My guest for today is Alok Jain. Alok Jain is a New Delhi based SEBI registered Investment Advisor and founder of a momentum investing service weekendinvesting.com
Alok is an Engineer from the Indian Institute of Technology Delhi and a MBA finance from the University of Maryland. He returned to India to start his journey in the markets by setting up one of the first National Stock Exchange memberships in New Delhi in 1996.
In the next two decades, Alok developed a keen sense for systematic rule based investing systems and technical trading. He is a keen observer of the psychology and behavioral aspects of the market and wanted to quantify and incorporate them in his investing. Alok had been running several of his products on his own funds since many years and over time he was convinced that others could make use of the same products as well and thus launched his advisory weekendinvesting.com.
Weekendinvesting.com is a Do-it-Yourself (DIY) advisory where Alok provides simple momentum based investing models. The unique part about his strategies is the low time-spent: returns ratio where the user spends up to 15 minutes a week to attend to their portfolios and the returns have so far have been beating the benchmarks by a wide margin.
Alok was recently featured in the news media for his advisory. https://tinyurl.com/ycy9vph8.
He also runs a hyperactive twitter feed at @Weekendinvestng to share his trading thoughts with a large twitter group.
This episode is brought to you by multipie.co where we believe Investing is an ignored life skill and it's time to change it. Multipie is building up a platform where people can form communities and learn, share , collaborate on growing their wealth using the right tools. We want your hard earned money to work for you
2:30 Alok’s personal and professional journey
8:02: Story behind weekend investing
9:43: Alok Jain’s investing strategy and his story with smallcase
18:24: Drawdowns and trading strategy during covid-19
23:47: How to identify which style of trading to practice
27:27: Exit principle to follow for stocks
32:51: Human psychology during investing
37:10: An investing stereotype Alok broke
42:02: Alok’s investing idols
44:10: Alok's life apart from trading
48:16: Alok’s views on journaling thoughts
53:53 Advice to 20 year old self
Hello, listeners. My name is Raj Singhal and welcome to another episode of Breaking Investment Stereotypes. This episode is brought to you by multiple.co, where we believe that investing is an ignored life skill. Our mission is to create a platform where people can come learn, share and collaborate through the right tools. Ultimately, we want your hard-earned money to work for you. Here at breaking investment stereotypes My job is to deconstruct world-class investors or wealth managers and deep dive into their investing journey professionally, personally about to get into how they've broken the stereotypes in a seemingly complex world of investing. I want to give little guidance on how to use the shows. None of the following should be taken as investment advice. Please see multipie.co/disclosures for more information. My guest for today is Alok Jain. Alok is a New Delhi-based SEBI registered investment advisor and founder of a momentum investing service called beacon investing.com. Alok is an engineer from IIT Delhi and MBA finance from the University of Maryland. He returned to India to start his journey in the markets by setting up one of the first National Stock Exchange membership in New Delhi in 1996. In the next two decades, Alok develops a keen sense for systematic rule-based investing systems and technical trading. He is a keen observer of the psychological and behavioral aspects of the market and wanted to quantify and incorporate them in his investing weekend investing.com is through it yourself advisory, where Also provides simple momentum-based investing models. The unique part about his strategies is the low time spent to returns ratio, where the user spends up to 15 minutes a week to attend to their portfolio and the returns have so far been beating the benchmark by a huge margin. He also runs a hyperactive Twitter feed at the rate weekend investing to share his trading thoughts with the larger Twitter group. So without further ado, please enjoy my conversation with Alok Jain. Hey, hello, welcome to the show. Let me begin with your side of the story. , you did your engineering from IIT Delhi and Master's in biotech in us and also did your MBA from us. How did you land from there to a prominent face in the Indian momentum and trading scene?
