Where Should Your Next ₹1 Lakh Go: Stocks, FD, Gold, Or Real Estate? Ft. Ajay Tyagi| FWS 101

What would be the asset allocation that you recommend for me? Let me give you a rule of thumb. Even if you're a 25 year old or a 30-year-old, 100 minus your age decides your equity exposure. So if you

are a 25 year old, 75% should go into equities. If it's a great company, you

equities. If it's a great company, you don't need to buy it on your hunch on the first day itself. Most people don't even know that Infosys was not successful as an IPO. It became more

successful and started moving up from the second and the third year onwards.

You've not mentioned defense which has been like a very very talked about topic.

There are two things which keeping us worried on the defense sector as of now.

One is natural resources curse. You know

if economies do get rich in natural resources, it actually takes away the incentive from them to be productive.

Look at Venezuela. It possibly has one of the richest oil resources. And on the other hand, look at Japan, a country which has zero natural resources.

Where would your bets lie in terms of which sectors to go overweight on top of?

>> I think that's a question which I would uh love to answer. Nope.

>> So AJ G uh as of today as we speak you are directly managing 2 and a half lakh cr of AUM across various equity mutual

fund schemes and the common narrative from media and even from a lot of leading investment experts is that don't try to manage your money by yourself.

Look for the people who know how to do it better than you which is where mutual funds sa campaign has come and a lot of money has been parked in mutual funds which we see a record number of uh SIP

still ongoing today. So my first question to you is what is it that somebody like you have uh which a retail investor might find it difficult to do

in terms of managing money?

That's a great question and I think it uh goes to the very basics of economics which we studied in the textbook which is called division of labor. Can anybody

manage uh uh you know money? I would say answer is yes. Can you effectively manage money? That depends on the amount

manage money? That depends on the amount of hours and the amount of labor that you are putting in. If I were to draw an analogy here, can everybody cook? Answer

is yes. Can I cook? Again, the answer is yes. Can I cook as well as uh you know

yes. Can I cook as well as uh you know one of the chefs at the Taj? The answer

is no. So that's the difference. So now

I want you to give me some very specific advice for me. Uh let us assume that I have 1 cr of liquid corpus as of now as we speak. What would be the asset

we speak. What would be the asset allocation that you recommend for me and everything is on the table. you know uh before I get very specific I do remember

you know one of my lessons in um in finance which I uh which I took while I was doing my CFA and it defined

two important attributes for any investor ability to take risk and willingness to take risk.

>> Yeah. you know, uh, a young kid of 5 years who's jumping from one building to the other, not realizing that if he slips between the cracks, uh, the game is entirely over because he doesn't even

understand the risk. He just enjoys taking that risk, jumping from one house to the other, from one terrace to the other, uh, not even knowing what could be the consequences of slipping.

interest.

>> Similarly, uh I would say for investors, uh yes, they are willing to take risk because all that they've seen in the last five, six years is the markets moving up and they know that a bad phase for the market is 6 months of no return

or one year for no return but then it just comes back uh you know with a third and then you know it starts to move up once again. uh but what if the markets

once again. uh but what if the markets go flat out over the next 3 years and what if you have an important uh expense item to be taken care of what

would you do then so therefore from that perspective let me gel the two things ability and uh willingness and therefore I would say even if you're a 25 year old

or a 30-year-old not even imagining any big ticket expenditure over the next 5 years still it is warranted to keep 15

to 20% into uh you know uh bonds or fixed income. Let me give you a rule of

fixed income. Let me give you a rule of thumb. You know in the west it's usually

thumb. You know in the west it's usually said 100 minus your age decides your equity exposure. So if you are a 25 year

equity exposure. So if you are a 25 year old 75% should go into equities. If you

are a 75% old 25% should go into equities. Right? Uh this is a very very

equities. Right? Uh this is a very very basic rule of thumb. On top of this then we get into ability and willingness to take risk. Right? Because it could be

take risk. Right? Because it could be possible that you are a 75 year old but you are already a billionaire. If you

are a billionaire, why would you lock in uh you know 25% 75% of wealth into fixed income because you may need 100 crores to take care of unforeseen circumstances. Beyond that you must

circumstances. Beyond that you must create generational wealth. Similarly

when you are a 25 year old obviously you need to have 75% into equities. But what

if you are looking to actually buy a house within the next 5 years? Would you

want to block in all of this money into equities? The answer is no because what

equities? The answer is no because what if market's correct 15 20%. You've

dipped into a big part of what could have been provided as home equity to take loan. So uh these are very nuanced

take loan. So uh these are very nuanced discussions by the way but I've just given you a broad framework. Let's say

you are a 30-year-old. Let me take the midpoint of your typical audience 25 to 40. Let's say you're 30 years old. 70%

40. Let's say you're 30 years old. 70%

of your assets should be into equities.

30% should be into fixed income. uh

>> no commodities, no real estate, nothing.

>> Sure. So I I I'll come to that now.

Okay. Uh let's cover commodities by way of financial assets itself, by way of equity exposure. See, okay.

equity exposure. See, okay.

>> Uh when I say 7030, we talking about risky assets versus non-risisky assets.

>> Okay.

>> Commodities are themselves very risky.

They are even more risky than equities.

>> Okay.

>> So we have to cover that into our risk exposure which is part of the 70% that I've just mentioned. Now if you were to further look at 70 I would say uh let me

solve for what I'm very very passionate about. Uh I would say 15 to 20% must go

about. Uh I would say 15 to 20% must go into global equities. You can't put all your eggs into one basket.

>> This 70 >> of this 70. So right now let's assume that this 70 is nothing but 100.

>> Okay.

>> Okay. So I am now dissecting how this 100 should be.

>> Okay.

uh this 100 should be 15 to 20% into global equities massive advantage which the US economy has all the greatest innovations happen there whether it's

biotech whether it's uh you know into uh healthcare whether it's into you know uh AI whether it's into launching an electric vehicle >> but what about valuations over there does that make you look

>> valu absolutely right so valuations there certainly are higher than what they ought to be therefore You don't need to rush. Build this over the next few years.

>> Okay.

>> But at the end of the third year, you must have 15 to 20% into global equities. And I would say my favorite

equities. And I would say my favorite place for global equities is US. You can

change the nomomenclature to US equities rather than just global equities.

>> Okay. So basically start like an SIP over there. Slowly build positions over

over there. Slowly build positions over there.

>> Slowly build positions.

>> No. No. China technology ETF.

>> Look, China can be a tactical exposure.

