Money Talk. ‘Be on the look out for quality stocks’

With the stock market in disarray, many investors will be worrying about their equity holdings, having second thoughts about parking additional sums in the equity market. But you must not harbour such doubts if you want to build long-term wealth, says Raamdeo Agrawal, Co-founder and Joint Managing Director, Motilal Oswal Financial Services. He is our investment guru, who has preached value investing along the lines of that practised by Warren Buffet through the Motilal Oswal Wealth Creation Study.

In such volatile times, it is best to re-visit your investment strategy through these market gurus to retain conviction.

What is the philosophy that has driven your investment decisions over the last few decades?

At Motilal Oswal Financial Services, we call it QGLP (quality, growth, longevity, and reasonable price). These are the four variables that help us gauge the value of any company.

The nature of a business can be understood by looking at the quality of the management; that is, the way the business has been run over the years and the wealth that has been created for investors.

The second factor to consider is the manner in which earnings have grown over the years and the sustainability of this earnings growth. Value is the interplay of these factors.

Once the value is determined, the price is brought into the equation to assess whether there is a favourable value-price gap. This is where the investor derives his margin of safety.

Who is your favourite investment guru? Which investment book do you think is the holy grail of investing?

Warren Buffet. The Warren Buffet letters published from 1967 till 2014 are a must-read for investors. They will tell an investor all that he or she wants to know about investing in the stock market, what mistakes to avoid and how to go about creating long-term wealth.

These letters can be read at www.berkshirehathway.com .

What was your first investment? When did you start investing?

I began investing in 1980. The first stock I invested in was Cemindia Ltd. I was about 23 years old at that time and I was inspired by my friend Ravi R N.

What is your personal asset allocation?

I have all my money invested in equities. I do not invest in fixed income instruments or in real estate.

What do you think of gold as an investment?

I think that it is a waste of time.

What was your best investment?

My best investment was in Motilal Oswal Financial Services. In direct equity, Hero MotoCorp has given me healthy returns.

Your biggest investment mistake?

I have made many mistakes, but recently, I lost money in Financial Technologies and Central Bank of India.

What is your advice to youngsters beginning to build an investment kitty?

Young people should focus only on equities.

Is buying property an investment?

Buying your own residence or office is a necessity and hence should be thought through differently.

What is your advice to investors at this juncture on equity investments?

Investors should always be on the lookout for quality stocks at reasonable prices and sell anything which is over-priced.

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