Hi, Raj, thank you for having me on your podcast. It's a pleasure to be here. The story goes back to 1995 where I was in the US and I was pursuing a master's in finance and an MBA program at the University of Maryland. And this new opportunity was coming up in the Indian market for opening up the National Stock Exchange and they invited professional members to apply for the membership. So, it was like a startup then. So I got together with a few investors, family investors mostly and we applied for this membership and I flew down from there and gave a business presentation to the NSE board. Then, it was a very high-tech presentation where users would sort of call into the brokering brokerage house and do the trades online. So, it was a bit ahead of time that for that time, they were reasonably convinced that a person without any experience can also know possibly do this, this is professionalism and they offered the membership right there. So, that started the journey of basically moving back to India and setting up this National Stock Exchange membership in Delhi. And a small office in Mumbai is initially where we started with institutional broking. So there were a lot of research reports coming out of our company and a lot of networking with the institutions that kind of a transaction happened, then over time it transformed into more of a retail-oriented brokerage house. And that over time, I think, over the next 20 years of its life, I saw so many retail clients doing all kinds of investing and trading. And I was also developing a keen sense of how what is working and what is not working for people. And that drew me towards, , more of trading or a rule-based, systematic approach to the markets. So that's what gradually kept sort of simmering underneath. And I developed certain strategies purely for my clients at that point of time to help them give more value add to the brokerage business because the brokerage business was kind of going down the tubes since the mid-2000s, , especially after the discount brokerages came in, post-2008. So unless you were able to do a lot of value add, , it was difficult to justify that kind of a setup. So that's where we sort of went into a systematic way of investing slash trading and post my giving up of the brokerage business in 2012 13, somewhere like that, I consult concentrating on developing strategies for running my small capital. And, doing that for myself. That gradually transformed into a very boring and very lonely sort of adventure, because earlier, at least at the corporate setup there in 20 employs 1000s of clients and you're, , you're all the time busy with some communication and interaction. And here, suddenly , you're sitting in one room in your house, and you're doing a strategy, which only requires you five minutes of input a week, and there's nothing left to do for the entire week. Now , nobody to even talk to or nobody to even advise anything. So that probably I if I, if I'm trying to remember, , that probably pushed me towards spending some more time on social media. And I happen to go to Twitter for this. And I started to just broadcast what I was doing on Twitter. So there was one strategy that I started life on Twitter in 2016. That strategy, every week, religiously, I was updating what was happening, that strategy, and it was free for anybody who wanted to ride along that strategy. And that went on for a year. And fortunately, that was a good year for small and mid-caps. And we got about 52% return on that strategy in that year. And so there was a lot of Twitter buzz around the strategy, that what is this guy doing, and he sees generated 2% of return and some media pick that up. So there were some articles written on what momentum investing is, and what we can invest in doing like that. But that's where sort of the ball started rolling. And I took up a SEBI registration, and I rolled out the same products, which I was running my capital on for others. And that's what I've been doing for the last four or five years now.
That's very interesting around before you delve deep into it, I just read a very interesting book. I want to understand you name your, your, , your platform as we can invest and as far as I understand markets are closed over the weekend. So what's the logic and reasoning behind this whole weekend? I think your Twitter handle is also caused by the same name.
Yeah, so to read a Twitter handle is weekend investing, but I didn't get the as it is. So there is “I” missing there. But yeah, I mean, so after the transactional business, one was looking forward to, , enjoying life, six days a week, and maybe working one day. And so, the concept was that, just before the weekend, you take whatever decisions are required for the investing. And then that's it, you're done for the entire week. So that's where, sort of the weekend investing concept. The name came through for me, which let me coin some term for what I'm doing, and add structure to what I'm doing, even if I were doing it for myself. And I entered and I named that name, and I thought it was a pretty silly sort of a name, but then, but it does create a lot of curiosity for people who get it for the first time.
It does. And, Tim Ferriss made this four-hour week very popular. I mean, he's a very popular podcaster. All right. So probably, I think he picked up from you, I guess, looks like to me, he followed, seeing what you doing. And now let's dig a little bit deeper into it. And, , you also run a smallcase portfolio for your investment, which, , seems to be very popular. And we would also go into the story behind this whole smallcase, I think you have a very interesting story the way I think you wrote to them and, and how did that come into being? So maybe you want to talk about that, and also tell our listeners more about your strategy and whatever you want to talk about.