It's very cheap today. So while US is expensive and therefore we are slightly weary about uh you know how the markets could behave over the next couple of years China is exactly the opposite very

cheap right now but you know often times cheap is cheap for a reason >> there is no comfort in the Chinese market uh the market is opaque their policies are opaque they're not a true democracy they change the rules of the

game at their own whims and fancies so I'll not be uh >> not a long-term player for China >> you're not a long-term player in China it's an okay >> short for one to two years you're for at best just about a year uh is what I

would say.

>> Okay. Okay. So 15 to 20% global global.

>> This also sort of takes care of currency depreciation, right? If I'm holding

depreciation, right? If I'm holding money at >> Absolutely. It actually adds to the net

>> Absolutely. It actually adds to the net rupee return because rupee in general over the long-term depreciates.

>> And what about Europe? Because lot of luxury don't you think for the whole world as well luxury will do well because rich are getting richer. There

are a few companies in Europe like uh uh LVMH uh which uh which which actually are are great plays. Uh

I mean I I would say I wouldn't play a European fund just because of a handful of these uh you know luxury companies.

>> But if there's an ETF that has European good stocks which is focused towards their consumption because they are driving the consumption of the world not just the Europe. Yeah. So, don't you think that would be an

>> it? It'll make sense if you do if you do

>> it? It'll make sense if you do if you do find uh an ETF which actually is uh predominantly uh on these luxury uh players and luxury manufacturers of

European origin. I would say that will

European origin. I would say that will be >> so there is this company. So, let me assume 20% has gone outside India.

>> Absolutely.

>> I got currency uh protection and I have global exposure which is uncorrelated with the Indian market to some extent.

>> Right. Right.

>> That's one part. That's one part. Now

let's solve for real estate. Look uh

>> so that comes under the risky bucket of the 70%.

>> So this comes under 70%.

>> Okay.

>> Uh now let's solve for real estate. My

view as an investor and an observer has been that real estate is an extremely opaque market. Extremely opaque. Uh when

opaque market. Extremely opaque. Uh when

things do well most people uh you know buy a flat, buy a house, buy sometimes land. when things turn bad they find it

land. when things turn bad they find it is so illquid that they're stuck in it for years together there are there is no buyer on the other side plus from a taxation perspective it is more uh unfriendly if you really think that

India's real estate sector will do well look there are enough and more opportunities in the stock market itself you do have a bunch of real estate companies you now have REITs as well and REITs are becoming more and more common

so if you are bullish on India's real estate sector the right way to play that is not buying physical real estate you have opportunities within the stock

markets to play real estate and I would say uh that's certainly a much better play much better play in any case post taxes there is enough and more evidence

that Indian equities outperform Indian real estate uh very very convincingly so uh I would advise anything into direct real estate look we all must have one

home we all have to own a house that we call as our home so to that extent uh you know investment into real estate is warranted but that's not an investment per se it's basically uh you know buying a home for yourself

>> but what's your opinion on I know this is not something you look at closely uh but uh from whatever I have studied in terms of return on equity uh on commercial real estate properties where

you have the ability to take loans invest wait for the project completion and then get you know a tenant to sort of service that loan don't you think from a return on equity perspective uh

it could be an interesting play which you can't do with the stock market investment because I can't take a loan to invest in stock market and not advisable.

>> Very very interesting observation. Look,

one of the other lessons I have always learned in investment is that leverage kills. It's all good when things are

kills. It's all good when things are going north >> and things are going in your favor. It

turns into a millstone around your neck if things start moving south. So I would never advocate uh doing anything with leverage. That's one of those lessons

leverage. That's one of those lessons which many investors have learned the hard way.

>> Yeah. And many of us have seen how people have uh uh you know got completely decimated because of leverage. So yeah, I mean leverage in

leverage. So yeah, I mean leverage in one shape or form whether it's buying equities on leverage, whether it's uh you know buying uh uh you know uh buying derivative positions which are also

leverage positions or buying real estate is not uh the shest way to it's a very quick way to make wealth provided you are lucky. If things go south then you

are lucky. If things go south then you can be trapped. But real estate typically is considered not to go south that to that extent like if I look at a prime uh grade commercial real estate

property what's the worst that can happen if even if I've taken loan can it won't correct by 50% right worst case maybe 20% correction uh but yeah when uh

instead of prices moving up when prices start moving down then you could have uh to pad up your loans because see loans are given at a particular what is known as loan to property ratio Right?

>> When your property value starts to come down, the the the bank would come knocking at you saying that you we lend to you when your property value was 1 cr. Now it's 80 lakhs. Pad up your loan,

cr. Now it's 80 lakhs. Pad up your loan, increase uh you know give us more money as security and do lateral. Yes, they

can they can certainly do that because you have to maintain the LTVs. >> That's one. The second thing is if you were thinking of servicing your loan by the rental income that you were getting on your commercial property, what if

that the occupancy which was expected to go 80% actually didn't go because there was plenty of uh you know commercial real estate space in South Bombay, right?

>> Then you stop getting those rental incomes and therefore your ability to service your loans goes down. So

>> look uh financial markets are littered with such kind of uh cases all the time.

So >> I think even the Airbnb boom of Goa >> Yeah. was based on the same

>> Yeah. was based on the same >> absolutely absolutely >> perfect. So 0% real estate

>> perfect. So 0% real estate >> then uh let's come to commodities very very risky I would never advise anybody

to buy uh commodity ETFs the only thing I would uh tell investors to buy is gold because it acts as a very good hedge especially during uncertain times and whenever things have been uncertain by

the way the reasons for gold going up in the last couple of years is not just uncertaintity it's also because of central banks buying a lot of gold.

Yeah.

>> And in to some extent dollarization happening around the world. But gold

acts as a very very good hedge when markets let's say correct 20 30%. So one

must have let's say 5 to 10% gold in that portfolio. It helps you during the

that portfolio. It helps you during the rainy days. Okay.

rainy days. Okay.

>> It helps you you know create liquidity in no time. And now it's become much more easier because instead of buying physical gold as many households used to do earlier you just buy gold ETFs which are absolutely liquid. In the current

situation, wouldn't you recommend a slightly higher allocation to gold considering the geopolitical situations?

>> I would have said yes to this provided the gold prices hadn't gone up so significantly.

>> So now you're saying bring it down to 10%.

>> Bring it down 10%. One of the things that we track is the returns by we call it the gold to equity ratio. We look at the returns made by gold over the last 10 years whereas versus the returns made

by let's say S&P 500 over the last 10 years. When this ratio becomes one or

years. When this ratio becomes one or higher, it just tells you that gold has actually peaked. You can do the same

actually peaked. You can do the same thing by looking at MCX gold versus nifty50.

>> Sure.

>> So, uh it is giving us this indication that gold price has moved up very steeply. Possibly gold has peaked. The

steeply. Possibly gold has peaked. The

returns from gold over the next 5 10 years are not going to be that strong.

