[00:02:31] Clay Finck: Well, back on episode 566, we discussed your first book, The Joys of Compounding, which was an international bestseller sitting right behind me.

[00:02:40] Clay Finck: It’s one of my very favorite investing books. But today we’re going to be covering your newly released book titled The Making of a Value Investor. To start, how about you just talk to us a little bit about the book and what the impetus was for writing this? 

[00:02:55] Gautam Baid: Sure. So I spent 10 on purchasing a journal in late 2014 and I considered that to be one of the best value investments I’ve ever made.

[00:03:03] Gautam Baid: Ever since that day, I’ve been keeping track of my investing decisions. And subsequent developments in my investment journal and my writing frequency in the journal witnessed a sharp increase from 2018 onwards and why is that? It’s because the biggest learnings always come from a bear market and those lessons bear fruit for an entire lifetime.

[00:03:23] Gautam Baid: So I experienced a brutal bear market, India from January 2018 to February 2020, followed by the pandemic induced market crash. In March 2020, and this book covers the journey of my evolution as an investor during a bear market and my learnings and reflections along the way as regards to impetus for writing this book.

[00:03:43] Gautam Baid: So I often post on social media platforms like LinkedIn the benefits and importance of maintaining an investment journal. And the genesis of this book lies in the response to a tweet of mine on August 26th last year. So. One of my followers on Twitter suggested to me, why don’t you publish all your biggest learnings and lessons from your investment journal into a book.

[00:04:04] Gautam Baid: So I found the idea to be very helpful and interesting. And shortly thereafter, I started working on the book and it took me approximately 12 months to complete writing it. Lo and behold, here we are with the, the book scheduled to release on 25th October worldwide. 

[00:04:19] Clay Finck: Well, you mentioned your biggest learnings are from a bear market since your second book.

[00:04:24] Clay Finck: It’s, you know, you’re sharing your journal and everything you’ve written down over this period of a bear market. What were some of your biggest learnings from the journaling process? Because I’m sure, uh, many investors, maybe they just don’t make the time for journaling. So I’m curious if you could share why you see this is so important, given that it’s your second book that you’re releasing.

[00:04:45] Gautam Baid: Sure. So this habit of journaling has helped me tremendously in improving myself and learning a lot about myself. Both as an investor and an individual, I receive a lot of valuable feedback from journaling and I use it to correct my personal behavioral biases because like Charlie Munger has taught us, you know, it’s a moral duty to be as rational as possible.

[00:05:04] Gautam Baid: None of us can be 100 percent rational, but you can try to minimize our biases to the maximum possible extent. This is where journaling comes in handy because all investors make mistakes, but the great investors repeat old mistakes less often. This is where the journal comes in handy because you know, you, it’s very difficult to make the same mistake twice if you’ve actually gone through your past mistakes in your journal and that way you basically improve as an investor.

[00:05:30] Gautam Baid: I’ve also maintained a personal archive of media commentary and investor behavior during various episodes of market panic during the last nine years and I find it highly beneficial to refer to this information whenever the market undergoes its periodic severe corrections because what I’ve realized over time is that Human nature in the markets has not really changed much over time and this is again where the journal really comes in handy.

[00:05:54] Gautam Baid: So it helps you maintain your emotional calm during periods of market turbulence and to not pay too much attention to the noise. And to refocus your attention back to what really matters in investing, which is the micro individual businesses and their industry developments, that is the best that you can do.

[00:06:11] Gautam Baid: Nothing else. So always be humble. 

[00:06:13] Clay Finck: And it’s also important to remember that, you know, just writing things down, you can’t remember everything in your brain. And when you do, you know, try and remember so many of these different things, oftentimes you’re misremembering what it is, you know, you thought at the time.

[00:06:27] Clay Finck: And once you write things on paper, you really can’t lie to yourself. So you mentioned the aspect of human psychology and it, it doesn’t change over time. And in your book, you talk a lot about what’s happening in these various points and what the investor sentiment was at the time. So could you talk more about investor sentiment and how we can go about, you know, judging investor sentiment?

[00:06:52] Clay Finck: Because there’s different points in your book where you’re saying, you know, there’s capitulation in the market. People are selling with no regard to valuation. So How do you go about judging the sentiment? Yeah, just your general thoughts on this. 

[00:07:04] Gautam Baid: To our of Clay, understanding the prevailing market sentiment and investor sentiment is very important, even though it is short term in nature, but it’s important.

[00:07:11] Gautam Baid: Why is that so? It’s because fundamentals Do not determine the price for a stock at any given point of time, demand and supply does. And that is why it is so important to understand sentiment because that is what drives the demand and supply dynamics in the short run. And there are two very effective ways to judge prevailing market sentiment.

[00:07:30] Gautam Baid: Number one is the IPO or initial public offering market, and number two is the quality of investor portfolio. So let me talk about both these points separately. Initial public offerings or IPOs are a very effective indicator for judging market sentiment. During stage one, good companies come out with IPOs at cheap valuations or reasonable valuations.

[00:07:50] Gautam Baid: During stage two, good companies come out with IPOs at expensive valuations or very expensive valuations. And in stage three, Bad companies, many of which do not have any earnings, come out with IPOs at ludicrous valuations and which are heavily oversubscribed by retail investors, whose surging presence in the markets is a late cycle indicator.

[00:08:11] Gautam Baid: And very high levels of margin funding, both in the primary and secondary market is a predominant characteristic of the final blue out phase of any bull market. So this is why, you know, IPO and margin funding and basically are very good indicators of market sentiment. Second is the quality of investor portfolios.

[00:08:28] Gautam Baid: So as a bull market matures, Many investors move their portfolios from high quality stocks having steady growth and high returns on equity to stocks having higher revenue growth, but inferior return ratios and poor management qualities. And then they move on to commodities and cyclicals. Then they move on to turnarounds, which are currently loss making.

[00:08:49] Gautam Baid: Then they move to micro caps with limited history of operations. And then finally, they move to highly leveraged companies with projections of rapid revenue growth. At this point, the bull market usually tops out and at the end of the euphoric phase, most investor portfolios have only junk stocks left in them.