So, essentially, I started out with three or four strategies in 2016, which were, obviously do it yourself (DIY), strategies, and you could use any brokerage house to run those strategies and those strategies essentially were, all of my strategies basically are based on the momentum engine. So, momentum is an anomaly that has not gotten explained in the last many hundreds of years. A lot of research has gone into this international research is there, where this phenomenon remains unexplained and not just unexplained the momentum performance has remained far superior to any other format of investing, , in terms of there is there have been studies on this by various research houses various consultancies, where they found that , over years and decades this format of investing has bitten all other , formats, whether it is value investing, growth investing or other funds. So this was very intriguing and it was very logical for me, , coming from the engineering background, and I frankly, I would tell you that I, I did try a lot of fundamental investing initially, but somehow it did not gel with, maybe I was too close to the market as it as an as a brokerage house also. So, there was, it was difficult to have a very long-term view when you're so close to the transaction, and you tend to have a shorter-term focus. And so, essentially, the whole idea of having a logical way of investing, and having done both investing and trading extensively on both sides, I tried to marry the best concepts from both sides into this. So from investing the portfolio approach, of having diversification within the portfolios or across the various portfolios and from trading, having a concept of position sizing, having a concept of risk management, and having sort of very clear trading rules, where there is no ambiguity at any decision point. So, my assent to the essence of what I was doing was that I should be clear about four things, basically what to buy, when to buy, how much to buy, and when to sell. So, these four things should be crystal clear at all points of time at the time of entry at a time folding at a time of exiting it, so, so, so that the rules are, , not making you feel inadequate, in times of stress. The main, the main advantage that I found in, in running such strategies was that, whether markets are going high, whether markets are going low, because, at least over the years, I have developed a lot of confidence in these strategies, I never feel, , that, , I'm, I'm feeling uncertain about the future, or, or, , maybe I'm, my back is against the wall, what should I do, so that clarity is there, that this is what I need to do. And, and that clarity helps you, , get a good night's sleep. So, that's sort of the bottom line on that. So these four strategies that I started, were focusing on various sub-segments of the market. So one strategy was focused on small caps. In other words, there was a mix of small caps and mid-caps, yet another one was at, , focusing only on the top large-cap stocks. So these strategies were going on 2016-17-18. And then, and we had reasonable success in terms of, , a lot of clients using these strategies and, and, and generating returns 2018 was a bad year where,, , we got a smash down on the small caps and mid-cap stocks. And that's when somehow I got introduced. I did, I came to know about the smallcase, through Nitin Kamat of Zerodha. And, and I had been using Zerodha since I gave up my own brokerage house, and I found that his way of dealing with things and his way of setting up things were very transparent, very straightforward. I liked his work. So in some conversation, he did mention the smallcase. And so I wrote to Vasant, the CEO at the smallcase, and, and I asked him, , what he was doing and kind of proposed that, , if you're doing portfolios of yourself that you're creating yourself, why don't you also host portfolios from registered entities, SEBI registered entities and I don't know if that that was the starting point of their thought on this or they were already thinking about this, but within the next three to six months, they created a beautiful platform called the Publisher and they all started onboarding, , sebi advisors, like me, I was the first one the guinea pig on their, on their platform. And then, , I mean, they have not looked back since then. So, that was sort of the backstory on the smallcase start, but the smallcase essentially provided scale to what I was doing individually on my own. So, the reach certainly was very manifold and at the processes that they have for onboarding and for , what kinds of support, etc so on so forth, essentially made my mom and pop store, , basically have a storefront which could cater to hundreds and 1000s of people. So, and once that happened, then we started , also doing more research in-house and started , some more strategies, one of the very popular strategies that have been on for a couple of years is called an All-Time High(ATH) strategy. So, this is one very unique sort of, you can say, a subset of momentum investing in the sense that momentum investing can also be done in 50,000 ways just like value or fundamental investing, there are so many ways of doing this. So, there is no one way of doing momentum investing as well. And there could be variations as per the practitioners. So, ATH investing is another sort of subset of this, wherein you are chasing stocks that are hitting all-time highs. And there have been numerous studies on this as well, , that stocks that are doing all-time highs tend to, , retain momentum in a significant way until they don't. So, there can be strategies, which can be built around this concept itself. So, we did that. And that strategy has done extremely well in the last four or five years, to two and a half years, I think on a smallcase and five years since inception. So, these are the sort of few strategies, then there are all the strategies which cater to the entire market cap, , all kinds of stocks that are available on the market. So there are seven, eight such strategies, which has a bouquet where people can, , spread their portfolio across, have several portfolios and diversify across the entire market.
Well, I will come to, , talking a little bit deeper into some of them, I will not get deeper into the strategy part, but just the whole momentum trading as well. You've been doing this for, , at least four or five years. Have you seen a big drawdown? I mean, , we've used what you mentioned about 2018-2020. Again, , we saw the big, , when the virus hit market dropped a huge amount. So, , what kind of drawdowns you'd have seen and how did you cope and recover from that, and I actually, there will be a follow-up question on that is that because of them and if they have happened, have your trading style change in a given that, , such a big event that happened in the market.