And if that's the case, use gold completely as a hedge rather than, you know, as an investment as well. So,

silver, copper, don't touch that.

>> Uh there's plenty of data to show that most of the commodities over the last 20, 30, 40 years uh have not been able to match up the returns given by equities.

>> Okay, >> this is true of gold as well, but gold still is the best out of the lot and like I said, gold at least is a very very good hedge.

>> So, uh there is no evidence to show that long-term investing in commodities is great. Look, if you get lucky and if you

great. Look, if you get lucky and if you bought copper at a particular price and you were able to flip it off when it doubled, good for you. But can this be

replicated every now and then? The

answer is no. And that's why I would hesitate to say that this shouldn't be part of your core portfolio.

>> Okay, >> which basically means that the remaining uh 70% ought to be into equity or equity related products. The

mix will keep changing depending on where the markets are. Today we are saying that hybrids >> should be at least uh 20 30% of your

portfolio within overall equities. Uh so

we are right now discussing the 100% for which we said 20% goes into global equities 10% goes into gold. I would say 20 to 30% should go into hybrid funds right now because markets are expensive.

So like equity saver funds, >> equity saving fund, balance advantage funds, multi-asset funds and so on, >> right?

>> So these funds basically either have a fixed allocation across three different categories like arbitrage, equity, bonds or they sort of take a tactical call of how much equity to have, how much >> absolutely have. So balanced advantage

fund and multiasset funds are the ones which take active allocation. So

>> at certain points of time their equity allocation can be as high as 70%. At

certain points of time their equity allocation can be as low as 40%.

>> Right.

>> So >> but the goal is to ensure that the taxation is 12 1/2%. Right.

>> Absolutely.

>> They are classified as equity products as so far as taxation is concerned.

>> So that is the hybrid funds. What is the remaining?

>> The remaining at this juncture should be into equity funds. Within equities we are wary of mid and small caps.

Therefore, we are saying mid and small cap allocation should be kept at the lowest maybe just about 10 to 15% put together mid and small and therefore I

would say the remaining uh 25% should be into large caps or flexi caps.

>> So 25% should be large cap why or flexi cap because they also do >> flexi caps are predominantly large cap oriented >> large cap oriented and and 10 10 to 15%

you're saying in mid and >> mid and small. So can you give me some specific examples of this process playing out in the last 26 years where a

certain sectoral bet or a thematic bet or a stock play uh which really played out well uh which UTI was able to figure out which most of the MC's could not do.

Is there any examples you can give me? I

would say uh the one example that I can give you is uh of a company called Eternal uh >> Zomato right >> Zumato which is now called Eternal

which IPOed in 2021. It was a lossmaking company then uh there was you know uh the conventional framework would have dismissed that business altogether

because on a conventional parameters uh the the company was not making profits. So we had to use something

profits. So we had to use something different. We knew that um I'll take a

different. We knew that um I'll take a step back. We knew that uh the business

step back. We knew that uh the business is great and the management team is equally great because we had seen that over the previous 6 to 7 years which is between 2015 to 2021

their core business then which was food services like you said uh Zomato was their key business back then. Now

Blinket is the bigger business and Zomato is slightly smaller than Blinket.

Their core business had seen brutal competition. By the way, uh you know I

competition. By the way, uh you know I have forgotten the names but there were at least seven or eight companies which were into food delivery. We used to call them food aggregators then. There was of course Zamato, there was of course

Swiggy, there was Tiny Owl, there was Food Panda, there was uh there was Uber Eats, there was Amazon by the way uh and I'm forgetting there were they were no less than seven or eight companies. All

of them very well funded either by private equity partners or you know very very deep pocketed parents like Uber and Amazon and these guys uh you know were

just a you know bunch of partners out of uh college they didn't have any backing they did get initial funding from info edge but they were very frugal with their money but they were extremely

passionate about solving this problem and they survived. So in 2021 when we came what we did remember about them is that look they have been able to withstand

this competition coming in from the big giants around the world and very deep pocketed private equity backed uh companies. So there must be something

companies. So there must be something they are doing.

The other bit of news back then was that they had already gained 60% market share. So from a brutally fought market

share. So from a brutally fought market where their market share was just 15 20% they had reached 60%. which was which was telling another tale. The third

thing we said is that look we know that they're making losses but they're also making losses because they are spreading their wings uh very far away. Uh but

let's just test them for their core markets. Their core markets were Delhi

markets. Their core markets were Delhi and Bombay more Delhi less Bombay because they were a northbased company.

So we said let's just look at the kind of profits that they are making in Delhi and that gave us very rich insights which told us that look in Delhi they're already profitable maybe already at 4 to

5% margin why they are not making profits at the aggregate level is that they are making deep investments into a jabalpur and a nagpur and a kochi because they're spreading their wings

they are recruiting a lot of people and uh that will lead to elevated losses for a couple of more years we did uh bite into that IPO very very carefully but

like I said we just took a very small bite at that point of time post listing we kept tracking them quarter after quarter meeting them and we were able to see that very sure progress that they

were making by 2023 their food services business at the aggregate level had become profitable and was inching towards 4 to 5% which was what Delhi was showing 3 years back so I think that

framework uh uh you know held us in goodstead once again like I said if you know what are the right questions to ask which if you know what is the right data to look at uh and if you follow that

process very dispassionately a lot of answers uh do come and a lot of things get uh answered so uh yeah I mean that was one example so let me extend that to

the current situation right this was the past uh now if I ask you this right now um what are the sectors which will have very strong uh you know tailwinds which

will make them outperform the broader market where would your bets lie in terms So which sectors to go overweight on?

>> Sure. Interesting. So Shan I would say uh we are bullish on two things. We are

bullish on technology as a theme.

>> Okay.

>> It is our belief that like the US India will throw up at least a dozen very strong technology platforms. Once again uh let me take a step back to uh tell

you why we are so convinced and what we are observing in the last 5 seven years.

A lot of these tech graduates who would leave the country, go outside, work in the Silicon Valley, uh are now realizing that India

has the perfect ecosystem for them to uh you know uh basically float a startup.