[00:09:06] Gautam Baid: During the subsequent bear market, which follows, both quality and junk stocks fall. Quality eventually recovers back fully, whereas the junk stocks lie low for many years. And it is only after going through the pain of a couple of such cycles that, as an investor, you develop the discipline to resist the incessant urge to go down the quality curve and chase quicker returns.

[00:09:28] Clay Finck: Related to the second point you mentioned there, the quality of the investor portfolio, is there sort of a science to figuring out, you know, what the quality is of a portfolio or is it just a matter of analyzing those around you and your environment and the news headlines or is there sort of other ways of going about this?

[00:09:46] Gautam Baid: The most effective way for me, personally speaking, is, uh, you know, a few WhatsApp groups on and off investing, which I’m part of. When investors start discussing only the junk quality stocks like deep cyclicals, micro caps, loss making companies, and when there is widespread euphoria for these kinds of stocks, that is when basically I get to know that, okay, right now it is completely risk on and investors are throwing caution to the winds and they are just focusing on trying to make money as fast as possible.

[00:10:12] Gautam Baid: And it is this urge to make quick money. and make money as fast as possible. You know, when there’s greed in the air, and you can literally sense it, that, you know, people are just not exercising caution, they’re not focusing on quality, they’re not focusing on the past track record. It’s all future projection based, so everyone is just investing on the future instead of actually looking at the past, what the company has done, even bigger way to judge sentiment in such cases is when you see a big surge in stock prices of holding companies, because in holding companies, stock prices generally go up only during the last stage of a bull market, you also see a plethora of IPOs from a single sector Coming during the peak of the frenzy in that particular sector, during the end of that sectoral bull market.

[00:10:54] Gautam Baid: And finally, and most importantly, you’ll often see new metrics of valuation suddenly popping up during the final stage of a euphoric bull market. So in the case of the late 1990s, it was number of, you know, eyeballs or clicks on the internet. And similarly, in 2021, during the meme stock euphoria, you had some new metrics coming out.

[00:11:12] Gautam Baid: So if new metrics of valuation start being discussed, that, you know, this is a new era, this time it’s different. It’s never different. The principles laid down by Graham and Intelligent Investor have stood the test of time and those three key principles are what we need to always focus on as value investors.

[00:11:30] Clay Finck: Yeah, for me, a lot of judging sentiment is looking at what’s going on on Twitter. And I think, you know, as you get more experience in markets and After reading through your journal, it’s quite obvious that price drives perception. So, when prices are low, people look for reasons why prices are low and potentially why prices are going to go even lower.

[00:11:53] Clay Finck: And then when prices are high, people look for reasons, they’re, you know, strong confirmation bias, they look for reasons why prices are high and try and find reasons to justify why they’re going to go even higher, so. The narrative is driven more so by prices than by the fundamentals. And I think that’s one of the most important things as a value investor is trying to see that market sentiment and differentiate the price and the fundamental.

[00:12:18] Gautam Baid: Correct. I absolutely agree with you. And, uh, you know, successful investing is all about having people agree with you. Later, because the alignment between price and value can be greatly distorted in the short run by technical and psychological factors. But as Benjamin Graham has taught us, in the short run, the market is a voting machine, but in the long run, it’s a weighing machine.

[00:12:39] Gautam Baid: So, and ironically, in order to generate alpha, investors do need the markets to be efficient, eventually, because the markets need to realize that they have made a mistake in valuing a company and then the market needs to correct it. Otherwise, mispricings would persist forever and in such a market, no one could reliably outperform.

[00:12:58] Gautam Baid: So you’re absolutely right that, you know, in the short run price does drive perception, but that is what allows value investors to exploit Mr. Market to our advantage because he’s a manic depressive on, you know, he either becomes overly exuberant or he becomes overly depressive.

[00:13:13] Clay Finck: I wanted to share some of your journal entries here and just give you some of my favorite ones and give you a chance to elaborate on them.

[00:13:21] Clay Finck: The first one I’ll read here is an important lesson for me in my investing journey. If it is a good quality business with high growth prospects for a long period of time, then it is okay to pay a high PE and sacrifice the first year return. The returns from the second to fifth years will compensate for the flat return in the first year.

[00:13:40] Clay Finck: End quote. And I tend to agree with you on this in that I prefer to pay up for quality, at least pay up in terms of seeing an obstaclely high valuation multiple rather than putting a bigger emphasis on a lower multiple and less emphasis on business quality. And I agree that having that multi year view is important.

[00:13:59] Clay Finck: So I’d love for you to expand more on this and having that longer term view and putting more emphasis on quality. 

[00:14:06] Gautam Baid: So for businesses that will grow their earnings, even at a moderate pace, but for a very long period of time, the optically high price to earning multiples that determine many value investors is in reality pretty low.

[00:14:19] Gautam Baid: This means that if you buy a strongly motored business, At what appears to be a full price based on current year earnings, you will still end up compounding your money at a higher rate than the discount rate you used to arrive at the fair value for the business and the longer the competitive advantage period for a business, the more the business is likely to be worth than what many market participants think.

[00:14:43] Gautam Baid: Durability of the mode is the key factor here. So the market tends to underappreciate companies that have really strong modes because that durability allows the company’s runway to last much more longer than what many people expect. So for long term investing, the focus needs to shift away. From entry P multiples to duration of the competitive advantage period, buying a stock is not that difficult in today’s information age, holding onto it amid all the noise in the digital age, that is what is more difficult.

[00:15:10] Gautam Baid: And if you want to hold on to a stock for the long run, you have to focus on two key things, which I’ve talked about in my book as well, you know, whether the company is growing revenues at a healthy clip and whether the original competitive advantage, which you bought the business for. Is that still in place?

[00:15:24] Gautam Baid: As long as these two things are in place, just stay put because the competitive advantage of the business will allow it to earn returns on capital above the cost of capital. And for such kind of businesses, the maximum delta The maximum rate of change, the maximum intrinsic value creation takes place when they focus on improving revenue growth.

