do you dare to dream with stocks to become rich well if the answer is yes you're at the right place Ace investor basant maheshwari has three decades of experience in equity investing with a history of identifying several multibaggers and today he shares his own experiences and his strategy for generating consistent long-term returns irrespective of where the market is going in other words how to become a thoughtful investor but today of course you are the co-founder of basan maheshwari wealth advisors it's a registered portfolio management company but you know I want to rewind I want to start at the very beginning how did you get interested in the stock market so manly the thing is unlike other disciplines like for example if you take to acting you would say I started acting at the age of three because I loved acting and then suddenly you become a Kareena Kapoor and we're Singh or whatever so if you take to Cricket you say if you have Virat Kohli you would say I used to sleep with my cricket bat and my pads on since I was three years old or four years old so that's again the passion that drives you to the game similarly with other disciplines maybe singing or running or whatever but when it comes to the stock market it's the lure of money so as a very honest confession passion follows the money so everyone comes to the stock market to make money and that's how it all started because as normal young people at the age of 18 or 19 suddenly to become passionate about investing looks a bit out of context so if somebody says I was passionate about investing since the age of 18. I mean it looks a little far-fetched basically I was greedy not greedy in a negative sense I wanted to make a lot of money a free money easy money where you could buy something for 30 today and it hit 34 tomorrow 11 return in two days that's only available in the stock market we don't realize the returns lure you to it but ultimately you end up giving back what you've made in the initial phase so when I started it was more of this where it was an effort to make a little more while you are studying and that's how it all started in 1991. so how old were you at that time when you started 2018 you were about 18 years old and you know you've just they honestly shared your motivation to start investing a lot has changed in your outlook over the last 30 years in the last three decades and we're going to talk about that but you know what was the first talk that you bought I'm really curious it was a stock the stock doesn't exist it doesn't exist and even the product that it's used to make doesn't exist it was called Hindustan Motors and I bought it in 1991 September October thereabouts at about 30 31 and why did I buy it it was a 30 rupee stock the probability of a 30 rupee stock going to 60 seemed a little higher at that time then if you would have bought a 400 rupee stock so the common thing was so you go for lower priced stocks so that is already oh that is how it all started and sometimes during those times there was no internet there was no uh phone line communication there was no media to tell you what's happening and strangely if I wanted to buy maybe a Hindustan Unilever or a Nestle it wouldn't trade at the Calcutta Stock Exchange it used to trade at the Bombay Stock Exchange so most of us had brokers who could trade you stocks only from the Calcutta Stock Exchange so people at Calcutta because I was in Calcutta at that time at that part of my life so people in Calcutta would tell you later I'll have to call up one more broker which meant a two percent brokerage instead of a one percent brokerage so the effort was to save as much on brokerage even the capital grows to zero doesn't matter because that's how you start you start by Saving brokerage at first so that's how it all started oh you know to be fair those were the times uh you know when there were Ambassador cars on the streets so you know although you started off by saying you know that product doesn't exist anymore the reality is in those days it was a fairly dominant product uh which brings me to the first multi-bagger stock in your portfolio and that's when things really start getting exciting so what was that first multibagger it came after 12 years so that was 2003 so for the first seven eight nine years I didn't know what to do uh it was more a game of buying something at 20 and hoping and praying to God that it hits 40 over the next few weeks it never hit 40. so I remember the only big stock only stock that I made good money big money was a Master Plus talk it was a mutual fund for it was a mutual fund trading on the stock exchange unit Trust of India was the parent of that Master Plus I think at the nav was 14 I bought it at 12 and a half because somebody told me there will be a buyback at 14 so I thought we can make one and a half rupee over the next one month so but in a 12 and a half the market moved up then we moved to 16 the stock price went to 14 the buyback never happened and I could sell off at 14. beyond that I don't think there were too many hits which I can boast off at this moment during that initial phase you know we keep using the term multibagger and today I'm really going to take this opportunity and say okay I know what multibagger is you know what multibagger is but there's somebody out there who's you know interested in getting into the stock market and you have to give them a simple digestible definition of the word multibagger so first multi-bagger is not a stock that moves up ten percent in a day that's what we do in media we talk about today's multibaggers we'll talk about multi Baggers in a day trade so you don't get a multi-backer in a day trade you don't get a multi-barger over a week the ideals so multibagger is also a definition which people would have for themselves but for me a stock which moves up seven to eight time times over a period of five to six years is a multibagger in the true sense of the world so what is the kind of a company that's going to give you five to seven or eight times over the next five seven years first is there has to be growth so when there is growth the company becomes cheaper year by year you have to start from a low valuation so the price earnings ratio so a low valuation you start from a low P it goes to a high P so if a company has quadrupled earnings over a period of six years and the PE moves up from say 10 to 30 so P moves up three times the earnings go up six times so six into three you've got an 18 bagger on your hand most of us either by a low PE stock or thinking that the valuation would go up but the valuation would never go up unless the stock shows you some earnings growth or you would buy a company that's already fully priced in so in today's market people ask me multi-maker and they think that either is lost the touch or he doesn't want to do tell me something because that's a fact if this at this kind of a valuation you cannot expect to get another pantaloon which will grow 40 times over the next six years or a page Industries or an iShare motor or anything because you're not starting from a low valuation base so as we discussed we would come to that but low valuation would come to you after a scorching and a fierce bear Market which means you would have been down 60 already on