The Market is a Great Guru — Vinod Sethi | The Long Game

0:00 When I was a boy, my grandmother kept a small plant on her window sill. Now, I don't remember what kind of plant it was, but I still remember that she watered it every morning the same way and at roughly the same time. I also remember asking her once she didn't just water it a lot once a week and get over with it. She looked at me like I had said something strange and said, "That's not how it works." I think about that a lot. not about the plant, about the look on a face and about that idea that some things have their own pace and you don't get to negotiate with them. I now believe most of what matters in life is like that plant. Whether it's building wealth, raising a child, learning a craft,

0:47 staying married, or even thinking clearly, none of it happens quickly. And yet we live in a world that keeps asking us to measure ourselves every few weeks, every few months. And against people who are also measuring themselves every few weeks, every few months, almost nobody seems to be playing the long game. And the ones who are quietly, they tend to end up with lives worth paying attention to. That's exactly what this show is all about. It's called the long game. For those of you who've been here a while, it's the same show you've been watching as the 1% show, just growing into a name that's that better reflects what it has always been trying to be, which is conversations with people who've stayed with something difficult for a really long time. Most of my guests would be

1:34 investors, but over time, I would love to bring on anyone whose life is a case studying patience in doing one thing slowly for decades and letting it compound. The name of the show comes from a book, The Long Game, that I just finished writing, but the idea goes back much further than that. It's what I've spent most of my adult life trying to understand. I don't have a full answer, but I have guests and I have questions and that's usually enough. My guest in this first episode is Venote Sati. We recorded this conversation in August of 2025 when I was preparing for the book. Now, Venod has spent more than 30 years in Indian markets. He was the CIO of Morgan Stanley Investment Management in India in the 1990s and since then he has been investing his own capital teaching

2:21 and thinking about markets in a way that very few people do. He's also one of those rare people in finance who talks about markets and life in the same breath which is exactly the kind of guest this show is built for. Here's our conversation. I hope you enjoy it. Great. So, so first question, uh, you know, the looking back at the very beginning of your career when you were just starting as an analyst and investor, what were some of the misconceptions you carried about this profession and what did you think the job was about and how did you how did reality teach you otherwise? Well, uh personally I was very young. I

3:09 didn't uh and India was also a different country in the 80s. We were still per capita income was whatever $300 or whatever. So the context is different. So you in the late 80s you sort of felt that you were coming from a uh from uh you know in India which is under potential at that point today is a very different world and you've gone to um the superpower on earth so there was that as as a 26 year old 25 year old you'll have that natural sort of bias that you know as to they're going uh this is Wall Street and all of

3:55 that. So, so more than any uh bias, it was it was just uh it was a different uh universe in a way. So you went from what was a 300 per capita country and perhaps US was at that time I don't know forget the exact number but 25 30,000 per capita uh country so there was that uh so one had to adjust to that reality that you you're actually in um you not only in that economy but you're one of the premier banks working in that economy and you know uh and um you've

4:42 been uh you've been chosen to manage money. So I'd say um the preconceived notions were not many. I mean you just went wideeyed. It is the way you would go if you you know went to Disneyland when you were 10 years old. So it was just a just uh you know it was a lifetime's opportunity to walk in and work there that time. And um so yes so the those were sort of the uh I'd say the blanks canvas or you know that was the sort of context of that moment. Uh so that's how that that's how you went. So you know you learning everything and you just preassume that everyone is and everything is smarter

5:28 than you are. But then uh you slowly realize that uh that isn't the case. We quickly realize that actually and uh so then then at the end of the day you know the human you know it's as human a place New York is a Bombay I mean it didn't take long to figure out that working in Araban Point or working in New York is you know okay similar city sister cities in some way. So you got into the groove very fast. uh post that. So um but over time you realize that human uh human emotions are what they are uh markets are emotional

6:14 people in higher positions are also human and uh so so over time and that's that's called learning I guess that you keep moving and so so that was sort of the uh context of that error and that's how it works you know >> so I think over a period of time so you had a start with Morgan Stanley and very young at your age and I think uh rightly said that uh uh there were some misconceptions I think some preconceived not notions not many but they were quickly dispelled with I think as you as you as you learned more into the into your career I think the amount of noise and information and confusion that time probably I don't know maybe you can correct that may have been much lesser compared to what a young analyst getting

6:59 into the market or into the industry today is is is that a correct assumption I'm making. >> Well, uh the uh ignorance of that era was lack of data. The ignorance of today's era is too much of data. But ignorance remains. So, so opportunities remain as a result. So as long as there's misconceptions and in and ignorance floating around, we investors have a job. So that uh continues. I would say the the earlier era of lack of information,

7:46 we assume that the internet era would make us all much more intelligent and better investors and so on. But um I think is led to the error of uh of of of stupidity also. So you see that in politics extreme people get voted into power people you know all sorts of things going on in this world right now. So I'd rather not take names and so on and so forth but you know uh we've transcended from an age of ignorance to an age of stupidity today. So that's okay. That's great because if it was an age of enlightenment then you know we'd be making 1% returns. So

8:33 so essentially it is important to recognize an age for what it is. So it's important to realize that information itself doesn't make you either a better investor or a better decision maker but it is relative to uh what is the psychological bias of that time. So making money in an age of stupidity is easier than uh in an age of ignorance. So everything you know swings one way the other and um so I think we formed self-reinforcing loops which is if your uh social media will reinforce self-reinforce if you think the earth is

9:18 flat you'll get more and more videos on how why the earth is flat and so does AI have that bias. AI also has been accused of uh self-reinforcing uh and making you feel good. So so there is uh so there is all of that. So the bottom line is that uh as long as there is if as long as people don't see reality for what it is and if you can then you can make a good investor. You know if you had to even you know broadly summarize that is what it is which is you capture

10:04 in mispricing because this sort of delta is shows up as mispricing in in in stock prices and that is your that is your edge which uh if you can hone that down if you if you can get that delta and get it right, then it's perfect. So, so how do you do that? Not easy, but then you don't have to capture every delta. So, you don't have to catch every fish in the river. So, let's assume the market is like a river. You're a fisherman. Okay? So, you're interested