So, most of the strategies, the way I go about them is that first of all, they have to be extensively back tested on let's say, the last 20 years of data. So, in the Indian market, we have good data available for about 25 years now, especially since NSE started, we have good data for our markets. So, so, so, rigorously testing out, , what your strategy would have done in the 2004 crash in the 2008 crash, what it would have done in the lull periods in 2010 to 13 what it would have done in , 2016 at the time of demon...on 2018 small-cap crash, so, all these various events, which are available, and then more than that, even global events, , 911 or , all other kinds of global events are there. So, once you've rigorously tested such impactful events, there is not much scope left for you to know, any surprises as such. So, you are expecting some drawdown rates; it depends upon the design of the strategy. So, you could have said He is where the drawdowns will be very limited, but then your churn may go up, , so you will, you will have stocks which drop out very frequently, but then you have to, to add in more frequently as well, or you could allow more room for those stocks to play. And then that would have a larger drawdown at times, but then there will be lower churn. So, it depends upon the design of the strategy. So, in our smallcase, strategies, for instance, in, in 2018, crash, I do a small case index went down like 65%, we drew down maybe like 35%, or 37%. In March to 2020, most of the large and mid-caps also fell about 25 to 30%, we were down maybe between 15 to 20%. So, the ability to go to cash. So, in all our strategies, except one, we basically will go to cash if the market is adverse. So, if there is no alternative opportunity of higher momentum available, the capital will go set in cash. And that creates a unique advantage in my view. So, , if you are, if the market is going from 100 to 60, and you're out at 80. And you're sitting there, so the when the market starts to revive from 60 to 100, and it goes up, let's say , 40% 50%, you're sitting at a higher base, and if you can capture some part of that rise, you will, you will be ahead of them ahead of the market. So, outperforming and outperforming while you're going up, these two , combine and create magic, that momentum investing provides so many strategies in march 2020. In our case, even the small and mid-cap strategies, like MI 50, we have one here. Drew down only 5%, because they very quickly went into cash, because the market was simmering before this crash, it wasn't really in high momentum. So , the exits were getting closer and closer to the price before the crash. And hence the price as soon as the crash started. These strategies exited and sat on cash for a month and a half. And by mid-April, they started picking up stocks again. So when there is a deep crash and a V-shaped recovery momentum strategies will lag initially in the pickup stage. Because by the time the momentum is established, the market is already off, , 10, 20, 30% from the water, and you're picking up stocks at that point. So, initially within the start of a new cycle, you can say there is a lag, but then it catches on very fast as , so All Time High strategy did 180% in this last one year, I mean, it's a phenomenal sort of number that that that that is times unbelievable, , what kind of a portfolio can do that also, so, these are sort of some of the things that that they are in terms of again, depending upon your design, you could design it to have very tight drawdowns or very large ones.
I will come to the question of, , somebody who's like coming up, and want to learn about investing, learn about trading? How does he decide that he's a better say momentum trader or a better fundamental trader? And then within fundamentals, now do you have this whole value and growth investing? Do you have any framework? Or is it purely trial and error?
I don't think I have a good answer for that, I think it is that one will have to dip their feet in most of these things. And see what clicks for them in the sense. Every person is built differently. They think differently, they have different risk, sort of acceptance scenarios. And the same, the same shoe doesn't fit all so you need to pay some sort of tuition to the market learning fee, try out various things. And I'm seeing that the learning curve for many youngsters is very, very fast. I mean, I'm seeing on Twitter , youngsters 20-25 years of age having more knowledge than what I've been able to acquire in 25 years. So I think they can do it fast now with the kind of information and resources available online. And very quickly within let's say half a decade, they can probably dip their feet into all kinds of things. And then start to build , what is their comfort zone?
Yeah. So I'll say, I think you also follow, , read about this guy called Jesse Livermore, and he said that “only the game can teach you the game”. So I think at a young age, A, you have the advantage of having less money, I mean, , you may call it a disadvantage, I will call it an advantage because you have less money, you will have less money to lose, right? So I think when you should always try and learn about things by putting up your own money in a smaller way. Now, many things are easily available in a smaller way, right, you can create smaller, and learn your own thing, and which will teach you so that when you have more money, you'll have a better discipline and better strategy around trading that.