[00:15:42] Gautam Baid: So, you know, for companies with high returns on capital, which are enabled in turn by their competitive advantage, as long as the revenue growth is healthy in double digits or more, just stay put, you’ll do very well over the long run. And you have to just hold on during the periodic time corrections. And the stock price selloffs during market falls, but you know, you’ll make a pretty good CAGR if you can simply hold on because in order to have a 10 bagger or a 20 bagger, you need to hold on to a 10 bagger or a 20 bagger, but during phases of euphoria, which in the, in the urge to make quicker money, we just sell our family silver and buy junk quality stocks.

[00:16:15] Gautam Baid: That is not what is really helpful for investing. 

[00:16:19] Clay Finck: Yeah, I totally agree with you. And you talk about, uh, you know, the biggest edge a lot of investors can have is a behavioral edge. And Bill Miller’s talked about, you know, the three edges you can have is informational, analytical, and behavioral. And of all individual investors, you know, behavioral is the key one to where we can really find that edge and find that advantage.

[00:16:41] Clay Finck: Anyone can go out and buy a stock today, but how many people can buy a good quality company and just sit on it for five plus years? 

[00:16:49] Gautam Baid: That’s pretty true. I mean, just look at what happened last day with not a stock recommendation, but just look at what happened with Google. The moment, uh, Microsoft took a stick in chat GPT and Google’s bar did not really do well in the beginning, Google stock price fell down to 80.

[00:17:02] Gautam Baid: And today it is 140. Did the intrinsic value of Google change by hundreds of billions of dollars in a matter of six months? No, right? But we just get so lost in the information overload that we panic and sell our high quality blue chip stocks. That is not how long term wealth is created. Buffett became Buffett because he was able to compound his money at a healthy clip for more than six to seven decades.

[00:17:25] Gautam Baid: That is what made him Buffett. So I’m not saying that you have to cling on to a single stock for the long run, but at least remain invested inside the market with a good portfolio over the long run. Only consider selling the high quality stocks when they become absolutely overvalued. For example, 150, 200p multiples.

[00:17:40] Gautam Baid: If they start trading at those kind of multiples, then consider selling them. But I’ve seen over time in the market scale that for these high quality growth stocks, they start off from a cheap valuation. Then they become reasonably valued. Then they become expensively valued. Then they become very expensive.

[00:17:55] Gautam Baid: And then finally they become absolutely overvalued. You have to create wealth. In the true sense, you have to hold on for that entire duration during the high growth phase of a company because the market in those cases keeps discounting earnings many years out. And that is how you get valuation re rating and that is how you get life changing multi baggers in the stock market.

[00:18:16] Clay Finck: I’ll turn to another excerpt from your book here. We need to humbly acknowledge the fact that a long term investment of 5 7 years is becoming increasingly difficult in today’s dynamic world. If a company doesn’t adapt to changing environments or coming disruptions, its business model could become obsolete before you know it.

[00:18:35] Clay Finck: Don’t get married to your stocks and don’t fall in love with management. Many investors portfolios got eroded in this bear market because of inertia and complacency, so I’d like for you to talk more about this need to continually reassess our investments in a world that is changing more rapidly than ever.

[00:18:53] Gautam Baid: It pays to have a long term view, but a long term view must be combined with an investment process, which is willing to continually question the core investment thesis, and investors should exercise active patience, that is, diligently verifying their original investment thesis on a regular basis and doing nothing.

[00:19:12] Gautam Baid: until something materially negative or adverse emerges. All too often investors become very complacent and stop questioning their holdings when the stock prices are going up. They resume analyzing in detail only when the stock prices start falling. But don’t do that. Don’t analyze your holdings only when the stock prices fall.

[00:19:28] Gautam Baid: Just because the prices of the stocks in your portfolio are going up, doesn’t mean that there is nothing wrong. taking place in the underlying business. So be very vigilant. People are changing at a very rapid clip because of technology around the world. And if we all just need to focus on terminal value because that is where 70 to 80 percent of the intrinsic value of any business resides, the terminal value is getting adversely impacted by any competitive development or any technological advancement, then you have to take action accordingly.

[00:19:57] Clay Finck: This next entry is a pretty interesting one, so I’m really interested to hear your take on it. Compounding is convex on the upside and concave on the downside. Positive asymmetry. Few understand this, but the day you do, it will change your investing perspective forever. So what do you mean here by compounding is convex on the upside and concave on the downside?

[00:20:22] Gautam Baid: Well, this was one of the biggest eureka moments in my investing journey, and I’m sure this is also going to be a big eureka moment for many listeners to our podcast today. If they can understand this power of this positive asymmetry in compounding, then it can potentially change their perspective about investing forever.

[00:20:38] Gautam Baid: So we often hear about the power of compounding in terms of, you know, if you compound your money at 20 percent for 25 years, you get a hundred bagger, or if you compound your money at 26 percent for 20 years, you get a hundred bagger, but the true power. Compounding lies in this positive asymmetry which I’m talking about.

[00:20:54] Gautam Baid: So, when I say it’s convex on the upside and concave on the downside, what it means is compounding increases at an increasing rate on the upside and it decreases at a decreasing rate on the downside. Let me explain this with the help of an example. Let’s assume that you have bought two stocks for 100 each.

[00:21:09] Gautam Baid: And the first stock goes up by 26 percent in year one and becomes 126. And the second stock decreases by 26 and becomes 74. So net net in the, at the end of year one, you have made zero return, right? What do you think would happen by the end of year 10? If every year stock one goes up by 26 percent and stock two decreases by 26%, what do you think would happen at the end of year 10?

[00:21:30] Gautam Baid: What would be your CAGR? You basically made zero at the end of year one. Any idea what would be your CAGR at the end of year 10? 

[00:21:37] Clay Finck: You’re really putting me on the spot here. I’m going to say, uh, something greater than 15 percent is what I’m going to guess. 

[00:21:44] Gautam Baid: So the actual answer is 17. 6%. So you’re at the end of year 10, even though stock two went to 0.

[00:21:53] Gautam Baid: 01, almost went to zero, you’re at an aggregate portfolio level, you still ended up making 17. 6%. And this was, this finding was a eureka moment for me because this is where the real power of compounding lies. The real power of compounding lies in its ability to empower you and enable you to be wrong 50 percent of the time and still make very handsome returns over time.

