Short Excerpts From a Talk by Parag Parikh

Listened to Parag Parikh speak on value investing on Nov. 7th in a meet organized by the Tamil Nadu Investors Association. Listened to him again on Nov. 8th in the PPFAS unit holders meet.

Some excerpts:

  • Equity has done well, but many (equity) investors have not.
  • There is nothing like a blue chip. Today's blue chips may not be tomorrows blue chips (Krishnan instantly thought of you)
  •  A good stock is not equal to a good company
  • Do not buy 'Gujarati' stocks because of who is in power. Buy them if they are good businesses
  • Offering dividend option in mutual funds is cheating the public!  It is mental accounting. It is not ethical. Use growth option and redeem when you want and what you want.
  • No one knows what is going to happen in the future. So forget about macro factors and economic indicators
  • Ignore new fund offerings.
  • Delay Gratification. Redeem only if necessary
  • Movement in stock price is not relevant. A company can still be profitable and do good business when its stock price is falling
  • Judge a stock by its dividend. How do you think investors analyzed stocks in the pre-internet era?
  • Never forget the law of the farm. One cannot sow today and reap tomorrow. That is the law of nature.
  • A balanced fund is not one which invests in equity and debt. It is one which has geographic diversity. With geographic diversification, one can buy parent companies much cheaper than their Indian offsprings
  • The regulator (SEBI) is also on a learning curve.

He repeated much of this in the PPFAS unit holders meet held on 8th Nov.

  • Made an interesting observation. When the Sensex was 100, gold was Rs. 100 per gram. Check their prices now and you will notice that equity has beat gold by ten times.
  • Asked them about the 50 Cr net worth issue. From what Rajeev Thakkar, the fund manager replied, I understood that they would simply liquidate their 'insider' holdings in the fund and add it to the net worth of the company just before the SEBI deadline. As of now the sponsor company - PPFAS ltd and its directors holdings and PPFAS AMC and its directors holdings add up to 40 Cr worth.
  • Parag Parikh also said something striking: If you ask my fund manager for some 'good stocks'", he wouldn't know. If you ask him for some 'good business'", he could tell you some.
  • Someone asked, why not start an ELSS fund. Rajeev replied that ELSS funds maybe replaced by long-term retirement funds (like Templeton India Pension plans).

Note: I am invested in PPFAS because I wanted the international equity exposure and do not hold any other mid/small-cap fund. For me, the funds diversification strategy will lend stability to my portfolio and offer good downside protection.  This means it will not be 'best' performer if you consider short durations.  This is not a 'hot' fund which will give you spectacular returns one year and remain a dud after that.  I expect it to remain a 'true to logo' (turtle) fund.
Please do not invest based on what I or other members in Asan Ideas of Wealth say about it. Buy it only if there is a vacancy in your folio and if you can justify its presence to yourself.

 

marshmallow test value investing
Can you guess the relevance of this picture?  Picture by Brian Fitzgerald (flickr)

 

Interested in a workshop on financial planning and goal-based investing at Bangalore?

The first meet on Dec. 14th is sold out. Register here and I will plan for a second meet

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20 thoughts on “Short Excerpts From a Talk by Parag Parikh

  1. Prasanth Prabhu

    "Please do not invest based on what I or other members in Asan Ideas of Wealth say about it. Buy it only if there is a vacancy in your folio and if you can justify its presence to yourself" - so true Pattu. Also thanks for a more detailed points from Parikh's interaction

    Reply
  2. Prasanth Prabhu

    "Please do not invest based on what I or other members in Asan Ideas of Wealth say about it. Buy it only if there is a vacancy in your folio and if you can justify its presence to yourself" - so true Pattu. Also thanks for a more detailed points from Parikh's interaction

    Reply
  3. Krishnan

    I have always been impressed by the philosophy and investment style of PPFAS. My only concern is that they have no track record; execution is as important as philosophy and only way to verify that is with a track record (I know Parag personally has very good track record). It is just unfortunate that their first year of existence has been huge bull market and it is impossible to compare for next few years (even risk adjusted) when everybody has made so much money. Not sure how long one should wait.

    Pattabiraman - regarding Bluechips logevity, thanks for thinking of our discussion.

    Reply
    1. pattu

      Their PMS service has an impressive track record. The fund is basically an extension of their PMS service for retail investors. I don't the state of the market matters. I have reviewed their performance before and I like the risk adjusted returns.

      Reply
  4. Krishnan

    I have always been impressed by the philosophy and investment style of PPFAS. My only concern is that they have no track record; execution is as important as philosophy and only way to verify that is with a track record (I know Parag personally has very good track record). It is just unfortunate that their first year of existence has been huge bull market and it is impossible to compare for next few years (even risk adjusted) when everybody has made so much money. Not sure how long one should wait.

    Pattabiraman - regarding Bluechips logevity, thanks for thinking of our discussion.

    Reply
    1. pattu

      Their PMS service has an impressive track record. The fund is basically an extension of their PMS service for retail investors. I don't the state of the market matters. I have reviewed their performance before and I like the risk adjusted returns.

      Reply
  5. Shankar

    This photo is about the famous marshmallow test ? Delayed gratification needed for good returns in the market aka time in the market ?

    Reply
  6. Shankar

    This photo is about the famous marshmallow test ? Delayed gratification needed for good returns in the market aka time in the market ?

    Reply

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