So I think there's not much risk when you're so young. , even if you blow up a few times, initially, and , you are spending all that you're saving into some sort of learning. And you're maybe spending more money on, on gaining knowledge through, , maybe some specialized coaching, tutoring, or whatever. So I think those kinds of expenses are cold and I'm seeing a lot of youngsters doing that. They are not worried about returns from day one, I mean, they are happy too, to spend more on learning things and trying out new things. And then , maybe at some later stage, they will start to build on that.
One more question, which comes to everybody's mind, right, , people say, , there are a lot of people and a lot of places you can learn about, , what to buy and, , that's an easier decision probably, but the most difficult decision for people to take is when to sell and, and that is true for , whether you are a momentum trader or whether you are a fundamental trader, , this decision you need to take some point in time. And this is where, , I've been thinking before getting into our podcast as well that even for a fundamental trader, probably decide to sell can be based on the momentum also, where you can protect yourself from a big drawdown you're worried about a big drawdown right I mean, , 10-20% everybody has to , keep in mind that can happen, but a bid drawdown you have to protice. So, any thoughts you have on what a general exit principle people can follow.
So, there are practitioners who have married , fundamental investing with momentum investing. So, they will have initial filters, wherein, they will be filtering based on their fundamental parameters, and then whatever subset they get then this allocate those towards the momentum picks and then exit based on , some momentum exits of certain either some parameter or some percentage fall or some, , ADR or some, some some some sort of a hard calculate table parameter. Now, in conventional fundamental investing, that is very difficult to do, because, I mean, you have so many variables, which are going on at the same time, , global macro, local, macro, , industry-wide, , the interest rate movements, your exchange rate movements, systematic, your market risk, there's so many moving parts, and, and once, , the market starts, let's say March 2020, , the market starts to tank. All those reasons why you bought the stock are still intact, , good quality management , prospects, how do you decide to get out? So, so I think, I think it's difficult to marry the two unless you have a very clinical approach, and you're using fundamentals only sort of as a filter to get better stocks into your selection. But if your basic approach is fundamental, then I think getting technicals or, or momentum or exit rules into that will disturb your basic sort of, , fundamental thinking about, about the concept of long term investing, I mean, Amazon Apple, they've, they've had 80% drawdowns, , if you weren't able to get out at 2030, maybe you will not be able to get in again. So, I don't know. I mean, that's a tough one. The approach has to be more first clinical and then maybe you can add on a value add if I want better stocks in my selection, so I'll have a fundamental filter.
Yeah, I think it's interesting. So , I've been following a few people and there is a lady called Beth Kindig. She writes about tech stocks a lot. And they have a font color font. So the pm is more a technical guy. So she does all the research and based on the research they buy, but then the person who's leading the whole investing, he makes decisions using technical input as well. And the way I've seen that I mean, they use that for entry strategies for sure. And they use that also to raise some cash sometimes, right? Whenever the team in the overall market is looking a little wobbly, you want to raise 10-20% cash, then you use technical analysis to raise some cash. And so they look out for all those five waves and those kinds of Elliot waves theory, but they use that. So I've seen that I mean, , but I but you're right that I've not seen where many successful cases for which can be, which can be put down in a very simplistic way. Not easy.
Yeah. So my sense also is that once you have a sort of a, , a watertight system, you don't want to have any ambiguity there. So as soon as you bring, , 15 variables, a lot of ambiguity comes into the system. And at the end of the day, you also need everybody who wants to blame somebody for, , the gain or the loss. And in my, in my system, I can blame my system for it, right, I don't have to beat myself up. , so in any conventional investment, you'll either know, sell short of the top or buy higher than the bottom. And you'll always beat yourself up, , why did I do this, why I couldn't have waited this that in this kind of investing, , that those questions do not arise, , my system set buy, I bought the registers and sell I sold, I couldn't help it, , so, so that way, it keeps you from beating yourself up.
Yeah, I mean, , now let's, let's talk a bit about human psychology, and I think you mentioned quite a few places that strategy is 20% of the game and rest is staying up the course, , and then somebody said that you only have to do a few things right? in your life so long, so long as you don't do too many wrong things, right? Or even bringing in Charlie Munger here , all I said, All I want to know is where I'm going to die so that I don't go there. Right? So how do you, , keeping the whole 80% is all about psychology, and we all know about greed and fear, the biggest enemies of wealth investing? How do you want to talk about that 80% of the human psychology part, and, , what's been your learning, you've been investing for a long period?
