
never tried this again and I never suggest this to anyone. Even if someone want
to, please do with the help of a right person.

Committing mistakes is a part of
an investment journey. I myself made many in the past and am sure that I’ll
keep committing them in future too.

We just need to review ourselves,
act wisely, learn and move on to become a better investor. Few of the key
mistakes that I would like to highlight are:

1. Investing with borrowed money
or through leverage. Leverage can be a key mistake which usually happens either
when we get carried away in euphoria or try to find shortcuts during the
initial stage of our journey. Even if you need to take leverage, it should be
based on your net worth and risk profile.

2. Selling too early just because
it has run up too fast. Till the time there is a visibility of business
potential and the company’s growth path, one should ride the growth as maximum
as possible.

3. Buying too late because of
unfiltered noise and fear of missing out. Never ignore the valuations, business
potential, and company fundamentals while acting on any suggestions. Always do
your own due diligence.

4. Building a big position too
early and then selling while the patience is being tested. It usually happens
whenever we pick a new stock to invest. Always build the position towards its
upside. In parallel, build the conviction when you see a visible growth in

5. The decision to buy a stock
which is based on borrowed ideas. When the markets decline, we tend to exit
even at loss from all the borrowed ideas. But once you build a conviction
through your own research, it has got no comparisons.

6. Acting in upward euphoria or
downside panic. These are the momentum phases when valuations go beyond
realistic levels & deserve a price as well as time correction. Buying in
upward euphoria or selling in panic during downsides is not advisable.

7. Running after people who keep
selling their own ideas. Rather, listen to your own thought process and do the
brainstorming sessions on it. Try to be in the company of people who listen,
respect & motivate you in discussions. Tricky but extremely useful.

8. We should exit out as soon as
we realize that we are wrong with our stock pick. Learn to take losses quickly.
Don’t expect to be right all the time. Learn from your mistakes, review
yourself and just move on.

9. Over-analysis in trying to
find a perfect stock may make us miss many opportunities on the way. The more
we think we know, the more closed-minded we’ll be. Over-thinking,
over-analysis, over-research…may do more harm than good. Keep It Simple.

10. Over-confidence made me start
predicting the things for which I was not too experienced. And it made me skip
my own basic investment rules. Learning is to stay balanced in thoughts so as
to not get carried away by own success. Stay humble to stay focused with a

11. Under confidence made me
start doubting my own research and conviction. We cannot outperform every
single time. And wherever we have thoroughly done our own research, there is no
point to search outside for negative views. Patience & Discipline are
highly important.

12. Ignoring business potential
while reacting with panic in weak markets can make us sell at lows and buy at
highs. You need to stay away from the noise to stay focused on your own
convictions. Opportunities are plenty at any point of time.

13. Tracking stock prices too
closely may tempt you to shuffle from conviction to momentum. In the process,
you may end up buying at highs and selling at lows. Sooner or later, momentum
comes in every stock and hence it gives entry/exit opportunity.

14. The stock market may not
respect us if we do not respect the valuations of our stocks. Follow a strict
valuations framework in order to keep doing well in all kind of market
sentiments. Some stocks may be expensive at 10 PE while some may be cheap at
50. Study well to plan well.

6. When do you sell a stock?
What are the criteria according to your rationale that a stock has reached its
life? When do you know it’s time to get out of stock?

Pankaj: I am completely
against the view of buying something with a mindset of holding it forever. I
have a dynamic exit strategy at any point of time. In terms of high-level
thought process, it is time to sell a stock when

~ When the business potential
turns doubtful


~ When the company fundamentals


~ When the valuations turn sky
high even after extrapolating the earnings few years forward.

At the same time, I do not sell a
stock just because the sky is falling.

7. Any example where patience
has paid off for you?

Pankaj: I am holding many
stocks for 4-5 years and I am of a very strong view that great returns come with
time & space. Keeping patience & staying disciplined has helped me
achieve great returns.

8. What life lessons do you
incorporate while making decisions in markets?

Pankaj: Knowing self &
understanding the risk profile is highly important. Based on my risk profile, I
build my portfolio strategy. In addition, regular profit booking is important.

Since the day I had started
investing, my learnings have been innumerable. And I am still learning as I
feel that investing is a never-ending process wherein we keep adding to our
learnings while we add to our experience.