Now let's uh move to the current situation. If you do have 110 unicorns

situation. If you do have 110 unicorns behind which you'd really have those very high uh caliber and very capable tech brains who were earlier going on to

the Silicon Valley but now they're just uh you know testing their business models here and trying to solve unique customer problems across different themes. To my mind there obviously will

themes. To my mind there obviously will be at least a couple of dozen success stories out of this 110. And obviously

this 110 is a is a number as of today is not static. This number will keep

not static. This number will keep growing. So it is basis this framework

growing. So it is basis this framework that has already got developed that I'm very confident. Now the other thing is

very confident. Now the other thing is that in India India is a consumption-driven economy. So 65% of

consumption-driven economy. So 65% of our GDP is consumption. If you look at the success stories around you in a way they are solving uh they are tech platforms which are basically consumerf

facing. Zumato is nothing but a

facing. Zumato is nothing but a consumerf facing uh tech platform. Nika

is nothing but a consumerf facing tech platform. uh urban company is nothing

platform. uh urban company is nothing but a consumerf facing tech platform. So

by the way these guys are not doing anything which is out of the world. They

haven't made a Tesla by the way. They

haven't innovated anything in artificial intelligence. They're just using the

intelligence. They're just using the tech stack and the tech platform to solve customer problems much more effectively than how they're being solved today. And in this process they

solved today. And in this process they will make a business model which is hugely scalable. because after all India

hugely scalable. because after all India is a big market 1.5 billion people like I said 65% of our GDP uh you know at 4 trillion uh you can back calculate 65%

is nothing but consumption so that makes me feel that uh you know uh consumerf facing tech companies will actually do very very well over the next 10 to 15

years. Uh so yeah so that's one theme we

years. Uh so yeah so that's one theme we are very very u uh positive about. Now

once again we're not going to swing our bat at anything and everything. We will

be extremely selective. You know one of the lessons I must tell this to our investors. One of the lessons I learned

investors. One of the lessons I learned very early on uh when I joined UTI was that if it's a great company you don't need to buy it on your hunch on the

first day itself. So most people don't even know that Infosys was not successful as an IPO. Infosces as a stock was not successful in the first

year of listing. It became more successful and started moving up from the second and the third year onwards.

But here's the thing. If you missed Infosys in 95, no problem. In fact,

possibly you got a better entry point later. If you missed it in 96, no

later. If you missed it in 96, no problem. If you missed it in 97, no

problem. If you missed it in 97, no problem. You had 2 or 3 years to do that

problem. You had 2 or 3 years to do that research to gain conviction about Mr. Morty and his team about, you know, what is it they're trying to do? Where would

the margins come from? Is this sticky business or not? because even if you bought Inforce after 3 years, its best days happened uh continued to happen for

the next 10 years and 15 years. So we're

using the same template, same learning.

I don't need to jump at an urban company if it comes out with an IPO today. I'll

take my time to learn about the business. I'll actually meet the

business. I'll actually meet the management every 6 months. I will ask them the same questions and try and figure out that is their are their answers consistent? are they changing

answers consistent? are they changing their uh you know uh uh uh what do you call business strategy every now and then and once I gain conviction even if

it's year two or year three uh we'll swing the bat then so so yeah so that's the the other learning you don't need to jump at each and every technology company whenever it's IPOing take your time

>> so this just before I go to the next sector it's very interesting that you started off with these new age internet commerce companies because when a retail investor looks at the financial of these

companies and we say such huge losses uh it always begs the question as to who is uh you know making the money was it the private equity investors or am I going to make the money once that has gone

public so would love to know from you because you have a direct uh you know ground view of what is happening in these companies because you have the privilege of meeting the management and

understanding what their future plans are like. So can you give us a glimpse

are like. So can you give us a glimpse of what is this category called food aggregator as a category or quick commerce you can call >> quickcommerce as a category what is the future going >> I think that's a question which I would

uh love to answer so so see here's the thing uh let's just look at the overall opportunity that's there now nobody has an exact finger on how big this market

is so there are different estimates the lowest estimate for the size of the overall food and grocery retail market in India is $500 billion.

There are estimates which go all the way up to 700 to 800 billion.

But more importantly uh these quick commerce companies are not just uh operating in food and beverages. You

know that these people are also uh delivering an iPhone to you in half an hour. These people are delivering

hour. These people are delivering multiple other appliances to you in 15 minutes to half an hour. So obviously

their addressable market is larger.

Let's say the addressable market is about 700 billion. Now that's the big opportunity that they are looking at in front of them. Their size today could be uh uh you know south of $10 billion. So

they haven't even scratched the surface really. But the opportunity is much much

really. But the opportunity is much much larger. Uh of course it'll require a lot

larger. Uh of course it'll require a lot of hard work in terms of execution. So

this business is about relentless and flawless execution year after year.

There are once again initial signs of this. Amazon has been trying for 12

this. Amazon has been trying for 12 years in India. it's still not profitable. These guys have tried quick

profitable. These guys have tried quick commerce for the last five or 6 years and they are already breaking even. So

once again we're using that template that let's respect a person who within 5 years has become close to break even is not burning cash versus a very very strong global player like Amazon which

is also basically a champion in execution but in India hasn't been able to uh make profit. So uh big market opportunity

uh business model which has uh a eyeballs fixated towards profitability and of course uh uh scalability makes us very excited about uh the entire

industry but uh but mind you uh there will be very few uh uh you know survivors here as well. This market may have five or six players in the interim when everybody has uh uh thrown their

hat in the ring and everybody is wanting to try their luck out. Eventually this

market will just be two or maximum three players. Yeah.

players. Yeah.

>> Which is which is the trend in almost every industry that two or three will be the duopolies that run the show.

>> Especially technology businesses are what we call as winner take all.

Typically in technology oriented businesses, platform related businesses, the winner takes 60 70% market share and the next guy would just have 30% market share and the third guy is just a

survivor and there are you know pretty much uh no other players eventually.

>> Why why does this happen? Is it

something >> because of because of what we call as network effects? Uh technology

network effects? Uh technology businesses have deep network effect. So

for instance uh if you are uh if Zamato is already the big uh food aggregator and if let's say you start a restaurant in Bombay you would want to be on Zamato

you wouldn't want to be on they by the way this country already has three or four apart from Zamato and Swiggy this country also has two or three very small

um other food aggregators as well. So

the network effect ensures that if you uh you know want your restaurant to be a success, you should be visible to people in your area, the chances are that if

you are on uh Zamato, you will get successful. And if a good restaurant is

successful. And if a good restaurant is on Zamato, it will in turn attract more and more customers. And because more and more customers are flocking in once again uh you know more and more restaurants will want to be on that

platform. So that's the typical flywheel

platform. So that's the typical flywheel effect of such businesses which we also call as network effect. That's how most of these technology businesses just experience an exponential growth. So but

right now there are not that many players which have gone public, right?