[00:22:14] Gautam Baid: Because There is no limit to the upside, but the bottom, the downside is tapped at zero. Right? So basically this is, you know, the true Eureka moment for me, because, you know, what this made me realize is that if you can simply hold on to your winners for the long run, the overall portfolio return will be taken care of.

[00:22:32] Gautam Baid: You know, I’ll give you a live example from my own India fund, which I’ve been running for the last 12 months. So our India fund went live on 3rd October last year. It’s up 18 percent in the first 12 months. And when I was doing a portfolio attribution analysis to see which stocks contributed the most, surprising to me that four stocks out of the initial 23 stocks accounted for more than 80 percent of the overall return of the fund in the first 12 months.

[00:22:55] Gautam Baid: The other 19 stocks hardly contributed. And this is again, the power of compounding at play, convexity on the upside. You let the winners run, let them become big winners because You know, investing is a probabilistic activity. You’re going to be wrong a lot of the time, but as long as you make your winners count and don’t blow up in any of the other picks, you’ll do very, very well at an aggregate portfolio level.

[00:23:16] Gautam Baid: Very powerful principle, positive asymmetry, and just reinforces the power of holding onto your winners. 

[00:23:25] Clay Finck: It’s very interesting how, you know, it’s so difficult just to find the winners, but it’s just as difficult just to hang on to them because it can be so easy after you see just a five bagger, for example, in five or 10 years, just to let go of it and think you can go and find the next big winner when in reality we should be likely be a very reluctant seller as long as the business continues to perform.

[00:23:48] Gautam Baid: I would like to share two pieces of statistics here just to know, because this is such an important topic that very few people talk about the importance of holding on, I want to share two statistics here with your audience so that they understand just why it is so, so critical and important to hold on to your winners for dear life.

[00:24:02] Gautam Baid: Between 1926 and 2018 in the U. S. market, only 4 percent of all listed equities accounted for 100 percent of the wealth creation. I’ll again repeat, in those 92 years, only 4 percent of Of all listed equities in this country accounted for 100 percent of the wealth creation, which means that once you have found the goose that lays the golden eggs, don’t kill the goose, hold on to it for dear life because 96 percent will fail or not really work out.

[00:24:28] Gautam Baid: It’s only those 4%. So when you find one of them, if you’re lucky enough to find one of them in your lifetime, make them count. So that’s the first statistic from the U. S. market. Now I’ll share, and this powered law is not just applicable in the U. S. market, it’s applicable to markets around the world, including India.

[00:24:42] Gautam Baid: In India, between 1990 and 2018, during those 28 years, only 1%, only 1 percent of all listed equities accounted for 90 percent of the wealth creation or market cap creation in India. Just think about that. Just 1 percent out of 4, 000 listed companies, which means that if you found, if you were lucky enough to identify one or two out of those 40 stocks in that 30 year period, you should have held on to it to, you know, really change your life as an investor.

[00:25:11] Gautam Baid: So, you know, many, you know, it’s, it’s very easy to identify a winning stock. But it’s not easy to hold onto it. So once you have found a great company growing at a healthy clip and it continues to grow at a healthy clip and it’s maintaining its competitive advantage, hold onto it. 

[00:25:26] Clay Finck: I wanna jump to a different topic that I don’t think is discussed.

[00:25:31] Clay Finck: too often. One of your entries, it referenced Dan Drunkenmiller, who’s this legendary macro investor, just had an absolutely incredible track record. And he said that liquidity is the most important thing in the market. And, you know, you, you go out, you live your day to day lives. Liquidity, it seems like a intangible thing that you know it exists and you know, there, you know, there’s periods of where capital is, uh, is scarce and times where capital is abundant, but you don’t really see it all that much in your day to day lives.

[00:26:02] Clay Finck: Um, maybe you can see it at the business you work with, but, uh, I’m curious to get your thoughts on liquidity. How you go about judging it and what you’re seeing maybe today in terms of liquidity, because a lot of people seem to be confused with where we’re at today, whether the bear market’s over or whether, you know, we may see another leg down.

[00:26:22] Gautam Baid: So I invest only in the Indian stock market. So I’ll speak in the Indian market context. How do I go about judging liquidity? So I look at the trend in the monthly domestic investor and foreign investor flows. And that gives me a pretty good idea about where liquidity is headed. So for a long time, foreign investors used to dominate the floors in the Indian equity market.

[00:26:41] Gautam Baid: But today it is the domestic institutional investors or the domestic investors who are basically controlling the narrative now and who have taken the mantle of leadership. And it is the individual investor. who’s powering the current ongoing bull market in India and monthly investments in equity mutual funds in India for the month of September crossed 2 billion for the first time ever.

[00:27:03] Gautam Baid: And just to give you some context, this monthly investment in domestic equity mutual funds in India was less than half a billion dollars six years ago. So in just six years, the monthly flows from individual investors has more than quadrupled. And to understand why is this happening? Why is there such a big surge?

[00:27:20] Gautam Baid: In financialization of savings, we need to look at history. So look at the history of the US, Japan, and China. When those countries GDP doubled from 3 trillion to 6 trillion, so their stock markets did not just double, their stock markets tripled or even quadrupled. And why did that happen? It’s because when a nation transitions from a low per capita income country to a middle income per capita country, the basic spending on items like food does not go up much, but these categories of branded discretionary consumption and financialization of savings These two categories simply exclude.

[00:27:53] Gautam Baid: Today, India is at 3. 4 trillion of GDP. And in the last few years, we are already seeing this trend of financialization of savings playing out. A quadrupling of flows in domestic equity mutual funds is just the beginning. I think that the day is not too far when the domestic investor flows will actually surpass the foreign investor flows in India.

[00:28:12] Gautam Baid: And then we won’t be dependent on foreign investor money anymore. And this is, again, like I write in my book, This is the reason why quality stocks in India just do not correct much because at every low level, there’s so much domestic money coming in to the market every month that the domestic mutual fund managers and local fund managers of private funds, they are just waiting on the sidelines.

[00:28:33] Gautam Baid: It’s so much liquidity to buy these stocks. So this is again why, you know, if you invest in good quality stocks in India, The drawdowns are basically limited and minimized to the maximum extent possible. 