When it comes to my core
learnings, I would like to share a few of them:

1. Markets have become extremely
dynamic. We must be highly flexible in our approach towards the stock picking
process during our investment journey.

2. Individually, any country is
no longer carrying enough weight these days because of globalization. We need
to study macros, especially a few of the largest economies, to help in
strategizing our investment process over time.

3. Living in history doesn’t help

4. Stay away from the noise and
negativity. Be an optimist and independent.

5. Never try to learn equity
investments through books. Books create a foundation however Investing is an
experience which gets refined with time. Get your hands dirty & stay put.

6. Investing is easy, but the
associated process/journey is not.

7. To reap the best gains through
Investing in stocks, we need to have Knowledge, Courage, Patience, and
Discipline. It’s a journey with no shortcuts.

9. Are you just investing for
yourself or do you offer professional services? What services do you offer?

Pankaj: I am an individual
investor and I do not offer any professional services. I am active on Twitter
and I am openly sharing my learnings, mistakes, experiences on Twitter.

10. Favourite books?

Pankaj: I have a thought
process that reading books cannot teach you the investment. Investing is an
experience that can't be built by reading books or cloning. We need to keep
learning, get the hands dirty and stay put to build our own path.

Still few of the following books
are good to read through

1. The Intelligent Investor

2. A Random Walk Down Wall Street

3. Rich Dad Poor Dad

4. The Warren Buffett Way

5. One Up On Wall Street

6. Money: Master The Game

7. Coffee Can Investing

11. Your hobbies?

Pankaj: I love stocks
research, traveling, movies, watching sports, trying different foods. I would
suggest everyone to spend on experiences rather than spending on material
things. Experiences create memories that remain with us forever.

I love to travel and wish to see
most of the world. Over a period, I feel, it’s only the memories that remain
with us.

12. How do you increase your
market knowledge?

Pankaj: I read into
newspapers, business magazines to study into countries, economies, innovation
in technology / chemistry / biology, disruptions, lifestyle changes.

Twitter has become an important
medium for me to read thru the latest happenings around the globe.

13. Who is your role model in

Pankaj: None. My thought
process is that everybody is unique & making someone role model is like we
are not able to explore ourselves. I keep reviewing myself dynamically.

14. Disruptions – What do you
think of them and how do you evaluate if a business you are looking at as a
prospective investment won’t get disrupted easily?

Pankaj: In current world
of innovation & technology, disruptions are bound to happen every now &
then. It is not easy to understand right away that what can get disrupted and

However, if we are reading right
global articles, we can understand well in time about the disruption. As an example,
I can say that I have been suggesting since 3+ years that automobile sector
should face challenges globally. Introduction of technology-based cab services
was a visible disruption.

15. One advice you would like
to give to younger people who have just started earning/saving/investing in the
financial freedom journey?

Pankaj: Well, we build our
career by gaining knowledge through education and experience. On similar lines,
we need to build our investment journey through our own knowledge. We need to
work hard to build the right knowledge. While practicing the investment
process, we need to be patient and disciplined at every step.

Respect yourself and have a firm
belief in your abilities. Never mock anyone. Social media is a place where
everyone tries to be as perfect as possible. This is taking away the learning
purpose. So learn the right, ignore the wrong.

To achieve financial
independence, it needs a lot of hard work to start with. Knowledge and
Experience build the ongoing foundation; while patience, courage and discipline
support the journey to stay put.

Beyond a certain point, I believe
that financial independence, as a concept, is purely psychological. For some,
One Million might be enough to survive; while at the same time, One Billion may
not be enough for someone else.

If someone really wishes to
achieve financial independence, below are my thoughts that I would like to
share with your readers:

1. Review yourself in terms of
current earnings

2. And if you stay in the same
kind of environment, speculate in terms of how much can you earn over the next
5-10-15  years

3. Understand your current
expenses and extrapolate judiciously to forecast your expenses over the next
10-15-20 years

4. Accordingly, identify the
means to add an extra income through the investments

5. Besides, either learn yourself or get associated with the right person during the journey

The above is for educational and informational purposes only. It is not an endorsement or a stock recommendation. The author may be holding the securities mentioned above. Do your independent and thorough research before investing.

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