So my learning, and that could be unique to my case has been that whenever I was doing, investing in the conventional mode, discretionary mode, my psychology, when I was pushed against the wall in stressful situations, got the better of me, in the sense of, I sort of gave up at that point and said, , okay, let's, let's dump this stock, or, , let's not go this way. Even with, , my initial hypothesis having been different, but that stress situation, caused me to alter my short-term decision on that investment, and not once on several occasions. So, despite having a good strategy, the psychology basically let you down, now, because of uncertainty around what will happen tomorrow. If this keeps a stock, let's say keep going down, or if it starts to bottom here and over, you don't know how you will react in the next part of the event, because you are not sure about how things will pan out and how you will react to it. So there are multiple sorts of connotations to that. Whereas in the very simple sort of following the role sort of military-like role fashion, is that, , I do what I'm told to do and, and I'll follow that, so you're kind of giving up your control in the sense and that requires a lot of, , you're changing your psychology towards the like in like in the conventional versus this price action based theory. In conventional investing, you are in a way, saying that these are my assumptions A, B, and C. And I see the stock to do , these are the prospects based on my assumptions right. The market is Selling you otherwise, but you're saying no, I think the market is wrong. And based on my assumptions, they should do this. Right. So this is one sort of a thought process. And the other thought process is that now, the market is always right, , the BBC principal “Bhav Bhagwan Che”, and, and I am going to follow the market when the market tells me it is right to buy, I'll buy it. So you're allowing your own psychology to be, , not not in control or not in command, but you're allowing others to tell you how you should react. So there's, I mean, it's a, it's a whole, very different sort of total approach, in terms of your psychology and, and I usually feel that even within the, within my products, for instance, if I were to analyze how people have done in the last five years who have used my products, some of them or many of them who come in at the market tops, let's say, people who came in at the market tops, even with the strategy in place, they were not able to do well, because they could not survive six months of a drawdown , they came in with the notion that we will, we will we are here for five years. But as soon as they got six months of drawdown, they gave up right. So, the strategy was not the important strategy, it was not even 20% there, it was all about their psychology, how they are going to approach this, this problem at hand. So you can give the best strategy to the person. But how he will execute it, how he will approach it is another ballgame.
So let's know that our podcast is called breaking investment stereotypes. You've been involved in investing for more than two decades. Now. Any stereotype you think you want to bring it up and which we should be breaking in here?
I think this whole concept of buy hold and forget it. This is something that, especially in today's world, does not work. The average span of a company lasting, , its lifetime, has gone down dramatically since the last 50 years. There are some US statistics on this, I think the average span of an S&P 500 company has gone down from like 45 years to maybe like 25 years or 20 years, something like that. So the whole idea of every industry going through a disruption in some way or the other has, that the speed of that happening has multiplied many folds in the last couple of decades. So there is really no moat, which can protect you for , forever. I mean, capital used to be scarce, it is not scarce anymore. I mean, there's talent, there's this movement of talent across geographical boundaries, there is no scarcity of anything. So we've seen this in the last 20 years, how industries and companies have just got disrupted despite having, , decades and centuries have not so you cannot sit on those laurels anymore. And, and you need some sort of a mechanism of evaluation of where you're going. And if there are 50 variables in your equation, then that's a very difficult evaluation to do. And the price, , being a leading indicator of many things, , like, in fact, there's a very interesting study that was published in the Livemint once that is the composition of, let's say, let's say the market moves 100% in a year. What is the composition of that relative to the pre-earnings season, during earnings season and post earnings season? How much of the moves happen in these three segments across 20 years of data that they presented? Very, very interestingly, in the US markets. It was, I think, 40% during earnings season, and 40% post-earnings season, and only 20% pre-earnings season. In Indian markets, it was 76% pre-earnings season and about 13% or 12% each during earnings and post-earnings. So, it tells you how our markets function versus the global market. I mean, we can discount things much ahead of earnings. And and and that's why , momentum is even a much better , sort of play, where , the price is leading the news and in many many many in So, many situations you will find, , good results prices already move bad results price has already moved, I mean, it is just that the price is moving, and people are saying why this is moving what has happened, and that why and the board gets released after three months or whatever it may be. So, from that perspective, this was a very interesting study that I came across. And so, this is something that, that needs to change, and times have changed and the buy-in world, while it can work for wonders for, for people, there is no surety about it, , we are always reminded of success stories, , Eicher Motors went 50 times and Bajaj Finance did this and so and so forth. But there is a huge selection bias in this approach, and buy and hold, if you were doing buy and hold across of 6000 stocks, you would get nowhere. So, so that there is one stereotype that that I'm not yet comfortable
I'll probably add there that , if you're buying stock based on fundamental analysis, then be ready to at least go through their results every quarter. Or you just believe that price captures everything and just go with the price moment, right, which is momentum trading. So be very clear, what are you buying the stock for? Now let's get into a little bit of your, , the, about you as a person who is the traders or investors you admire, I mean, some current or previous or whatever, in either India or globally?