How do I sort of build a portfolio because right now there is no mutual fund which is saying that hey this is just for future technology companies. So

how do I go about taking this wisdom that you've given me to actually make some money. So right now the job is to

some money. So right now the job is to keep having a very strong domain knowledge. Uh keep meeting managements

knowledge. Uh keep meeting managements try and understand you know which is the management you thought was the most exciting which were the conversations which made you most convinced so that

when it comes uh to pulling the trigger you already have done your homework. So

maybe uh you know after a few years u this could be 20% of one's portfolio but look 20% is a very big number. I mean

just imagine holding even 5% of Amazon in 2010 >> in your portfolio. what that 5% would have done to your portfolio >> would have been exactly so we don't need

to have 40% of tech companies in our portfolio 10 15% great >> interesting so beyond tech what other sectors do you see because from my

vantage point it looks like uh probably healthcare defense will do well but what is your opinion uh before I come to healthcare and defense I think the one

sector which can do very well is the EMS space, electronics manufacturing uh uh uh uh space. Uh mind

you the government is pushing for it and the government has been pushing for it since 2021. We are all aware that when

since 2021. We are all aware that when COVID uh happened uh China had a zero tolerance policy. They shut down their

tolerance policy. They shut down their plants because of the zero tolerance policy in China. There was mayhem in so far as global supply chains were

concerned. Uh because up until 2020

concerned. Uh because up until 2020 everything was being outsourced to China. all the supply chains were

China. all the supply chains were running deep into China. Uh and when uh all of this problem started to happen, people realized that uh look they don't have enough inventory uh because the

Chinese factories are are shut down and therefore started the concept of what is now popularly known as China plus one.

So of course China will remain a big partner but you need to find additional partners beyond China and uh citing and looking at this opportunity sensing this

opportunity uh uh Mr. Modi uh started his policy of encouraging manufacturing in India by giving incentives. He called

it the production linked incentive scheme commonly known as PLI scheme. The

government chose around 10 to 12 different sectors. The one sector which

different sectors. The one sector which has been a poster child of success here has been electronics manufacturing. They

were able to get in Apple. By the way, by next year, Apple will be manufacturing 25% of all its global mobile phones in India alone. Today that

number is about 17 18%. This has all happened in four to five years by the way. Uh they got they came in with their

way. Uh they got they came in with their entire ecosystem. Uh similarly uh other

entire ecosystem. Uh similarly uh other uh mobile brands also came in. The

government is now pushing for uh life beyond mobile phones by manufacturing PCs and laptops into the country. In

this budget the government has given an incentive for servers because do remember if artificial intelligence and cloud computing is the thing everything

will reside on servers. to me you need massive data center capability. So the

government is giving incentives for data centers. Uh that again will help a lot

centers. Uh that again will help a lot of manufacturing of this particular hardware. So we are excited about this

hardware. So we are excited about this opportunity. Once again I'm not at

opportunity. Once again I'm not at liberty to disclose companies and their you know what what we feel their future would look like. But yes look around yourself. Electronics manufacturing is

yourself. Electronics manufacturing is actually a big theme which has wind in its sales also because the government is uh backing it up. So this is like a combination of manufacturing plus AI as

a theme >> uh in certain segments. Yes. Because uh

if you talk about data centers, it is manufacturing uh on something which uh will be required if AI really is a big success. You'll need massive computing

success. You'll need massive computing capacity. Therefore, massive uh data

capacity. Therefore, massive uh data centers, massive servers and so on. The

government is also giving incentives for semicon manufacturing by the way. Uh uh

so so I think this could be a very very interesting semiconductor manufacture.

>> We don't have the raw materials though, right? It's comfortable.

right? It's comfortable.

>> So, we would we would take the basic raw materials of course once again from our close friend China.

>> But but we would be at least uh capturing some part of the value chain.

We can't capture the initial part of the value chain. Of course, you're

value chain. Of course, you're absolutely right. Rare earth is

absolutely right. Rare earth is something where India is not rich. China

has a lot of control over rare earth. Uh

so they do have uh the basic building blocks for semicon uh coming in from China. So from a natural resource point

China. So from a natural resource point of view, India actually has zero advantage, right? The only advantage we

advantage, right? The only advantage we have is labor arbitrage. Is there any other asset that India has which makes which could potentially make us uh you know richer? Because I see all the

know richer? Because I see all the successful countries right now is primarily because of the natural resources that they had. Absolutely. U

you know India doesn't have uh a lot of uh natural resources. Um so so therefore that's a disadvantage. But you know a

long long time back again in one of the economics textbooks I read this theory about

uh what was known as the the natural resources curse. You know if economies

resources curse. You know if economies do get rich in natural resources it actually takes away the incentive from them to be productive to get hyperactive

about innovation and so on. And this has happened to a lot of countries of the last 100 years. Europe.

>> Just think about all the African nations, bloody rich in natural resources. Just think of all the South

resources. Just think of all the South American nations. Look at Venezuela. It

American nations. Look at Venezuela. It

possibly has one of the richest oil resources. It's been a horrible country.

resources. It's been a horrible country.

I mean, forget forget uh uh you know about innovation happening there. As a

country, it's been in disarray. Look at

many of these uh uh countries like Peru or Argentina and so on. So look uh and and on the other hand look at Japan a country which has zero natural resources but possibly because they didn't have

any uh backs stop they were paranoid about innovation they were paranoid about hard work and what they taught to their next generation was that look we have to fend for ourselves we have no natural advantages

>> so yeah I I I I do feel that uh yes not having a natural resource is a disadvantage but but history has also taught us that many of these nations have done very well notwithstanding the

fact that uh they they weren't rich in natural resources. So yeah, I mean we've

natural resources. So yeah, I mean we've reached so far we've been the fastest growing economy in the world for the last 15 20 years without natural resources. I think if we just keep

resources. I think if we just keep executing with our heads down uh I'm sure we can replicate the success of the last 10 years.

>> Okay. So you started off with technology companies then you went into electronics manufacturing. What is the next sector?

manufacturing. What is the next sector?

uh I would say uh the uh consumerf facing sectors by which I mean a lot of sectors particularly

consumer discretionary uh could be uh you know uh the sector to watch out for uh and I say this for a couple of reasons uh once again I go

back to that broad framework India is an economy where 65% of its GDP is coming from consumption >> till now what we have solved for is the basic necessities which we also call as

consumer staples. Some people also call

consumer staples. Some people also call it as FMCG companies. Till now we have solved for these things.

>> But uh once again the evolution of economies around the world has also taught us that when per capita income starts to grow, people become more and more discretionary in their spend. We

start buying luxury watches. We start

buying uh you know the ladies start buying uh you know uh jewelry beyond uh uh you know what possibly could just be required for for occasions. People start

buying people start filling up their >> Chinese just launched beyond.

>> Absolutely.

>> The word beyond.

>> Absolutely. Absolutely. Uh you know people start filling up their wardrobes beyond what could just be an essential wear. So people start spending uh money

wear. So people start spending uh money on what is known as discretionary spend.