10:51 that you catch a reasonable number of fish on a predictable, consistent basis. You don't need to know the whole river. You don't have to beat anyone. There's enough fish for everyone if they want to. It's not like a boxing match or a tennis match where there's one winner and one loser. The banking business is more like a fisherman's business. So you know if you just do some and you catch sufficient amount of fish you're home. So, so one shouldn't get overwhelmed with also uh too much of data, too much you know there thousands of listed stocks, there's so much there that you can get intimidated as a young

11:37 analyst as to where do you begin? And so like most young analysts you believe that working 12 hours a day and you know reading as much as possible giving equal weight to all information that lands on your desk. It's like an equal weighted portfolio. So like I give you 100 research suppose you you devote as much time to page one as page two and page three because uh so on and so forth then you're in trouble because those pages are never ending. You'll feel exhausted. You would have worked 18 hours a day. You would feel good that you're hardworking but hard work has nothing to do with returns.

12:22 I mean the correlation is very it perhaps is a slightly negative correlation. So you know it's not that you get better by staring at uh more and more data. So the challenge in the investment business unlike many other professions is that there is some sort of a linear relationship between hard work and output. You're a factory worker. You're a dentist. you're a cardiologist, you're a lawyer, you know, you've been taught since childhood to be on that road, but the uh but the uh but I don't think it

13:08 it uh that relationship holds up. I remember some odd conversation that used to float around in Morgan St. I might have the facts wrong but I think there was a very prominent global strategist of ours called Byron Wi who was the head of global strategy there for decades very well-known guy he happened to be a good friend of Soros or childhood friend of some link they've known each other for decades so one became become you know a very wealthy guy the other was also wealthy guy but you know Soros was so Soros would apparently laugh and tell Byron, you know, Byron, the reason I'm more wealthy than you is because I didn't have to come to

13:53 office every Monday. I didn't have to come to office every day. So, uh you know, it's it's it's funny, but it's also profound. I mean, he's uh he is saying something meaningful. So to live with that nonlinearity is not an easy thing to do because it can I if you let's say you worked very hard but you you know you didn't make good returns or whatever it can uh it can stress people out especially youngsters and uh

14:41 the ability ability to wake up when the woolly mammoth is in front of you and to be sleeping otherwise is an art that money managers need to cultivate and so so how you do that is a personal choice I mean there's no I can't say do this and that so so how would I sort of do it like I' I'd swim every day okay because swimming is you know one you can enjoy swimming The others you can ponder over ideas, you can see patterns, you can do other things. And the great thing about swimming, you can stop swimming and start investing for instance. So I'm just giving you one example. I'm just saying you can figure

15:26 out your own pattern. But in uh to be in a in a relaxed uh state where you're not uh forcing, you know, it reminds me of people at a railway station where they they're waiting for a train and many of them come to the edge and look whether the train is coming. You see that is an analyst. He's hoping that him looking will make the train come faster. It's not going to. Okay. So, you might as well relax. So, when the train comes, it comes. But when it comes, you better be awake.

16:12 So, very often the challenge in working in an investment bank as a money manager is that an investment bank, everyone's working 24 hours a day. Okay? Everyone's not a money manager. you're just hanging out. You're you're staring out of the window wondering whether, you know, you should take 5% of HDFC or 10% of HDFC and what are the pros and cons of both and uh for that you have to stare out of the window for a month, you see. But to anyone else in the office, you look jobless because I mean, look at this guy. You know, where everyone shows up at work at 7 and you're staring out of the window

17:01 or you're just like chasing around because what else can you do? So to come to that conclusion, there's nothing else you can do. You can't work hard and come to that conclusion. So it is just you know modeling in your brain managing risk you're managing you know events you're managing you're thinking of it's it's a you're following your probability sort of function in your brain as to you know how do you uh this fine line between being heroic and you know crashing everything in markets it can happen overnight and so how do you pace This is these

17:46 things out. So now in what way will hard work get you there? I don't know. I don't think so. So I think analysts need to know that in markets they need to cultivate that at the end of the day you will get paid for pain and patience. It's a fair price. So they asked the there was a very interesting interview of the Nvidia uh founder recently he's one of the you know the largest mag uh market cap company in the world and someone I think in one of the interviews asked him a question that given same question that you're asking

18:32 if you had gone back to your younger selves would you do what you're doing he said because only I know what nightmares I've gone through to reach here. So if I had to relive it, I'd never do this. It's shocking but it's true. But at the end of the day in investments also whether you like it or not you'll have to play pay you'll have to the price you pay for significant returns is pain patience that doesn't go away however bright you are and you know you'll have to wait for long periods of time and you know and sometimes stocks give you a return in a

19:19 what you waited for a decade gives you that return in 3 months. it happens. So uh so now those are skills that you need to it's uh you need to cultivate I remember there was a there was some trade I forget the exact detail but this is part of forklaw at Morgan there was a guy who in ' 87 shorted the the Dow just uh you know about sort of early in the year not October 87 when And there was a big crash. He was expecting a big crash. So he was seriously shot somewhere May June or something. You know about 3 6 months before that. I

20:06 could be wrong a bit on the facts but the fact is less important. And um so apparently the market kept going up and uh this guy went on a vacation. He said I'll return when the market falls. Okay. and October 87 when the day the market fell I think he made for that era he made 55 million or something for the firm and I think that quarter also Morgan Stanley was profitable the October 87 quarter thanks to one guy with insight with patience ability to take pain and hang in there

20:52 and uh and get and and get it. Yeah, it happens. So um I mean the reason I'm giving some of these examples is just to give context to young people that uh youngsters sometimes feel like till that time you've gone from first standard to second standard third you know there's a linear you would like to make 20% return the first year you like to make uh and so on and so forth but the sensex went below 3,000 every year between the between 94 and 2003 every year. It went below 3,000 and