So, I haven't, let me say that I don't read too many books. And that that is my sort of shortcoming in life that after my academics, I started gave up on reading books, and I said, , maybe let's, let's only concentrate on what I can absorb by visually by seeing something and that all my sort of concepts got visualized by seeing, and there's a very small, interesting story, I'm deviating from the topic, but when I coined these momentum strategies, I had not read a book about momentum investing. So in 2014-15, when I was doing this, I thought , I have discovered something great. And, , I don't know why nobody's talked about this. And then when, , other people told me and I got to know that there's just so many tonnes of research around this area. So, a lot of momentum, or trade-oriented traders. Earlier, I had some readings about , Turtle Traders, , Richard Dennis, of that era and then later on, of course, the champions from , the books from Jack Swagger and Mark Minervini. I mean, all these are champion traders and basically what they have emphasized everything is that if you have to be very strong mentally, and it is more of a, , mental and discipline game. So again, coming back to that, , the strategy is not so important. The strategy is not the holy grail, the holy grail is inside you as to how you can, , approach the problem and stick to a disciplined approach.
Since you said, you don't read too many books, let me ask, what do you enjoy, then outside trading?
I actually enjoy my work a lot. Let me and I don't trade much, ...
you said you only work over the weekend, right. So what do you do on the weekdays then?
The investing part gets taken off and taken care of in 15 minutes, okay. No, but this, this, this entire advisory that has taken on and , hundreds and 1000s of people who are asking questions at all times, and interaction or to get to their part, maybe it is sort of addiction as well. But I think that interaction is very, very, sort of unique in terms of I'm learning so much every day, , from so many people that and that that I think amazes me and I like to interact With so many of the newcomers who are coming, and they're asking, , questions based on my experience, and I'm able to, , sometimes share and share some thoughts, which, which may not be there, like, for instance, , stories like, , if you go to the pre Demat era, , when I was having a broking house in Delhi, a, my manager used to fill up a suitcase full of physical shares, take the Rajdhani, go to Mumbai, and do the payin of the shares. And, , three days later the payout, the clearinghouse would give him a physical payout worth of, , the big suitcase, and he would take the train back, and come to the office and spend two days in stamping and making sure each of those physical documents reaches each, each, each client's house. I mean, these kinds of stories are unheard of, in today's generation, , so, so I enjoy a lot of my work and free time for some movies, or I like to walk a lot, so when, when COVID allows, and we have some nice parks around here. So I go, I go for very long walks because that is something which I like to do.
You mentioned about Twitter and Twitter is really addictive. I was not much into Twitter , But when I quit my job on January 20. Before that, being in a bank was very difficult to write something in your name, right? So I was not active at all. And then I started becoming active afterward as I was a free man and it amazes me the amount of knowledge that is there on Twitter, and the available free knowledge. It's unbelievable. Unbelievable. Yeah,
I mean, I have so many people write to me that, , we've been able to change our approach to the market. Just because we were, , somehow we came to know about your Twitter handle, and we started to follow it. And this thought process has made me realize that this type of investing suits me well. And , it changed my perspective. So when I hear that kind of stories and success stories amongst them, that gives me, , a real big kick, , that just by a few tweets, here, and there, you're impacting, , somebody's long term vision and long term strategy towards, towards their growth. So, so that yeah, I mean, and, and, and people are approachable on Twitter, and you can, , ask questions and approach anybody on Twitter and you get a response. And that's, that's just amazing.
We're coming to towards the close of our, for our podcast now, as a couple of more things, I need to, , ask, what's your... you mentioned about, , when somebody is young, he should, , probably write down the thoughts behind what the either investing or the trading they've done? How's your How do you approach your journaling? I mean, you do have a formal process of journaling things, or how do you do?