So look uh we will have to be conscious about the evolution of the Indian consumer as per capita income keeps increasing and this evolution will be no different from what we have seen around

the world. There are no companies which

the world. There are no companies which which I can specifically point out saying that this is only for discretionary spending. Right? Because I

discretionary spending. Right? Because I

had the same thesis that luxury spending will go up because GDP per capita is increasing. The number of upper middle

increasing. The number of upper middle class Indians or the rising affluent class is skyrocketing. And I see know how my friends are spending money right like on things that they probably use once or twice the whole year. But that's

not going to stop because it's aspirational in nature. But how do I identify a company which only does that?

There are no publicly listed companies.

>> You actually named one company just now, Titan. Titan is all about discretionary

Titan. Titan is all about discretionary spend. Jewelry is a very very

spend. Jewelry is a very very discretionary category and plus with their percentage of studded jewelry increasing and plain jewelry reducing it will become even more discretionary in

nature. So if you look around there will

nature. So if you look around there will be companies you know a company like Trent is also a discretionary company.

>> Trent is for >> uh Trent is basically uh the chain which runs the westside stores >> and the zudio stores. It's basically an apperal company.

>> Yeah.

>> Uh in a way, a company like Jubilant Food Works is discretionary. Look,

you're not required to uh eat a pizza every day or every other week. But uh

but yes, if you do have the means, uh you can order a pizza, you know, any time of the day at office, at home. If

your kids want to eat a pizza, you won't stop yourself from indulging in it. But

you can do that only when you do have an income beyond a particular level. M

>> so yes there are many examples of discretionary categories by the way uh cars and automobiles are a discretionary thing themselves. So we all are changing

thing themselves. So we all are changing our cars every 5 years because you know what we thought was great in 2020 may not be great in 2027 while the car can

serve you for another 5 years but you still want to upgrade to something. So

that's another example of discretionary.

>> Automobiles have been one of the best performing sectors in the last 2 years.

Do you think that will continue >> uh in the long run? We feel it should continue because uh let me give you a very interesting statistic. Uh

we talk about penetration of cars in India the penetration is just about 2%.

It's 2.3 or 2.4 uh let's call it 2 and a half%. Which means that for every 100

half%. Which means that for every 100 people you only have uh 2 and a half cars.

>> Yeah.

>> The same number for China is about 15 16%. The same number for Russia and

16%. The same number for Russia and Brazil is more than 20%. The same number for Europe is about more than 40%. The

same number for US is 80%. So we're not reaching US in the next few decades for sure.

>> 80% of people in the US have cars.

>> For every 100 people, 80 80 cars are there. So 80% of people have cars

there. So 80% of people have cars because you know many homes will have two cars and three cars and so on. Uh

even if you're commuting by metro, you still have a couple of cars in your garage. You may use it over the weekend

garage. You may use it over the weekend or uh you know going on a long drive on a holiday. uh India is 2 and a half%.

a holiday. uh India is 2 and a half%.

This is a category which is massively underpenetrated. But why is it

underpenetrated. But why is it underpenetrated? Because look at 2,500

underpenetrated? Because look at 2,500 per capita income. You don't expect uh uh people to straight away start buying cars. They will fill up their essential

cars. They will fill up their essential needs first. Then they will take the

needs first. Then they will take the next step of taking their kids out to enjoy a meal, enjoy a pizza, then maybe you know buy them uh good clothes.

>> You know, everybody aspires to buy a car, but it happens beyond a particular income level. But we are all uh going to

income level. But we are all uh going to reach there. I think people in the

reach there. I think people in the bigger cities have already reached there. As this growth leads to wealth

there. As this growth leads to wealth effect percolating down to smaller towns and cities across the country, uh we will see uh you know cars in small

towns, small villages everywhere.

>> So market expansion is happening.

>> Absolutely. So okay. So consumption on discretionary side which is basically people looking at things beyond roti kapra makan right. What are things that in life?

>> Absolutely. and look at the brands which are catering to that.

>> Absolutely. So these are your top three sectors.

>> And the fourth one I think you made a passing reference to this healthcare.

>> Yeah.

>> Interestingly when we do uh study the healthare trends around the world we once again pick up the same thing that people start spending a lot on their

healthare uh as income levels increase.

>> The easiest example and the best example I can give you for this is you know uh the diagnostic sector.

>> Yeah. where people today would actually uh go and get a full body checkup done at least once a year. Some people do it even twice a year.

>> Just go back to your father's generation or your grandfather's generation.

>> Nobody would ever do a full body checkup >> uh you know at any frequency. People

would visit the doctor >> who would uh you know uh and they would visit the doctor only when they were facing some kind of an illness. And you

know the doctors back in the day since I am of the ' 70s vintage I can tell you the doctors back in the day will also not do the test immediately. You know

they had unique ways uh of making you open your mouth look at your tongue.

Doctors would look into your eye whether it's yellow or it's uh fine. They would

look at your nails and then do the preliminary diagnosis and then give the medicine. Most of the times you'll get

medicine. Most of the times you'll get cured. If you didn't then they would say

cured. If you didn't then they would say that okay at such and such hospital you need to go and do your tests. So that

was how you know healthcare was being administered.

>> Uh now if you go to any doctor the first thing he says is okay I'm giving you a medicine which will provide you relief for the next couple of days but come back to me with all these tests. So both

as a preventive >> this is why my uh parents who are 60 and 70 years old respectively they say that hospitals are just there to loot your money these days. They'll just tell you to do all of these tests

>> to you know make you make a make you do a big bill. So so you know maybe maybe they are not too wrong >> but look uh once again this is how the society is evolving. If people have the

money they don't mind spending it on these tests because they just want to be sure about their uh their health. M

>> uh so so again this is not something unique happening in India. We've seen

how this has evolved in countries uh which have been 10 years or 20 years ahead of us on the curve.

>> Yeah.

>> Uh and this is what we are seeing has already started happening in the country in the last I would say 5 to 10 years.

So we are positive on healthcare. We are

positive on diagnostics as a theme. Uh

we are positive on hospitals. People

don't want to go to government hospitals at all. When is the last time you went

at all. When is the last time you went to a government hospital? When is the last time any of your audience would have gone to a government hospital? I

mean none of us have. So people want to we're very happy going to private hospitals. Most of us have a medical

hospitals. Most of us have a medical insurance. So we get reimbursed as well.

insurance. So we get reimbursed as well.

So hospitals is a is going to be a very big business. And I would say

big business. And I would say pharmaceutical is also uh uh you know a big opportunity because you know apart from what we call as uh uh medicines to

solve for your acute illness we also are seeing this increasing trend of people u now starting to consume a lot of

vitamins which can you know keep them healthy. uh plus uh with the chronic

healthy. uh plus uh with the chronic diseases the instances of chronic disease is also increasing. People are

now also uh you know I would say taking these chronic drugs on a daily basis. So

the spend towards pharmaceuticals is also on a rising trend. Yeah.