21:39 so now that is what 9 years. So patience. So anyway stocks did did well and so on and so forth but it isn't it wasn't easy. So for people who lived through the that era it was a tough market. So I think for in for analysts I think you need pain, patience as I said. You need clarity of mind, insight and you know declutter your uh brain in whatever way you can. I think these are vital and not everyone has it. So, you know, I

22:24 I I think you're probably born with it. And if you're born with it, you get better. So, there are many uh many pride guys I know, much brighter than me, who are poor investors. But that doesn't mean they have but they make careers in in entrepreneurship. They make careers in other things. So, they've been investment bankers, they've been deal makers. So you know so you have to figure out early that whether you're cut out for this. So uh otherwise it can be an extremely painful prof you know uh career path. Yes you your fantasies of big money is being made and all that

23:12 but uh but the mortality rate of all the players since the 80s and 90s is very high. So there's a very small there's a very small universe that gets glorified but it's probably almost like a statistical u uh auditing. So a senior charter director met me and he said he he you know he he told me like that I invest only in startups and and uh and unlisted situations. So, so I said why? He said I can't handle daily price movement. It just like it just I can't I'm paralyzed. So now so

24:00 the great thing about him is that he knows what he's what makes him tick and what doesn't make him tick. And because he's figured that out, he's done very well. Not that he's done badly. I'm not saying there's uh but if you if you lack that ability to have this uh uh skills then you should reassess. So that's what I would tell young analysts that you know Wall Street movies, Hollywood movies, everything makes it look racy. you see billionaires and you know that you know I mean a lot of Wall Street channels are like you know sports channels now you

24:46 everything looks racy and so on so forth but it's not so it's at the end of the day uh challenging maybe boring business where uh you just have to spend a lot of time waiting very often between action points. So, so I I always caution youngsters because I see a lot of that that uh lots of youngsters get into it. Then there's also I find that youngsters feel the peer pressure today that you know some other 20-year-old has done this and my friend is doing this and that. So there is that.

25:32 So that is a big danger. The big danger is that this isn't a tennis game. And uh if you I mean market in a funny way is like a mirror. If you suffer from greed, you'll get screwed. If you suffer from fear, you'll get screwed. So your biases will finally show up in your outcomes. And uh so there's a you know so that I think is also I find among young I I meet a lot of youngsters uh I hardly meet people of my age group I meet prefer to meet 20 30 40 year olds just because you know they're energetic

26:18 and uh I learn a few things from them also as to how they're thinking. So sometimes I feel that they unduly put this pressure on themselves that you know they should free themselves a little from this competitive uh pleasure because the guy who does well over a decade or to three decades and four decades isn't the guy who's winning the game every day. I mean, I think Warren Buffett probably made 99% of his money after the age of 60, you know. So, at 55, you would have just

27:05 be a wealthy guy, but not a legend. So, he's he's been playing that game for 50 plus years, and uh he's gotten there. So uh so that is that is you know that is uh but the statistical averages are I think the the statistical odds of young analysts and people wanting to go in Bollywood or Hollywood may be about the same the hat rate will not be materially different so every 100 people who want to do it I don't think uh

27:54 it can vary you out if you're not self-aware about whether the skills you have are uh or your strengths align with what the market requires. So uh and very often health suffers as a result. So you know lots of people also have health issues as a result and that comes from that little distortion. you can't sleep well at night, you know, all the everything adds up. So, and there are always events they covid came along, there was 2008 crisis, there was a world trade center, Rajiv Gandhi gets assassinated. When is there not enough reason for you not to sleep well at night? There's endless reason.

28:40 But if you can sleep well every day that you're a money manager and you don't miss out on your sleep, that's very important. Two, and that's also a litmus test whether you're cut out for it or not. If prices make you sleepless, then you're in trouble. Or if prices make you irrationally happy and you want to hit the bar daily, that's also a problem. So because in both cases, you'll get hammered if you don't sleep well or if you drink too much. So

29:25 yeah, so the ability to make a lot of money and go to a bar and drink a glass of milk like Phantom used to in his comic books, you know, a long time ago. then you're something. Then you probably uh or if you make a lot of money and you still take the same taxi home, glory to you. So these are some of the you need to also cultivate as a young person. So one of my friends met he was studying at Colombia. He was a prominent industrialist in North India. He was in Columbia University and he was taking the subway to go downtown and then this was at night and then u he

30:11 saw some guy in a suit who looked like it is Warren Buffett but he couldn't believe it. What the hell? I mean like you know 9:30 at in Harlem there's this guy who looks like Warren Buffett uh standing at the subway station. So he like a nice Indian went left right it peered into him. So then Warren Buffett called him and said like uh what's it you know what's up son. So this guy asked I'm sorry but are you Warren Buffett? He said yeah I am Warren Buffett. So so he said what are you doing in the station? He said I'm going downtown just like you. So uh now a guy who can do that is uh is

30:57 probably fit to be a billionaire. So that is uh so all these things there are some certain qualities that many of these people do share the ability to be grounded at all times because unless you're grounded you'll make a poor man money manager. If you if you're not if you don't see the human situation, the human condition, then uh then you'll pay a price in uh some other businesses possibly you can get away in a manufacturing and setup. Maybe you I don't think you can but anyway I don't know enough about

31:43 other uh professions but this is a common um theme I've seen. So for instance I had uh and so this is what I tell young analysts also that uh so my whenever I used to go to London I used to uh meet my final meeting was always with a friend of mine who was I think the heir to a 500y year financial empire of Europe. I won't take his name, but he's his family's been having good wine and food and wealth for five centuries.

