From The Horse’s Mouth: Prem Doshi Trader Profile

 

1. Tell us a little bit about yourself.

-So my name is Prem Doshi. I run a company called ACE Equities. It's a broking firm, we offer research to our clients.

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

-Back in 2005, when I was 12, I was always interested in reading the news and did read the business newspapers too though I never understood them. Then, I heard relatives and other people having a conversation about how easy it is to make money in share markets, So practically it was the idea of easy money that got me interested.

3. The first stock you bought, first loss and what did you learn from it?

-The first stock that I bought was RNRL at 25.70. The reason was that the newspapers said it was the cheapest Reliance stock and I loved Reliance, I had read up on Ambanis and I knew they were great wealth creators plus I being a gujju had a gujju bias didn't remember the first loss as I had too many of them in my first phase of the market. I eventually ended up giving my funds to my stockbroker to manage and they blew my small account in a few months, which gave me a rough idea that the brokerage market has an opportunity if someone comes up who can give "right" advice and not just over-trade for brokerage.

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

-I like verifiable businesses, like an F&B company like Jubilant Food, where you can see so many stores across India and it is easy to tell if it's doing well so that you would not need to dig deep to know its a good business.

Apart from that, I like to look at businesses that are not over cheap and not over-expensive, companies that deliver good growth and trade at sane valuations. Right now, according to me its a rarity.

I follow very laymanish metrics such as Price to Book, P/E and Current Price, MarketCap to Sales.

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

-I feel I played the Sugar and Paper cycle well in 2015-2016 which provided a very good return as I could pre-empt the moves.

What I did wrong personally, there was a small-cap company that I had entered into in 2018 on a turnaround buzz, it was debt-ridden and shut down and I trusted the management's words and BSE announcements of the company that the stock would double and I did not sell and it ended up losing 90-95% of the investment value in it.

It was a very recent blunder!

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?

-If a stock is performing and I sell it, it is usually when I believe its fairly valued to the growth it delivers and/or if I see a new lucrative opportunity to shift the funds.

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

- I think all stock pickers, especially in the midcap space, are having a lot of patience since 2018, still waiting for a payday.

As for the history, I have been in the markets since 2005, since 2005 I had many failures and mostly failures require a lot of patience to recoup and emerge stronger.

8. Tell us more about services and are your future plans?

-I want to focus on improving my research, since 2017 have avoided a lot of disasters and given exit messages before corrections/crashes happened in stocks like Indiabulls, DHFL, YES BANK, Dilip Buildcon, Shankara, etc. But still got stuck in stock like Coffee Day where I didn't foresee a suicide.

So the focus remains on improving my research first.

9. What are your favourite books?

-Not a big fan of reading but I have enjoyed reading The Secret, The reminiscence of a stock operator, Wolf of Wall Street, The Tipping Point, Connect The Dots.

10. Your hobbies?

-I like to listen to music, playing & watching cricket and I like writing mostly two-line poetry and stuff like that.

11. How do you increase your market knowledge?

-Research in the stock market should be like you are preparing for a Govt exam. You should know the current affairs, the historical movements, The comparable sectors, stocks everything.

So keep reading more and more about companies, industries and keeping spending time on the terminal and stock info.

12. Who is your role model in investing?

-Don't have a role model.

13. 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?

-In a highly disruptive world, it is pretty difficult or impossible for someone to pick up disruptions before they happen all the time.

What we can do is remain adaptive, incase we see, read or get a whiff about a disruption that is in the works, we have to take an exit and instead try to benefit from the disruption.

For example in the decorative paints industry right now, there has been no major disruption and Asian Paints has become the world's most expensive paint company.

So if you see something changing you can make your move, it anyway doesn't strike you overnight.

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

-Start understanding how stocks are companies. If you spot things around you changing it can be a big play in the stock market. For example, if you see all your friends paying for online matrimony, you can look at stocks in that sector. Develop this habit of asking anything and everything and keep asking. Today you have Google. many people did not have Google growing up. Today technology can be utilized to become wealthy, One should make the best use of it.

Most importantly, don't jump into a financial freedom journey by quitting jobs and doing full-time trading, etc. Take your sweet time learning the tricks and don't mutilate your career. Today, I would rather have a stable job and save and invest and compound rather than quit my job and juggle with money and would expect the same from all of you.

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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