>> So you've not mentioned defense which has been like a very very talked about topic in India in the last couple of years. How come no mention of defense as

years. How come no mention of defense as a sector?

>> So defense certainly is a sector where once again there's a government push. Uh

there are two things which um are keeping us worried on the defense sector as of now. Uh one is the valuations.

These companies have gone through the roof in terms of valuations. If you look at their valuations today compared to the last 10 year history, you know what I mean?

>> Yeah. Uh the second thing is look u the defense sector is at the mercy of the government one way or the other. Uh it's

a sector which is the exact opposite of a monopoly. A monopoly is a industry

a monopoly. A monopoly is a industry where there is one seller and there are thousands of buyers. Uh the defense

sector uh is something which I call as monopsiny. uh you know uh uh uh in the

monopsiny. uh you know uh uh uh in the economics textbooks there is a concept of a monoponyy where there is only one buyer but multiple sellers the buyer here is the government uh of course

these companies are also trying for exports uh I'm not denying that but predominantly 70 to 80% of all that they produce is going to go to one buyer and therefore you are at the uh mercy of

that buyer in years when you know the government says that our spend on defense this year will remain muted it will be a bloody blow for them. Uh

please don't underappreciate uh the power of the government in terms of elongated uh elongating the working capital cycle of these players. We've seen it many

times in the past for both companies like H and Bat Electronics when uh you know the government refused to make payments to them for 8 months, 9 months, 12 months because the government said

our finances are stretched. Many of

these companies actually had debt on their balance sheet because they had to fund their working capital because the payments were not coming from the government. So you know in a monopsiny

government. So you know in a monopsiny industry the one client holds a lot of power. Uh uh having said that I do

power. Uh uh having said that I do appreciate the fact that defense is a sector where the government is pushing a lot of local manufacturing but at this present juncture given where the

valuations are we are cautious. Yeah.

And if I look at the fund fact sheet um and there are almost 50 plus AMC's I've seen that the the one of the biggest sectors is always

financials. You did not mention

financials. You did not mention financials. What is the story behind

financials. What is the story behind that? Maybe I didn't uh mention

that? Maybe I didn't uh mention financials because it is one of those sectors which is very obvious and that therefore I wanted to concentrate on you know ideas which are still not so

obvious in the minds of uh investors but can be really big uh going forward.

Look, financials is a well-discovered story. Uh uh which doesn't mean that uh

story. Uh uh which doesn't mean that uh the sector has gone exrowth the sector still has a lot of juice left in it, a lot of growth left in it. But uh you know I would say that uh the growth

rates for the entire sector will certainly come down compared to the last 10 years.

>> This is what I wanted to understand right >> so if you look at you know the biggest driver for the bank so what's the biggest part of the financial services sector it is banks >> which is lending essentially. Now if you look at the credit growth in the

country, it used to be 15 16% at a point of time. Today the credit growth is 12%.

of time. Today the credit growth is 12%.

The last few years the credit growth was single digit.

>> Why? So because India is still a credit hungry nation.

>> India is still a credit hungry nation.

But uh you know there are a few things happening. Uh look when when you talk

happening. Uh look when when you talk about the banks, it's not just retail lending, it's also corporate lending.

Corporates are flushed with cash right now. They've all raised a lot of money

now. They've all raised a lot of money in the last few years. They've raised

money from the stock markets. they've

also raised uh you know QIPS their own cash generation has been very strong. So when you look at the net debt

strong. So when you look at the net debt to earnings or net debt to equity for uh uh you know corporate India you would see that this figure has been coming

down which means that corporates really are not very hungry for uh credit right now.

>> Uh that's one part of it. The second

thing is that uh uh yes the credit is still underpenetrated in India especially when it comes to retail as consumption grows in the country a lot of retail financing will also keep

happening but possibly uh at the size and scale at which the Indian banks are today uh it's difficult to grow at 20 25%. The system level credit growth is

25%. The system level credit growth is also not growing like I said in mid to high teens. Therefore growth rates one

high teens. Therefore growth rates one way or the other certain >> system level credit >> which means total credit growth in the country.

>> Okay.

>> Uh that number used to grow at 15 16% uh 10 15 years back >> that number is expected to grow at just about 12 13% now. So at the aggregate

level at the systemwide level this number has tracked down and because all of these banks are fairly big now whether we talk about HDFC or ICIC or SBI or any of these other banks uh they

can't obviously keep growing five 7 percentage points higher than what the system itself is growing.

>> So then why is still 30 20 to 30% of allocation of most of the AMC is still in financials. So one is that uh you

in financials. So one is that uh you know these are still very very big opportunities.

Uh mind you even if they grow at 14 15% that's not a bad number.

>> Yeah you know India's nominal GDP growth is expected to be this year at 10%. But

this year inflation is still expected to be low even if inflation increases India's nominal GDP growth will be maybe somewhere between 10 to 12%.

If you are able to grow at 15 16% which is three or four percentage points higher than the normal GDP growth it's not a bad outcome. uh plus these are very very solid businesses tried and

tested. So I would say that uh yeah I

tested. So I would say that uh yeah I mean uh uh the size of the opportunity in future plus the growth rates that are expected to persist albeit lower than what they used to be a decade back are

still healthy. So basically it's better

still healthy. So basically it's better riskadjusted returns than the other sectors that you >> That's the last part. Absolutely right.

In terms of valuations, the the big banks are trading at uh uh you know extremely attractive valuations while the markets are trading at a premium to long-term averages. Uh the banks are

long-term averages. Uh the banks are actually uh trading at either at their long-term averages in some cases even at a discount to the long-term averages.

>> So now let's do this. I want to I understood your um so basically this is sort of hours and hours of research that you've distilled here for me. Thank you

so much. I already feel like a much smarter investor now. So now let's go to the rapid fire round.

>> Okay.

>> Where we get into quick questions and you have to give quick answers.

>> Okay.

>> Okay. First question. One metric you trust the most when evaluating a business.

>> Return on capital employed. return on

capital employed. Why? What is the >> because it tells you how efficient is the business in terms of capital allocation. See ultimately every

allocation. See ultimately every business is about how efficiently they are using that capital to create profits and to generate returns.

>> So that is a very very important metric.

>> So if they have a lot of cash reserves and they don't know what to do with it that is something that >> so usually when we use this metric we look at return on capital minus excess cash. Uh we don't want to penalize

cash. Uh we don't want to penalize companies which have cash. So for

instance, Marauti has 80,000 crores of cash. Why to penalize it? They have

cash. Why to penalize it? They have

built this war chest acidously over the years.