32:31 And so I would always end by my last meeting of the day would be in his office. So I'd come in a cab and you know get off in his office and and so you know we chat about the heing chat and then he would say so how are you going to the airport so I keep quiet because I know he'll recommend me to take the subway with him the underground because he lives somewhere on the way. So I say, you know, my car's waiting, but I'm saying like, you know, I don't know what I'm doing. So he's okay, let's let's let's take the underground. We'll get another 45 minutes. And uh so this air to the fortune

33:17 of um it's a crowded underground train. I'm just laughing at the fact that no one in the train knows who I'm talking to. But this guy's unaffected. He's sitting there and he drops off and uh then I go to the airport. So I think analysts should make an effort to step out and meet interesting people because you can't learn by reading. you can learn these things change you fundamentally when you uh when you live that.

34:03 So, I I did the same thing dozens of times. And I'd say that taught me a lot about uh how you should be when you're wealthy. And uh and unless you you touch and feel situations like this, you know, it might just sound like fantasy and that you think every guy the first thing you do is to buy a Mayback and float around. But um yeah, so uh I mean one uh so many well-known

34:49 the top money managers of our business would take the train home in New York and live in rented homes and walk to the office from the station. I mean it's uh so in Midtown Manhattan you you could you would meet the who's who walking to the office. I mean I've seen I've seen like all the legends I've seen them walking on the streets. So, so being grounded, being real is uh and know well that money is a

35:35 is a flow. It can disappear also. So don't identify yourself too closely with wealth or or don't live under the delusion that it'll be forever. So I remember Pervinder Singh uh was in her office ran back seat old grand chairman I think it's four or five years before he passed away and uh he had great plans this that and the other and then look what happened I mean his children landed up in prison lots of things happened I mean it's very sad But that's the nature of money, nature of

36:22 And why talk that far? I mean, let's talk about Rahand Data. I mean, I've seen him uh I don't know whether I've spoken about this before, but like is raining very heavily in Bombay, you know, right now. I think this was in the late '9s perhaps. It was raining very heavily and this was after the Asian crisis and I was sort of managing the Singapore office also and so uh all traffic came to a grinding halt about 3 kilometers before the airport total stop and so my option was to wait in the car or go walking in the rain and catch the flight.

37:08 So I said okay clear decision no debate. So, I got off the the the car and I went uh walking to the airport fully drenched. I see no one in the airport. There's one guy in a suit about 50 m ahead of me looking carrying this and walking. And as I come closer, I think I thought it was Radhandara. I got up with him and I said like why are you working? So he told me why are you working? I said listen I I have a job you know I'm an employee of Morgan Stanley. I just laughed. So he said no no I I also have some important work. Uh so there were

37:53 two of us walking all the way to the airport which is 3 kilometers and then we got into the and Singapore Airlines was waiting there and so they had towels ready for us because they heard that Ratna is coming and thanks to Tada I benefited also. So I got a shirt, I got a towel, I got upgraded to first class so on and so forth. But look at Mr. Tata I don't think even employees would do that walk 3 hours I mean 3 miles in the 3 kilometers in the rain and uh but he was doing it and carrying his own luggage.

38:38 So, so you know these kind these these are marks of greatness in my view and uh so I can tell you many such incidents of the of Mr. Tata. So youngster should know that that it isn't about glitz and glamour and being uh seen at the right places but it is having being so well grounded and self satisfied that you can do all this that you can walk to the airport. So I think people should put themselves in situations where they uh they can witness

39:26 such things. So I think going getting out of the office, factory visits, going here and there is helpful. Meeting other money managers, getting out of your comfort zone and then you'll see greatness all around. You will not see I'm not saying greatness exists only among the wealthy money managers. There is greatness all around. But I remember once I again talking about dream once I got into Bombay airport and there was like the old Santa Cruz airport those days it was like 3 ft of water outside and this is like 1:00 a.m.

40:14 So there is nothing my car no car nothing and there's this one girl at this one of these cap companies you know Akbar travels or whatever so she was there some young kid 22 year old girl and so I went to her and I said can I you know is is there any chance of getting a taxi even I'm laughing she's also laughing and then she says okay let me try so she got on the phone. She went out in the water. She hustled and screamed and shouted and got me a taxi within an hour. Somehow she doesn't know me. I don't know her. She's just the ordinary Bombay citizen

41:00 doing a fairly low-end job. But I was amazed at her commitment you know and only good things can happen to such people. So a greatness exists at every level and your ability to see that is important. It need not come in a Mercedes. It can be just that one person out there and uh and there are many such people. So I think a good job of a a money manager's good job is to see how the inner DNA of a person is. So I remember uh looking at a company

41:48 I'd gone for a company visit where I found the promoter spoke very rudely to the security guard you know he was wait around and so on that is enough for me not to invest in him you know and uh and the company the stock also went to zero and I also went with bridge and munjal for the hero Honda plant visit with and at least 500 workers touched his feet while we were walking around. Yeah. Now that tells you something and we took a large stake there. I in fact went to the Haldi Ram in

42:35 Kolkata when it first opened. They had opened one big uh what do you call it? Uh food court. I think it was some one lakh square feet. It was some It was very big. First of its kind in India in a large city. So he had set this up and um so I I went to his office. I I had heard about it, you know. So I said I I want to go there. So those days I used to wear a tie and so on and so forth. So when I walked in the Ali owner thought there's a raid on him. there must be some some income tax, some ED, who the hell, some guy has come to raid him. So he panicked. I said, "None of that, you know. I mean, uh, I just felt like I

43:22 want to see you. I heard you're great, so I'll just come to see what you're doing." So he he I realized because we had some common friends. So he quickly understood that, you know. Then he took me around his facility and the amazing thing about this guy was he didn't speak a word of English by the way. He didn't even know hello but he a super bright guy. I absolutely admired him. But as we were walking around every repeat customer he saw in that store he was touching their feet. The owner of Almir was touching the feet of his customers.

44:09 He touched the feet of at least 25 or 50 odd regular customers he saw in the food court while he was taking me around. I didn't I didn't have to I was pretty sure that day this guy is going to become very big. No number can tell you that. But I just knew in my gut that this guy is going to be big time. He just sold some a stake at some fancy valuation. He's earned every penny of it. He was that way when he started. I mean, amazing.