[00:28:44] Clay Finck: So when you say financialization of savings, is that just referring to more and more people having access to brokerage accounts and getting access to the world of investing?

[00:28:54] Gautam Baid: Not just access to brokerage account, it also means access to banking accounts. Driven by our Prime Minister’s Jan Dhan Yojana in the last few years, there’s been a surge in financial inclusion in the country and a lot of people are also opening bank accounts. They’re also, you know, accessing a lot of financial services through digital medium, like, you know, mobile apps and the like, and financialization of savings does not only include the stock market, it also includes various aspects of financial services, like wealth management, insurance and asset management and estate planning.

[00:29:24] Gautam Baid: And so as this is an area on which I’m very bullish and I’m expressing this bullishness through A few holdings in my India fund as well. So they’re holding some of the leading wealth managers of India, listed wealth managers of India in our fund. And I think this industry is poised to grow at a very healthy clip for a very long period of time for the next decade.

[00:29:43] Clay Finck: I wanted to jump to your lessons from the bear market in India, because that’s what much of your journal and your book is covering. So, let’s start with, uh, tracking the bear market and watching prices just continually fall and fall and people selling irrespective of valuations. I’m curious if you were seeing any signs that marked the end of the bear market in India and how we may be able to be on the lookout for in future bear markets of signs we can look for to mark the end of a bear market and the entering of a bull market.

[00:30:18] Gautam Baid: Yes. So bear markets are very treacherous and very painful. There’s a reason for that because there are so many false starts which give rise to false hope among investors that the bear market is finally coming to an end. If you closely observe in my book, you’ll notice that, you know, I mentioned that during February 2019, when, uh, there was a big hope among investors that the bear market is finally coming to an end because of the strikes by the Indian army in Pakistan, you know, many people thought that, okay, you know, now this will bolster the current political dispensation chances to come back to the full majority.

[00:30:50] Gautam Baid: And therefore there was a brief bear market rally And then the investor’s hopes got dashed shortly thereafter. Then in May 2019, when the Modi government came to power again with a full maturity, again, there was a very sharp bear market rally and people were expecting the bear market to end. Again, our hopes got dashed after that.

[00:31:09] Gautam Baid: And then in September 2019, when we had that historic corporate tax cut in India, Then again, I’ve written in my book, including myself, you know, I mean, I expected, okay, now the bear market will finally end. This is, this has to be it. Now the pain has to stop, but again, our hopes were dashed. And again, the bear market resumed.

[00:31:24] Gautam Baid: So three separate bear market rallies, basically just sucked us in back in and just made us complacent again, that, okay, the bad times is over, but the bear market is not over till the last bull gives up. And by 23rd March 2020, I can assure you almost everyone in the world had almost given up and by the end of it all, like I write in my book, investors were posting philosophical messages about life, the meaning of life in general on WhatsApp groups.

[00:31:49] Gautam Baid: That was just how despondent everyone, everyone was. You’ll get to know the Exact bottom only in hindsight, in this case, the global markets including India bottomed on 23rd March 2020. But generally a new bull market kicks off with a few consecutive months of hugely positive market breadth. This is what was missing during those three bear market rallies.

[00:32:09] Gautam Baid: It just lasted a few weeks, but not for a few months. And you know, by June 2020, after the first three months after the bear market ended, it was now clear to me that, okay, now I think we can reasonably say that the bear market has ended and there are three telltale signs for, you know, a new bull market to begin, valuations, which are based on depressed corporate and loosening

[00:32:36] Gautam Baid: liquidity from very tight levels. And the three ingredients for a bear market to begin. are high valuations on peak corporate earnings based on inflated margins and tightening liquidity from very loose levels. So basically this is exactly what happened in late 2021 when these three phenomena played out.

[00:32:55] Gautam Baid: That is when you had that 15 month long difficult bear market in US tech. So this is not this broad parameters may help you, but to be honest, practically speaking, you get to know the exact peak in the exact bottom only in hindsight. 

[00:33:09] Clay Finck: Right. That’s exactly what comes to mind. When you say that, you said, uh, you know, you could see the growth for a few weeks, but, uh, a few months is kind of when, you know, you’re in the bull market and you talk about this in your book where, you know, it’s much better not to try and time this stuff and time when the bottom is going to be, because it’s only in hindsight when, you know, for certain we should always just be looking to continue to buy things for less than they’re worth and having that longterm time horizon rather than Trying to get you and, uh, jump in and out of the market.

[00:33:41] Gautam Baid: That’s really, that’s really it. Yep. That’s the best we can do. This is, and this, you know, I’ve tried this enough in the last 16 years of investing type to trade in and out, you know, and, uh, based on market sentiment or what I expect the market to do without realizing that the best stocks, the biggest winners in the market, Clay, they tend to make their biggest moves, you know, doing flat or range bond markets.

[00:34:01] Gautam Baid: And this is. Again, something which you learn only from experience that, you know, these big winners, what they do is they go up sharply during the range bond market when the market is doing nothing. Basically, you know, like in India, for example, like in the past also in the US as well. They’ve had many range bond markets.

[00:34:16] Gautam Baid: Like I’ll give you some numbers here just to illustrate this point. Very important. So between 31st December 1964 and 31st December 1981, the Dow Jones Industrial Average in the US went from 874 to 875. A move, a single point move. It went up by one point in 17 years. Yet Warren Buffett compounded his capital at more than 20 percent over those 17 long years when the market gave zero.

[00:34:41] Gautam Baid: And that is the hallmark of a true stock picker. It’s very easy to make money and there is, you know, euphoria all around. Liquidity is very wholesome and, you know, bull market sentiment is prevalent, but the true test of a good investor is how much you’re able to protect yourself and your clients during a bear market and whether you’re able to generate alpha.

[00:35:01] Gautam Baid: During range bond markets, we have to accept the fact that during bear markets, when everything falls, you know, even our portfolio will fall. In the book, I write about my experiences in March 2020, so by February 2020, I had already transitioned to, you know, becoming a very high quality focused investor, you know, focusing on high quality equities only.

[00:35:20] Gautam Baid: And yet, when March 2020 came, even my portfolio fell 30 35 percent in a single month along with the index. Because in a month, when Apple, Google, Microsoft are falling 30 35 percent in 3 4 weeks, and what can you do? You can just accept this volatility, or you know, and just accept that, you know, this is a general norm for equity markets that you will get these periodic phases of fear and pain once every decade.