Yeah, so, last 20 years, I don't think I've done any investment without journaling it. So what I started doing somewhere, somewhere in 2002/03, when I was trading a lot, I used to write a blog to myself, every day after trading, that this is what I did. So if so, , that kind of blogging website where you need to make the blog public, but you can have it for yourself. So I used to religiously write a half a page blog to myself, This is what I did, these are the trades that I took, this is where I did, I think I went wrong. And I should improve this. So there was an analysis period of half an hour every day, and which, at the end of the week, or the end of the month, you are counting, , okay, this month, I This was my return and in trading, you can do it every month. So where did I go wrong? And how many times did I make this mistake? So having a good journal is extremely important, especially for trading. And even for investing, I think, like conventional investors who let's say, buy mutual funds, etc. I can guarantee you 80% of the people don't know exactly what the returns are. And what are the returns compared to industry averages of their sub-segment in those mutual funds? Let's say somebody is investing in large caps. So is he generating , 12% versus an industry average of 11.5 or something like that? So that matrix is not there because, , somehow because of the advertising, etc you are convinced that you've invested and now you're safe, and everything's going hunky-dory. So having a periodic assessment, and, and despite, , the companies will send you performance, but you, you need to have a handle on that, , what is your internal rate of return, etc. And how different allocations could have that scenario building, , if I had allocated this much to gold and this much to that, what, how could it have been, I think that kind of homework, a lot of people don't want to do I mean, they just want to set aside some money and give it either to a fund manager or to a PMS manager and sort of get rid of that problem, I, I, I have a very strong believer that unless you put your hand in it, you will not gain much out of it. I mean, absolute cannot, you, I mean, there are no free lunches here. I mean, you offer your money to somebody else, you will make returns, but there will be nominal returns, I mean, you will not do anything great there. So, you need to get yourself involved. And , even if you need to get an advisor to handhold you for a few years, you need to take off on your own also at some point in time. So, I think that that is a journey that happens with a disciplined approach towards journaling. And, and I think one very important thing that I forgot to mention here is that journaling can be done in public, you should do your journaling in public. I was doing it in private, but I learned later that you can do your journaling in public. So, let's say I mean, you don't want to give out your absolute portfolio values, that's fine. But give out your percentages of gain or loss, , put out your performance in percentage gain loss that this is what I have done, maybe somebody will help you, maybe somebody will encourage you to do better, maybe somebody will get motivated by your performance. And you will feel accountable that yes, I have to journal every day because yes, I did it yesterday, I did them for yesterday, what will people say? If I don't do it today? , so there is a pressure, there's self-inflicted pressure that I need to do it. So so that happens when you have a public eye on what you're doing, like we do a weekly report on our performance, there is no need to do it, right. But I spent many hours on a Friday night doing that because then I have self-inflicted pressure on me that I need to get this report out today. Whatever I mean, the performance that is regardless of whether it was a good, bad or ugly report that needs to go out today, and I need to report this is my practice. This is the discipline that I need to have. So I think the right house, yeah,
I know people underestimate the analysis, tell all the young guys in our firm as well that please do, right. Because when you write you learn yourself, it's not about somebody else, it's just for your learning that you should write.
I think writing on Twitter itself has been such a life-changing activity for me. I mean, the more I write, the more I'm able to express myself, the angrier just the thoughts that are coming to me, , I probably like tweet 50 times in a day, but I consider these as , liberating thoughts coming out of me and I don't care what anybody will say about it. I mean, these are my thoughts and I want to journal them on. So that's, that's, that's how journaling can help right here.
So I'll come to the last question. One and this is what we ask every , every guest what advice you will give to your 20-year-old self. So suppose you're starting now as a 20-year-old guy, and what advice you will give for especially from the investing point of view.
I think to myself, I should have read more I had not read about what I was going to do when I just jumped into the business without an experience I should have read more and possibly, , read more about price action based theory without spending a decade trying to do fundamental investing then cut into this so that's what I that would have been my sort of take on my 20-year-old
Okay, thank you Alok, thanks for being part of this. For our listeners to follow very popular Twitter handle of Alok Jain, tell me if I'm pronouncing it correctly. It's called weekend One(1) vesting?
it is @weekinginvestng..no I after T
okay so it is @weekendinvestng but no I after t, so it's tng instead of ting. Do follow him. He writes a lot as he said, and I've been a follower of your Twitter handle and then please for our listeners do share and with your friends and families about our podcast and we will see your next time.