44:55 So uh so you have to have a certain pattern recognition. You got to have you got to be able to see under the skin of the matrix. You know you just can't see you just can't see numbers and say this will happen. So, uh, so your ability to to see things a little more as to what the intentions and the motivations of the investment that you're making, the of the person driving that investment, I think you'll have a better idea. Your odds of making money will be higher. So in this clutter as you said you know there's so much of data there's so much

45:40 of all this but who's going to tell you this unless you step out of your office and you actually I didn't even have a appointment with them I just walked in because I just saw that building and I think youngsters should know that the world is much more receptive than you think you know where youngster no one stopped taking my calls I mean Rahul Bajage will also speak to us Mr. Chidamra would kindly speak to us Mr. One more saying what kind of speak the world is helpful. There are enough people whatever you say whatever you know you say at the end of the day

46:28 uh this will be a common experience of people who've uh who've you know broken out in early age. They'll always say that they found everyone helpful, you know. So, youngsters should should make that should not feel too reticent about uh making that phone call. An accomplished guy gives a discount to a young kid. He's happy that he's caught. He's okay to He's okay if the young kid is stupid. He's not you know he will give you that uh he will try to help you if you can if

47:14 he can I mean there'll be some arrogant guys of course but my own experience is that uh people are more helpful than you think. So I remember writing a I mean I had very little pocket money as a kid. So I I developed this crazy habit about uh writing letters those days postal letters you know there was no email of course in the ' 70s and so on I remember writing a letter to Indra Gandhi time I don't know what I wrote also something some I was high school student but the funny thing is she replied so I wrote on Monday and my mother opened the letter on Friday she was

48:00 shocked that Indra Gandhi is written to a kid who's like just gone to school. My point is if you make the attempt the the world is more helpful than you think. So that optimism should be there among youngsters and don't hesitate to reach out and this is a common theme even if you hear Steve Jobs and Gates and everyone they they'll all tell you that teams got an apprenticeship at unit Packard when he was a school kid because he got his number from the yellow pages from the white pages you know there used to be telephone directories those days and he found that Mr. Packard's number is is the thing. So

48:48 you just called up Mr. Packard and said like I'm Steve Jobs and I want some chips or whatever. So the guy gave him a job. So so break out of the mold, you know. So in this clutter, I mean I'm saying all this because these are your these are sort of your breakout points if you will, you know, if you make that a dent. So yeah, I went on a monologue. >> No, I think that covered that covered a lot of questions in fact. So I had a lot of questions on that. >> I saw I saw some of your questions. >> Yes. Yes. So I just sort of since this is for the young analyst

49:34 >> uh I was just sort of trying to say things that uh and giving them real examples rather than preaching you know about this and that >> as to uh how uh you know I mean these are some of the strengths you need to have and this is how you need to break out and create opportunities for yourselves. >> Mhm. And great. I think you mentioned about Steve Jobs. I was uh just reading uh I think one of his biographies where they talked about the and I think it was Steve Jobs who talked about the power of being naive right uh when you're starting out because when you're naive you uh you are not sure that something cannot happen and because you know that something cannot or something uh you're

50:20 not sure whether you are going to do it or not because and because you think that you're well equipped to do that because not you're not really scared about that this thing cannot happen and I cannot do it and nobody can do it and that makes you well equipped to do with it. So a lot of stuff >> absolutely absolutely I still ask the dumbest questions and uh start from you know building blocks you know even today I'll ask if I don't know something I will ask what it is and go by building blocks because to me it's a mark of confidence if someone can ask the dumb question because he knows he can figure it out block by block. So, so never get intimidated by what you don't understand. And there's a

51:06 big mistake uh investors make which is uh especially if you are say for for in for instance I was recently uh meeting a defense company which was organized by a lot of the the big names on Dal Street. So the guy had come to meet me and so we were talking and I realized that sometimes investors when you don't understand for instance say tech or you don't understand you know uh uh basic laws of science and so on so forth. you hesitate to uh

51:52 to ask the simple questions and you run the risk of since you don't understand you take it as a given that he they might be right and uh so I found that to be the case in this and you know it's better to ask dumb questions and know that if something something can't be explained to you then there's either a catch or uh you shouldn't invest. So always be naive enough to ask the simplest of questions and you know simplest of questions can you know you ask a series of half a dozen questions you will

52:38 you will either get the answer or you'll know that the other person doesn't have an answer. So u >> yeah simple never hesitate to be alive as you said >> I think you mentioned in the previous response that a lot of these things are unlearnable or unteable because you're born with them like the idea of curiosity the idea of being grounded right so most of the time we are not we cannot really learn them as we grow up we either born with that or we're not born with that >> specifically about see being an analyst uh in an institutional setup and most analyst work if you're not your own investor Right. You're working in an institutional setup whether it's a sell side or a buy side right and you take and you mentioned that it takes a lot of uh pain lot of patience uh uh to come to

53:25 this kind of an idea that it takes at a lot of patience a lot of pain to really uh become great at your art whatever you're doing as an analyst right how does uh in your experience so you you start you you started work with modern Stanley institution setup in today's world I think the incentives are all I think a lot of misaligned incentives that institutions work with the short- termism. Given that setup and also the failure rate that you mentioned about that being successful after long many years is a statistical oddity. Given all that setup, how does an analyst working in an institutional setup really create that patience or have that luxury of time to go through that pain to become a good observer or good thinker or uh do you need to seek out mentors? uh do you

54:12 learn from experiences? Is it pure luck? How do you deal with that? >> Good question. It's tough. It's uh very tough. The the incentives all misaligned and the bigger danger is that you might get uh uh you might learn the wrong lessons, you know, or you might you might just uh burn out as a result. So I think a few things are important. Uh one is try to find a your bosses need to be a little more longer duration. If you work in a setup which is looking daily enemies and so on so forth then you're sort of doomed.