[00:35:45] Gautam Baid: But you have to take the pain if you want to enjoy the long term gain. There’s no way getting around it. 

[00:35:50] Clay Finck: And bear markets can also give us very good opportunities to add to high quality companies. And on page 157, you talked about when it’s appropriate and when it’s not appropriate to average down during a bear market.

[00:36:05] Clay Finck: So what did you find in your research on this? 

[00:36:08] Gautam Baid: Sure. So there are four point, 40 points here. You must not average down much on highly leveraged business models like bank, uh, banking. You must not average down much in operationally leveraged or operationally levered models like commodities. You must not average down in businesses which are facing technical or technological obsolescence.

[00:36:30] Gautam Baid: You absolutely must not average down in the highly levered business models involving fraud. You can average down or you should average down in stocks of structural growth businesses. With a large size of opportunity and having sector leadership and This is the single biggest advantage of investing in quality because when you invest in quality, it empowers you and it enables you to view every market correction as a buying opportunity.

[00:36:58] Gautam Baid: And this is what helped me stay the course during March 2020. If you’re on the second last page of the book, you may recall that unlike 2018 and 19, when I felt nervous and anxious on many occasions during market sell offs, this time I know. That I’m in the safe hands of quality and that my portfolio’s recovery eventually.

[00:37:16] Gautam Baid: Recovery is a matter of when, not if, so investing in quality empowers you to stay the course. I think that’s one of the single biggest advantages of being a high quality equity focused investor. 

[00:37:28] Clay Finck: When I look back to 2022, I think about all these names that were just high flyers in 2021, and then their growth slowed down and then the stock just got hammered.

[00:37:39] Clay Finck: I think it’s much harder to average down psychologically and buy more into something like that versus something that’s just consistently delivering the, the consistent high quality growth that they’re doing. So like, top line revenue continues to increase. I think investors really pick up on that consistency.

[00:37:56] Clay Finck: And you know, it’s not so choppy in terms of like tremendous growth one year and growth that slowed way down the next. And, you know, I think there’s sort of the predictability in determining that quality there. And also something that’s able to continue to grow and weather through those troubled times, makes it much easier to buy into quality companies.

[00:38:17] Gautam Baid: I agree. And in the book, I’ve also mentioned this so that, you know, this bear market made me realize why psychologically I’m not really suited for very, very sharp volatility of 70 percent on the way up and the way down. I think for me, minimizing volatility, you know, by, you know, building a very robust portfolio, prudently diversified portfolio, I think that is what really suits my temperament.

[00:38:37] Gautam Baid: So, This is again, something you have to go through the grind and the experience to actually discover your own investing style. 

[00:38:44] Clay Finck: So I wanted to pull in one more quote here because I think it’s just so important when it comes to understanding our biases. You’re right. Many times, investors who have seen a bear market are unable to participate in the subsequent bull market due to price anchoring.

[00:39:00] Clay Finck: Focus on finding value, not on trying to get the lowest price. And I think this is just so, so important, especially if your goal is to own high quality businesses, because high quality businesses over time, they generally tend to continue to hit new all time highs at just about every year. It can be difficult for us, you know, as investors because it’s so easy to get anchored on where you could have bought the company.

[00:39:24] Clay Finck: or maybe even three or six months ago. 

[00:39:27] Gautam Baid: True. But this is again, what makes Warren Buffett the greatest of all time, right? He bought Apple that had already reached cult status more than a trillion dollars of market cap and yet he made the biggest amount of money of his entire investment career in Apple itself.

[00:39:42] Gautam Baid: He did not do price anchoring. He was focused on finding value. He bought Apple stock and it was out of favor, but Buffett had the vision to visualize Apple as a consumer brand company, branded consumer company, not as a hardware company. He was able to look at the high switching cost and the strong customer loyalty for the product and he focused on the qualitative attributes which mattered and not You know, the prevailing market sentiment.

[00:40:06] Gautam Baid: And this is again, the hallmark of a great investor. It is your independent thinking to take a view, which is different from that of consensus, because if you take the same view as that of the consensus, then how can you outperform? One more quote 

[00:40:19] Clay Finck: I wanted to mention here too, is different stocks require varying degrees of patience.

[00:40:24] Clay Finck: What did you mean by this quote here? 

[00:40:26] Gautam Baid: This is a very important quote, actually. And it’s true that different stocks require different degrees of patience. Be very patient with able management teams operating in structural growth industries and if you can find such companies in the small cap or mid cap space with a large addressable market opportunity.

[00:40:45] Gautam Baid: And having sector leadership can be the most patient with such investments. It’s very, very important because then you have struck the gold mine. Very, very important. And, you know, there are certain embedded optionalities in a business which the market cannot price upfront for managements that can scale.

[00:41:03] Gautam Baid: Businesses led by dynamic pivoting.

[00:41:09] Gautam Baid: into adjacent areas within that industry and they keep expanding the terminal value, something which is quite difficult to model in an Excel spreadsheet. So this is why, you know, you tend to keep getting positive surprises when you partner with very capable managements. And you tend to keep getting negative surprises when you partner with fraudulent management.

[00:41:30] Gautam Baid: Again, you know, the power of management in long term wealth creation just cannot be overemphasized. It is so, so important. And this again, something it’s a soft factor, but it’s something which again, you get to appreciate only with the passage of time and experience. This is why I’ve talked about the importance of management so much in my new book at multiple places.

[00:41:48] Gautam Baid: You’ll see I’m repeating the same point again and again, because This principle is getting reinforced in my mind again and again throughout the, as the bear market picked up steam, because I was noticing that the average or below average managements, their companies were struggling a lot. Whereas the strong capable managements, they capitalized on the bear market and the depressed industry conditions to capture market share away from their competitors.

[00:42:10] Gautam Baid: And this market share capture during recessions and bear markets is a source of great value creation for shareholders over time, over the long run. That’s why you should focus on sector leadership and strong management teams. 