your Capital so does the multibagger help because you've already been reduced to 40 from 100 and you're growing your capital on that 40. so there's nothing free in life so you take away from somewhere and you have to give something somewhere else okay I'm gonna pause there for a moment and I'm going to go back to the you know the fact that for the first 12 years there was no multi-bagger no in your life uh which you know basically leads me to the conclusion that patience resilience stamina strength conviction are all words that really must be in the vocabulary stubbornness there was no patience there was nothing because I remember I bought HDFC bank at 35 because somebody said bombas if anybody says it seems wow this guy really knows something and if you say asan Souls this guy doesn't know anything so even now when people call me they say Bombay you're on Twitter you figure out Bombay you figure out Barcelona all right so coming back to it it was really stubbornness I think I was more of an aimless Arrow if I can express myself quite candidly here I didn't know what I was doing but I wanted to do something and I knew that the only way to get rich was to the stock market get rich quickly quickly being the operative world so for years and years used to buy a shares sell them in the hope that this would go up in the hope that somebody has given us a tip it didn't really work through so several reasons why I didn't work through but it just didn't work through and you know in our conversations we're going to be able to explore so many of your experiences your themes the evolution and your strategies but aimless Arrow then if you have to use two three words to describe yourself today and I I just want people who are watching to really understand that an aimless Arrow can uh mature into uh something quite different but it takes a 30-year Journey this maturity doesn't happen on its own you have to get success and the first success will always be a stroke of luck it can't be planned at least from the stock market perspective it has to be something where you've bought a stock and then you hold on to it and it makes money and then the entire thesis falls into place so I think it's more of that once you start making money then you know what has worked for you and more important than that in the markets it's important to know what doesn't work for everyone I mean some people can have different have any style of functioning and just because you cannot relate to it doesn't mean it's not going to work but if you have never used that style to make money and you are you're doing it for the first time then the logic of following that style doesn't exist so what works for you you keep doing the same thing again and that's how you move ahead you've had 30 years in the equity markets and I just want to know because you know most of us the first thing that we do is we got some money we go buy a house and I'll tell you very honestly that gives me a great sense of security so literally the first thing that I did when I had some Capital was to go buy a home that I can call my own have you ever bought property no I find that shocking I do not believe it so you're gonna have to say it loud and clear to me no I've never bought a property and I don't intend to unless I'm at the end of my life and I know that this is the so if I die of an accident maybe next week I don't think I'll die with a property there's one ancestral home which we all have so that's about it but why initially there wasn't enough money to buy a property but there was money to invest in the stock market that was always there because I couldn't see if you look at it no one gets Rich buying gold people get rich then they buy gold no one gets rich doing Bank fds you become rich then you do a bank ft so I'm just trying to work the cause and effect relationship very few people get rich buying a property very few not even one percent or two percent so but there are several people who get rich doing businesses and a stock market is a passive form of doing a business so if I rewind myself back so for the initial phase there was nothing to do and there was no not enough money later on once money started to come in you set targets for yourself I should have so much X I should have 10x 100x X could be any number 1000x whatever once you reach 50x 70x100 X 200x whatever then you say we can do it any day how does it matter so initially it's about not having enough once you have enough it's just an excuse to tell you that I don't want to do this but if I can give you an economic reason what I have built over the years is let's assume I am working somewhere as an employee I take home a salary and then I property and do an Emi for 10 years 15 years whatever the amount Emi amount be logically my salary income should be stronger than my Emi liability responsibility logic otherwise I would go bankrupt if I'm not making enough from my salary then that business then that Emi cannot be repaid back that's the first part the second part is my boss my employer my owner has to pay me a little less than what I would recover for him in those 25 days in a month that I work for him sure because that's how he does that that's how he would work he would make his money or else he would push me out the next month so salary income is subordinate to business income Emi is subordinate to salary income which means business income should be tremendously more than emis or home now it's not my own thing but it's for everyone else to understand what you want in life if you want safety I want the money under my mattress if I want more safety I want money to be in gold but then I'll give you two more things if you have money under your mattress and there's a demonetization being announced there's a problem if you have money in gold and you're asleep and somebody breaks through your back door and walks away with the gold then also there's a problem everything in life comes with the risk element so I always used to say there are some people who are so risk-averse that look at the ceiling fan and say I hope it doesn't fall down so there are instant instance to look at it in this fashion that we all Define what we want in life for me it's always been about All or Nothing foreign and it's not everyone's responsibility it's not expected out of everyone to be thinking big all the time because then if everybody has got all the cash in the world it means either you're a Zimbabwe or a Venezuela so the mechanics of capitalism decides that only a few people should think big a good proportion of that few people who thought big would go bankrupt and it's fine to go bankrupt it's fine to go bankrupt in India we look at bankruptcy in a says there's a stigma associated with it good enough in America they'd say just didn't work out let me see what I can do next we've still not come to terms with keeping the past aside and moving forward I think that's the basic difference where the country itself that's how it is and you know my main takeaway from this conversation is the fact that if you're talking about creating wealth then really you got to think big potentially you've got to take risks as well and I think that's the message uh that's come home to me in the course of this conversation with basan maheshwari