55:01 Uh so you you need to get lucky also to have a a wise boss. So uh and very often you know people learn uh from you know so I would actually give credit to my bosses at Morgan Stanley not me to be honest and I really mean that for being patient with me and uh I mean hats off to them really. So that uh that is the missing side of the equation that you don't see that there is your uh your environment is important but there's a contra example to that

55:46 which is like someone like Julian Robertson worked on the cell side and started tiger only at the age of 49 and uh so he took the he took He he concentrated that short- termism experience of being a sellside broker learned enough. So it's up to you. You can sit in a gutter and also learn and you can sit in a t and also not learn. Okay. So he started tiger at the age of 49 or 50. I mean I could be wrong a little bit here and there. And I think he went around trying to raise money barely managed to raise 8 million

56:34 out of which I think four or so was his own money and so on. I mean my facts may be a little fuzzy but the broad stories along these lines. So if you want to learn uh as they say that you know satyoga is so much better than kalyoga right but they say your chances of spiritual development are higher in kalyug than in satyug because happens every day okay in kalyug it happens once in a thousand years so now you can take two ways you can get enlightened by it you know okay if you develop velop an inner silence. You see the comedy of it all. Okay, it's stressful if you partake in the game. If

57:21 you just It's a movie, you'll learn and you'll become very good investor. If you're born with it, you'll learn one way or the other. So yes, it is what it is and it's a mad house and let's face it, the market is a crazy place. Everyone's the collective the question is basically how do you profit from a situation where millions of people want to get rich overnight those are that's 90% of the market okay so it is a madhouse so so how do you create that stillness in you wherever you

58:09 So it is in the borrowed piece of of the of Mount Everest or Tage Hotel or somewhere that you're sitting. But if you can sit in this chaotic fun house of yours where everyone's crazy and you could get fired any time, okay? And you can still create a stillness and uh see the either it can make you a very good investor. You'll understand psychology better than others. So so there is no excuse and nothing can stop you know uh you can't you you can't stop

58:54 a lie basically. So it's up to you. So it can be in school, it can be stressful or like Julian, you can become a you can put all that to use one day. So so that but also in sort of a uh what do you call it? So Buddha famously said no. So he uh so apparently Buddha got enlightened and he chose to be silent. That's the story. Then all the gods descended on him and said like listen you know you've you know you should you should preach and talk and help humanity.

59:40 So then Buddha said that listen I don't see the point of it because uh a person who has to get there will get there anyway. Yeah. And how much ever I have preached a person who doesn't have to get there will never get there. So then the gods came up with a nice answer and they said that uh yes what you're saying is absolutely correct but there are some people who are in that intersection set who might benefit from you know these are not mutually exclusive sets there is a small segment of people who will benefit from your teaching so that's when Buddha apparently started preaching I think same thing applies to markets

1:00:29 You see? So yeah, you can live by excuses or you can live by outcomes. So I think very poorly of a guy who starts off meeting me say I was poor, you know, I struggled and I'm like and you know puts me off right away. He thinks excuses will generate sympathy and therefore I will invest. Never. I'm looking for a guy who looks for no excuse. Only outcomes matter. So once you get into that mindset then uh

1:01:17 then so that's the other thing that people invest in excuses especially young anal young people so some guy came to raise looking some money some in some potential one investor who want to set up his own uh PMS or whatever he spent 45 minutes telling me how how uh you know his family lost everything. He came up the hard way this that and the other. Then after 40 minutes he asked me do you have any questions? I said none I have no questions since you're so much into your own greatness. This is really patting yourself on the

1:02:03 back that you are uh that you have everyone is a hero. Everyone has adversarial situation. So drop off. Uh so this is what I all my young analysts who worked for me I would say that I want no excuses. I don't want to know whether something worked or not worked. not interested only interested in outcomes. Whether you come to office at 9:00 in the morning is also of no interest to me. Whether you come at all is also of no interest to me. I'm just interested in outcome. I don't want to know you. I don't want to know your wife. I don't know want to know your kids. I don't want to get into

1:02:49 that. So I think if you start creating that that uh that attitude I think that is uh that sets you this shortens your uh learning curve. You'll get there faster. Excuses tend to uh uh give you the wrong incentives as you said it miss you know these are the wrong incentives basically because it doesn't really uh so so lots of people who I've worked with are still come meet me and all that you know they might have thought I was very tough at some point than the other

1:03:36 but at the end of the day uh many of them still All of them, many of them talk to me and uh are in touch with me still. And so I think uh you you must cultivate that attitude because only then will the world take you seriously, you know. So uh so stop living on excuses that I have a handicap because you know I was poor and I was rich and I was this and that and the other. Drop all of it and you will uh you uh

1:04:23 you'll also end up destroying your ego. It's good. Yeah. Your self-created greatness. So yeah, and I think young animals should also know that their job is to make sure that they uh make their boss's life more comfortable rather than you know I mean the boss is not a school principal. You say you're working on a fund management now your bosses what makes the boss comfortable you come out with brilliant

1:05:08 ideas you know and uh everything else is a story so you know let's be clear so your your incentives are sometimes misaligned because you're fuzzy also in your head and um you're using all these strategies to to survive and that's not really helpful. You're better off. I mean, if you're a straight shooter and you come out with powerful ideas over time, I mean, you'll be sought after.