[00:42:23] Clay Finck: I had a question here on the wisdom of markets. Many people echo Benjamin Graham saying that the market is a manic depressant, which it sometimes can be, but there’s also a lot of wisdom that can be found in market prices and how markets react during different periods of the bear and bull markets.

[00:42:42] Clay Finck: And you have one journal entry here. You talk about watching which stocks don’t stabilizes.

[00:42:52] Clay Finck: So can you talk to us about how market prices give us valuable information and signals about a company? 

[00:42:59] Gautam Baid: Sure. So as an active and highly engaged investor, over time, you develop what is known as a feel for the market. So what do I mean by that? If a group of stocks from a single industry are all weighing up rapidly for a few successive days in a row, then that is a strong signal to you being given by the market.

[00:43:17] Gautam Baid: that the underlying fortunes of that industry may be turning around and should be investigated further. In fact, this is one of the best ways to identify inflection points in any given sector or industry. This is just the starting point for research. This is not a necessary condition that you will find that the industry is turned around, but it should make you sit up and take notice.

[00:43:37] Gautam Baid: I’ll tell you what I do in such cases. The moment I see a particular industry, stocks from a single industry is suddenly going up together as a group for a few days in a row from very depressed levels. Immediately download the latest earnings conference call transcripts of the leading companies in the sector and try to read between the lines about what the management is saying, because you may get clues from what the management is trying to say in that latest or most recent earnings conference call.

[00:44:02] Gautam Baid: And most of the time you’ll Observe that the stocks which are going up do not even have any current earnings to speak of. They’re currently loss making or because of the industry down cycle. But we get to realize only in hindsight that the market in fact was a very smart discounting machine. So just try or, you know, try or miss to, you know, gather, do some scuttle, but try to connect with industry sources to get a sense of what’s happening on the ground.

[00:44:25] Gautam Baid: Because by the time it’s reflected in the reported numbers, by that time the stock prices would have run up. So you have to do the work. Pay attention to the market, pay attention to what the market is trying to tell you and then start the work at your end. 

[00:44:37] Clay Finck: One interesting point that Chris Mayer has told me in relation to this is, you know, as value investors, oftentimes we’re looking for something that, you know, seems to be trading at a good price.

[00:44:48] Clay Finck: So oftentimes we can see, Oh, this stock’s down 20%, but the fundamentals haven’t really changed with it. So today seems like. you know, discount relative to recent prices. One comment he made to me was that sometimes the market can get ahead of a company’s future growth. So a company might be at all time highs and you’re like, Oh, well I’m not getting the bargain because you have that anchor of where the price was before.

[00:45:09] Clay Finck: But sometimes the market can see, you know, a quality management team continuing to capitalize on the opportunities ahead. And even if a stock’s at an all time high, sometimes it can still be trading well below its intrinsic value. 

[00:45:23] Gautam Baid: Very true. So any stock which became a thousand bagger or a 10, 000 bagger or a hundred bagger hit an all time high hundreds and thousands of time in its journey, right?

[00:45:32] Gautam Baid: So unless you buy a stock at an all time high, how will you make money? So obvious. Seems very obvious in hindsight, right? And in fact, I’ll give you one more example here. So now any stock, any stock in the world, which has compounded at 18 to 20 percent for the last 20 30 years was by definition undervalued at all points of time throughout those 30 years and while it was hitting all time highs.

[00:45:53] Gautam Baid: This is why I always seem to talk about focusing on underlying value and not focusing on the stock price. And this is what differentiates value investors from momentum price chasers. 

[00:46:05] Clay Finck: I had one question here about the Fed. In late 2018, you talked about how markets were falling and since inflation was low at the time, you expected the Fed to intervene to avoid a meltdown.

[00:46:18] Clay Finck: Today, you know, the Fed is all what a lot of people want to talk about. There’s a ton of pressure on them. There’s a ton of pressure and concerns around Inflation. So I’m curious how you’re thinking about the Fed’s policies today and its impact on markets. 

[00:46:33] Gautam Baid: Well, it’s very interesting that you asked me this question because just yesterday night, well, before going to bed, I was reading Howard Mark’s latest memo, which is titled further thoughts on the biggest key change.

[00:46:43] Gautam Baid: So. Last year in December, he published a memo called a very big sea change in the markets and just yesterday night, a new memo came out titled further thoughts on sea change. So in that, Howard Marks is trying to bring out this very point that we are in the era of zero interest rates is over and now we investors will have to work harder to make good returns from equities because now equities as an asset class.

[00:47:06] Gautam Baid: faces a very strong challenge from a very viable alternative, fixed income, which was not an alternative for the last 13 years, since 2008. In 2008, the Federal Reserve cut interest rates all the way to zero. And for the next 13 years till 2021 end, it basically stayed near that level, right? So moneymaking was relatively pretty easy, except for a brief period in between because of COVID.

[00:47:28] Gautam Baid: But Now that money market funds are giving you more than 5 percent and the Federal Reserve is clinging on to this higher for longer narrative, that’s likely to act as a headwind for equities over the medium term. So what will, what may happen here is the markets may become range bound, the markets may go into a long term time correction, but individual bottom up stock pickers will be very handsomely, handsomely rewarded.

[00:47:52] Gautam Baid: I think this is. The time to really, uh, for active management to shine and to make a very strong comeback after almost more than a decade of underperformance. So this is what my view is. And as far as the Federal Reserve is concerned, I think they have very less headroom today to cut rates to very low levels.

[00:48:08] Gautam Baid: And in late 2018, driven by the stock market sell off, Jerome Powell made a statement in January 2019. And he said, okay, I get your message. I will not be that restrictive anymore. And then he started cutting rates by the middle of the year. But this time around, even though the Federal Reserve may want to, the markets recover, but their hands are basically tied by the very deeply entrenched inflation, which may, which does not look like going back to 2%, which the Feds target anytime soon.

[00:48:34] Gautam Baid: I think we are in a higher for longer regime or quite, you know, a few years down the line. I think if you look at the Federal Reserve’s dot plot, I mean, they forecast that they don’t see The inflation going back to 2 percent anytime soon within the next two years, so we should definitely pay respect to valuations in such an environment and this is not the time to take excessive risk.