>> 80,000 cr cash.

>> Yeah. Wow.

>> One red flag that makes you instantly drop a stock idea.

>> I would say cash flows at the operating level turning weak and you know moving towards the negative territory. This

business actually is losing the right to even survive. Forget thrive. H

even survive. Forget thrive. H

the most overrated investing metric today I would say in the U technology stroke internet theme uh the number of

customers that you have is a very very overrated uh metric because we want to have uh profitable customers rather than uh you know customers who are just adding up to the numbers but are not

helping uh reach to their target of profitability.

So some internet companies use this metric called monthly transacting users.

It's not a metric to which to my mind is a is a very uh knowledgeable metric.

>> And when you're talking about operating profit, don't you think these internet companies will have uh shaky operating margins uh for you to assess them based on that like how do you look at that?

>> So Sharon, I was talking about operating cash flows.

>> Operating cash flows. Okay.

>> So operating cash flows tells you about how strong is their working capital cycle. So let me give you an example. Uh you know there are companies which show you strong sales

>> but that strong sales is happening because they have very liberal uh you know uh data days being given to the customer. So they make a sale to you

customer. So they make a sale to you >> reflect that into their books as sales >> but the money that you pay to the company could be after 3 months or 6 months or 9 months. But I showed in my

books >> but you've already showed revenues in your books but when I look at the operating cash flow because the cash from you hasn't come to me >> that cash flow is not getting reflected so that's a sign of a business which I'm

extremely wary of because they are showing growth in the P&L but there is no cash flow into the business and you know there's a very interesting saying

in investing that uh uh sales is vanity uh profits is sanity But cash in bank is reality. We want evidence of cash coming

reality. We want evidence of cash coming back to the business.

>> Yeah, that's what I look at every every every week.

>> All right. Um,

one behavioral mistake that cost investors the most money from your 26 years of experience.

>> I think I learned this lesson of sales versus cash flows in the 2009 crash.

That is when and uh and I did allude to this uh in the earlier part of this podcast that 2006 78 were gogo years for the stock markets. The stock markets

were just moving up like this. Whenever

the stock markets move up uh you know like a rocket uh there is a tendency to take your guards off. People love taking risk. People only talk about businesses

risk. People only talk about businesses which are just growing at 30 40% without checking the quality of that growth. the

quality of the growth resides in the cash flows. Uh and you know when things

cash flows. Uh and you know when things turned bad I just realized that all of this growth was worth nothing because it was not being backed up by cash flows coming in. Uh customers were being told

coming in. Uh customers were being told that you take the product from us you pay us back after whatever uh whenever you're comfortable.

>> So that was the biggest lesson which taught me that cash and bank is reality.

The success of a business has to be measured by is it making an effective sales which is being backed up by the customer paying back rather than just uh

you know an elongated uh working capital cycle.

A sector you would never invest in.

I would say commodities in general and a commodity like coal in particular.

Look, it's a it's a commodity which will uh have a what what do you call as peak demand very soon.

>> The world is shifting away from fossil fuels number one.

>> Once it hits its peak then it's >> when it's at its peak from there the demand will keep going down. So who

knows we could be at peak demand for coal within the next few years. So

>> commodities usually are very tricky. So

in general I am wary of investing into commodities. If if if you know of a

commodities. If if if you know of a commodity where the uh demand is going to just keep going down then you have to

be doubly uh uh cautious about it. So

coal could be one such commodity.

One sign that a company's growth is not sustainable.

I think that is the >> cash flow. Once again if cash flows are not coming growth is not sustainable.

>> If markets fall 20% tomorrow what is your first reaction? I'll start putting in money. If it's 20% fall, then it gets

in money. If it's 20% fall, then it gets into the attractive zone. Two things uh one is that if you really see the markets crash 20%.

While inevitably that will uh you know take away your risk-taking ability but actually that is a time when uh risk is

worth taking. So that 25 30% that we

worth taking. So that 25 30% that we spoke about which is sitting in fixed income at least some part of it should be moved into equities. So 10% very easily should be moved into equities

because you know there is enough data to suggest that after a very sharp fall usually markets recover within a year's time.

>> So 20% is a bloody uh sharp fall uh you know uh uh from my perspective. So it

definitely warrants an asset allocation shift. If you're sitting on cash put

shift. If you're sitting on cash put that in immediately. If you're not sitting on cash, if you have 30% into fixed income, then at least shift some part of it into equities.

>> Got it.

The most misunderstood concept in mutual fund investing.

>> I would say that uh mutual funds uh can give you returns year after year without witnessing a down year.

>> That is misunderstood, right?

>> That's that's very misunderstood. Mutual

funds are linked to the stock markets.

If stock markets go down, V2 will go down. What we uh tell investors all the

down. What we uh tell investors all the time is that if you are patient and if you stay the long course, then this is one uh vehicle to create serious wealth for yourself and for your family. It's

also a very taxefficient way of making returns. It's the most liquid asset

returns. It's the most liquid asset class. If you need the money, if your

class. If you need the money, if your investment is worth 10 crores, if you need all of that 10 crores, it'll be in your bank account T+1 or T+2. So uh

there's no other asset class which gives you that kind of transparency and liquidity. So uh yeah I would say uh

liquidity. So uh yeah I would say uh don't look at the mutual fund industry as you know one of those uh uh golden goose which will keep laying down a egg

every other day or every other uh year.

They will be down years but if you stay the course you will you know generate substantial wealth. So

substantial wealth. So >> I think that's all the questions I had.

Uh Mr. Ajay Aagi. I think this was something very special because I was honestly um you know taking this entire conversation like I'm a student trying

to get as much wisdom from you as possible. Your experience in the market

possible. Your experience in the market is as much as my age. So thank you so much for taking out time from your busy schedule. Thank you so much guys for

schedule. Thank you so much guys for watching till the end. I'm sure if you've been watching this for so long you've been as blown away with this conversation like I have been listening

to it. uh would love to know about your

to it. uh would love to know about your feedback on how I could have made this better. Please drop down your questions

better. Please drop down your questions below. Uh questions do you think I wish

below. Uh questions do you think I wish I asked for and which I will ask in the future and please also drop down your own guest recommendations in the comment section below so that I may get you them

on the next one. Until then, I'll see you on the next one. Before you go, guys, if this episode gave you even one insight that made you think differently

about money, don't just keep it to yourself. Share it with your friend or

yourself. Share it with your friend or family member who could use it, too. And

if it sparked a new thought or even made you disagree with me, drop a comment below and tell me why. Your critic helps me make these conversations sharper and

more useful for you. As long as you have me subscribed, I'll make sure that you walk away with at least one new thing every Wednesday.