1:05:56 So, so there are two ways to survive. One is to be so good that no one can live without you. Or then the other way is to live by excuses. So is the blue pill and the red pill. Automorphas's great line. But it it is I think that is what it is. I mean I love to tell this to young young youngsters because I think uh it it you know it it clears the clutter in the brain very often. It can

1:06:42 that everything else doesn't matter you know so much. So so this uh And I think I think youngsters would be would benefit from from decluttering themselves and walking on a courageous path like that, you know, and they will I think I think they will reach their full potential faster if they take that risk. I think it's good. I think you mentioned about decluttering and and that's I

1:07:27 think where my next question was coming from. Uh especially in today's world. I think you mentioned that uh when you were starting out uh it was the scarcity of information or right uh in today's world it's abundance of stupidity because there's too much information out there and not many questions and not many people willing to really sit with their questions because everyone of us is wanting to seek instant answers and we're getting confident answers from people. we're getting confident answers from AI and that adds to our own confidence that whatever AI says whatever we think as the first idea must be the right idea. So there's too much confusion out there, the amount of volume of data, opinions, right? Uh out there, right? So uh when you talk about decluttering uh uh in given all the situation all around the confusion and data and opinions, are there any specific mental habits or disciplines uh

1:08:14 that probably you've learned to cultivate and you see around in those good analysts that can really make a difference between someone who either drowns in information and opinions versus someone who learns to filter and focus on what really matters. So any mental habit or any any ideas on that front? >> Yes, I think uh couple of thoughts on that. One is what you said is absolutely correct. I think education gives us the wrong incentives. It we have to answer questions. Whereas the real skill in life is to ask the right question. you know to ask the right question and the other is so in all this data asking the right question will give you the multibag

1:09:02 as to what is it so what do I mean by the right question so right question can be how do you prioritize on a totem pole how do you prioritize what is most critical separated from important separate to necessary separate to would be good to have. Okay. So you equally waiting everything is a big disaster. So I don't need to know the last final number in a balance sheet. I'm not interested in that. I'm

1:09:48 interested in just that one critical firstly the critical important firstly I'm segregating what is the critical what is the important what is this I do all the time not only in balances in everything in life as to what I should do in the day also the critical because there are only 24 hours in a day there's cluttering everywhere so you have to abandon ship you can't do everything you can't attend your your your grandfather sisters brother's marriage and also there are only so you there are many things you cannot do. So you start with uh a hierarchy as to what are the most critical things

1:10:33 which has the highest delta that uh I need to do today or even when you're studying a balance sheet or company what is that one thing what is that one critical thing which can be the breakout here or which the noise is hiding you see and so leave the answers to the world. Everyone has that information. So I'm not impressed by someone who says I know the debt equity ratio and the average inventory days of a company. Okay. DK. So uh but that you equal weighted everything. You had that half an hour. If you can figure out what is

1:11:19 uh what is the key driver which if you get an answer to can make this a profound investment or you know that this is going to not do well. So the ability to declutter comes from a state of mind where you're looking for hierarchy of choices to make. Okay. And you're not getting confused by the 20page reports and 30page reports. You're not. So now if you read a 50page presentation with this mindset, you'll be able to read it in five minutes and you'll also find the fault in the presentation.

1:12:06 You'll find where the flaw is. So very often people would like get shocked that they would have worked a week for a presentation to me and that one flaw in that whole 50page I will point only at that and I would have read it only 5 minutes. Everything else they've done well. So now it's not because I'm a genius. I'm not. I'm just saying because I uh I'm looking to uh I'm looking at that key question and whether I'm getting a clear insight out of the presentation. If I'm not it is very imp GBD produces a great presentation today. So it's not going to make you a better decision maker. So uh

1:12:52 so these are habits you need to cultivate. So you you also can't get into the habit of enjoying reading for its own sake. So I'll read a a mean force myself I I'll give myself only 10 minutes say for instance to say read the Wall Street Journal okay and I'll read it cover to cover but I can also spend two hours reading it and enjoying it and having a cup of coffee and uh and get nothing out of it. Okay, it might be fun but then you know you have to decide those are the choices you have to make. So so you know I'm I'm giving these suggestions because we live in a world of clutter. There are 100 podcasts to watch. There are 100 you know

1:13:39 self-improvement uh things there are books and this and that nothing going to help you. But uh but if you realize that the real shortage in life is time okay and that uh so so you don't have the luxury of getting the last piece of information digested and so on so forth and feel you've achieved something you've achieved nothing okay so give up this completion habit like you have passed an exam. There is no exam here. Okay. So your your

1:14:25 so you have the only your only shortage is time. Your only weapon is time. And so how do you put it to best use? Uh and you need to sleep 8 hours a day. You need to rest for relax those 8 hours a day. So you basically have how much time do you have? So return of time that is more important than uh anything else. I'd say more important than money return on equity is return on time. So so if you cultivate certain if it you're conscious of it you'll do something about it otherwise you become a 40y old before you know it.

1:15:11 Life will take over. So if you're aware of the passage of time and then you have that sense of uh criticality and that that it'll never come back then you'll do something you'll you'll read a balance sheet differently you'll read all data different G and the odds are you won't spend half a full day watching cricket then because what you You just chased a ball. Okay. So if you ask me I watch cricket no. Do I watch a movie? No. Because that adds 20% to my uh so to me time is important.

1:16:00 So whether India won or Pakistan won a cricket match I mean a day is lost. So not I'm not criticizing people who it depends on what you want to do in life. I'm saying if you're a young analyst there are there's so much leakage of time that you can in a world of so much clutter. You contribute to the clutter by having habits where uh like I remember I was I was told uh the channel of the firm had told me that you should learn golf okay. So I was actually taken to a coaching

1:16:47 lesson. This is really funny that uh I remember it was the I think the chef was even standing there you know the coach is teaching so he asked me to hit a ball. Okay. So, I hit the ball. Then I stared into the sky and I flung my golf club and I told the chairman I don't want to do this because suddenly I thought about this that I'll be hitting a ball six hours gone just so that I can get to know someone.

1:17:36 Okay. Okay. I mean, it's I'm not saying it's a good I'm not criticizing the sport. Don't get me wrong. I'm just talking about what you my priorities. So, you know, it was uh yeah. So, unless you actively work at decluttering, first you have to declutter your time. You have to add expand your your time to the best possible because that's your only nuclear weapon in your hand. Okay? And what compounds is the the way you spend your time. So it doesn't I think that has to be a conscious habit that

1:18:23 young should create. Earlier the better because I think employability now is between the age of 20 and 40. I think we entering an age where most people will be unemployable at 40 unless they really uh practice some of the things we're discussing now because there's AI, there's commoditization, there's everything. So you can't just cruise along and retire at 65 anymore. They're irrelevant if you don't. uh so I would frankly argue that uh some of the things that we're discussing are probably the way to survive the

1:19:08 the new era you know this is I think so uh so how do you make yourself relevant where so an analyst had the time to I had the luxury of three days to come up with a report on an idea that I gave And uh I mean I I'll give you an example. So I just I was very curious to know for many for a long period of time that uh what is the history of the East India Company and what did its stock price do and link it to events in India. what actions in India to the stock price of East India Company right from 1600 to

1:19:55 1860 when it shut down. So it was always in the back of my mind that this is like a thesis you know that and so my idea basically was my suspicion was rather is that all actions of East India Company in India were were really motivated by the its stock price in London. That was my basic thesis. So I was declaring the entire history of British India and you know you say there was a battle of Plasi Panipad this that and the okay fine but I wanted to look at it from a capital market point of view. So I struggled for years. So I I was

1:20:41 always struggling key like how do I get this done? So but now came AR So, so I was thinking you know maybe it'll take me 3 months a year to figure this out and this and that and I always tell people that do this as a PhD thesis you know wherever you are you know suggest this to your some university and do it no one did it for years I told people then I got into AI then uh in a so I it's you know I went to multiple AI engine and basically what I did then is

1:21:26 the this question I'm saying is from the sharp questioning point of view. I'm I'm saying this to explain how sharp questioning is more important than information. That's why I'm telling you the story which is uh I just started by sharp questions. Okay, that first breakdown in decade by decade 16 to 1610 1610 1620 and so on so forth. So like 26 slices of time and tell me what major events happened every decade and what did the stock price do in that decade? Okay. So you you cluttered 260 years of time.

1:22:13 So AI being a being a useful slave will do exactly if you what you ask to do if you ask it sharply. So, so I I I did all that and then I I I I got a great insight into East India Company which I probably wouldn't have got by reading three books on East India. There are many books on East India Company. have seen them but you know they're they're descriptive they're no one's linking I was looking for a different causality you know I was looking for what I'm basically saying that the stock price was was the motivator for actions of East India company in India but at least I would like to research that I'm not saying I conclude it

1:23:00 now after all of that research I got a fair I got an insight into East India company that you know I I think it's pretty interesting again why because of sharp questioning proper questioning and so then the AI so then I asked yeah so you know what do you think makes the stock price tick so let's look at that why do you think when did the prices go when did it go down so then it you know it went into a bit of a tizzy but then the conclusion were pretty obvious that when they were expanding their their coverage of India, the stock price was going up and when they stopped

1:23:46 expanding in India, the price would go down. So what's my point of saying this? My point of saying this is not to describe about the East India Company but I'm saying we are in a different world where if if you are I if you can translate some idea or or hypothesis of yours into uh into sharp questioning and don't bother about reading too much and looking at other people's answers and in a scattered way trying to find your questions answered today. Those tools are available for you. I mean the same thing to come to this conclusion. I probably have to sit

1:24:33 in a library and be reading all sorts of stuff to come to all of this conclusion. But today all of that is possible if you uh ask the right question. So basically what would have taken 10 analysts to give me this data over 3 months uh 260 years of financial history, its linkages and so on and so forth. All that job has been eliminated by by the new tools in our hand. So for a young analyst, the option of just comfortably working on collecting data on East India Company is no longer a guarantee of $100,000 job is what I'm trying to say.

1:25:20 So they better up the curve and learn how to So you're better off uh learning to use the weaponry that is now in your hand and make that a useful slave and put it to use and the young analyst's job is also reinvented in a way you know or will get reinvented in a way. So, so I I gave the example of the East India Company just to say that you know because this is a classic example of what a financial problem an analyst would face. you'll be asked some questions about you know whatever ITC Hindustan lever so I was frankly looking at another question which is

1:26:06 why has uni lever Indonesia and why the ITC equivalent of cigarette company in India Gangaram it's a famous so these are sort of the equivalent of the uni liver in India and ITC in India both those stocks have collapsed 90%. So I kept asking analysts like why is that happening? Can it happen in India? I mean if an in if uni lever or Indonesia can fall 90%. That like I really want to know why because are they that's an emerging market India is an emerging market you know there are commonalities. How can something fall 90%.

1:26:53 Then uh the same with the cigarette company. Uh I asked many analysts they couldn't they couldn't figure it out. young analysts and uh then finally I I I figured out let me use AI and you know again ask sharp questions and like you know just see if I can uh I think I got I got some answers. I wouldn't say it's complete. I'm not saying the research is complete but I'm saying that this art of as a young analyst either your boss or you will come up with some you want to

1:27:41 see a pattern recognition. Pattern recognition is at the heart of picking a good stock. So it's very important. So there's clues everywhere. So any good analyst should this the shocking thing is no good analyst has looked at uni liver Indonesia and why it is down 90%. It's the same uni liver in India which you are trading at 50 100 times earnings or whatever it is. So uh so the uh so for an analyst to be valuable today he has to have this sort of he has in this age of clutter

1:28:28 you still can parallel process and see patterns where ne where uh and now you have the tools to exploit it. So you you know you can become a super analyst if you give such ideas to your fund man wherever you're working buy side sell side or you're an investor yourself or whatever I mean I'm just giving some of these examples to stretch their minds to thinking that way you know that uh the old typical job of uh I've been given a question I will go linearly at it has materially changed

1:29:16 and uh so today you can you need to uh keep constantly uh be curious and develop this habit of so let's let's put it the other way around. So we spent uh we spent say an hour on a question and then we spent 20 hours finding the answer. Now in a way that's reversed. If you ask the right question, AI gives you that answer in an hour. So you freed up 19 hours of your time theoretically speaking to ask even sharper questions.

1:30:05 So some guys are going to you put this to devastating effect. Think of a world where where you you have a 8hour working day where you spend 5 hours asking really insightful questions and the answers are just clinging away. I mean that's like me having 100 MBAs working for me. And then the question is are you capable enough to to ask smart questions of I was then you'll be invaluable.

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