[00:48:54] Gautam Baid: This is the time to cut leverage from your asset allocation, cut high risk from your asset allocation, focus on quality. Be prudent and pay respect to valuations. I think that is how I would approach investing in this environment. 

[00:49:07] Clay Finck: And conventional wisdom, you know, says with higher interest rates, you’re going to see lower stock valuations.

[00:49:14] Clay Finck: It seems a bit too simplistic for me, you know, after being in the markets for a certain period of time, you tend to kind of become skeptical of if X then Y type statements like that. I’m curious what your thoughts are on, you know, how interest rates should be impacting valuations and Whether that impacts how you’re valuing companies today versus two, three years ago.

[00:49:38] Gautam Baid: So I’ve talked about this in my book as well, that, you know, as long as interest rates go up in an orderly manner. Stock prices can go up at the same time as well. So by middle of 2007, the Fed Fund’s rate was 5. 25%. And it was only after many years of tightening that we finally had the subprime crisis and the stock market crash in 2008 and 2009.

[00:49:58] Gautam Baid: But for many years, between 2003 to 2007, we had a multi year bull market because interest rates went up in an orderly fashion. But this time around, Because interest rates have gone from zero to 5 percent in just a matter of one year, the pace, it’s a pace of increase, which matters to the market, not the absolute, absolute increase, but the sharpness of the increase because interest rates have gone up so fast in such a short, short span of time, at a time when global debt has crossed 100 trillion and U.

[00:50:26] Gautam Baid: S. federal debt has crossed 33 trillion a year. You cannot fathom or imagine a scenario in the future when something bad is going to happen because you have a scenario where trillions of dollars of debt has been taken and interest rates are going up at the same time. So something, some big financial accident is around the corner.

[00:50:42] Gautam Baid: We already saw the initial teaser of the teaser of this in March when Signature Bank, First Republic Bank, and a few other banks basically collapsed. So I think, you know, you will, you will see a lot of regional bank failures over the next few years because of this high interest rate environment, because what’s going to happen is a lot of people are going to basically go opt for the large, larger, safer banks because they perceive them to be safer and there’ll be a deposit flight away from the regional banks and they are, they’re also very heavily exposed to the commercial real estate market and we all know that commercial real estate market is in a big mess.

[00:51:15] Gautam Baid: I think regional banks are going to be the very big pain point for the US stock market over the next few years. 

[00:51:21] Clay Finck: Well, I guess that begs the question, you know, we may see another bear market here in the near future. So, you know, you mentioned avoiding like highly leveraged companies. How else can investors best prepare themselves for a bear market?

[00:51:36] Gautam Baid: Well, this is a very, very important question, Clay, that as an investor, how can you be best prepared to survive the periodic severe bear market corrections and the future bear markets in your lifetime? Ensure that you have. tennis balls or high quality stocks in your portfolio and not eggs or junk quality bad stocks, which will splatter after hitting the floor.

[00:51:57] Gautam Baid: Many individuals make large paper fortunes in bull markets, but eventually lose all of it when the bear market ultimately arrives. So, you know, during the bear market crash, both quality and junk stocks fall. Quality eventually bounces back to all time highs after the recovery, whereas the junk stocks never recover or lie low for many, many years.

[00:52:18] Gautam Baid: And how much you’re able to recover after the recovery, how much you’re able to retain after the recovery from a bear market is far more important than how much paper profit you make during a bull market. And quality of the business and quality of the management matters the most in retaining long term wealth.

[00:52:35] Gautam Baid: This is again, you know, the, one of the single biggest learnings for me in my career that, you know, just focus on quality of the business and quality of the management, because this is what’s going to allow you to stay the course, to have the courage to buy more during market corrections and bear markets, and it will also help minimize drawdowns to the maximum extent because there’s always, you know, a demand for high quality equities in any stock market.

[00:52:56] Gautam Baid: So, you know, buyers after the bear market is over, The first round of buying comes in the high quality stocks only. So not only does it provide you healthy returns over time, it also helps minimize drawdowns. the point about drawdowns, even though these value investors do not equate volatility with risk, the point about drawdowns has become significant when you’re putting large amounts of capital to work, especially when you’re running an asset management business or a fund management business.

[00:53:21] Gautam Baid: I’ve worked as a fund manager at a mutual fund before, so I know there are two things which clients do not like. Clients do not like, even if it’s a portfolio of 25 30 stocks, if any single stock blows up 80 90%, even though the overall portfolio impact is muted, clients do not like any single stock blowing up like that.

[00:53:37] Gautam Baid: And, if the market, if the relevant benchmark index is falling 30 40%, and your fund is down 50 percent or more, that is also something which clients do not like. Clients basically want you to fall slight, if you can fall slightly less. Then your benchmark during market sell offs and rise more than the benchmark during market recovery.

[00:53:55] Gautam Baid: Over the long term, you’ll end up with a healthy CAGR. And this is how you build a sustainable long term investment business. This is again a very important point for all emerging fund managers to take care of because now we may be comfortable with volatility. We may be comfortable with 40 50 percent drawdowns.

[00:54:09] Gautam Baid: For us, it is like child’s play now, but clients for whom this is not the primary profession, they get scared and take, you know, They then want to redraw their capital at the capital at the worst possible time when they see their account values crash like that. So, you know, you have to be practical about it, take a very objective view about this, these things and try to follow a philosophy which allows you to have a long term track record and with good study rates of return over time.

[00:54:35] Gautam Baid: The CAGR should be healthy and you should try to minimize volatility to the maximum extent you can. 

[00:54:40] Clay Finck: In discussing the Fed, you mentioned the banking sector. I’m curious if since you talk about the banking sector a lot during your book, is that, you know, a key part of, you know, managing your fund and companies you own today?

[00:54:53] Clay Finck: And what are your general thoughts in banking and how it relates to India? 

[00:54:57] Gautam Baid: So in lending businesses, the jockey is much more important than the horse. It’s all about management, management and management. And one that has been tested across at least a couple of cycles. The market rightly pays up for management quality in this particular industry.

[00:55:13] Gautam Baid: And for investors in a lending business, it is all about trust. Trust is a vital ingredient for valuations in a lending business because at the end of the day, as an investor, you cannot really look into each and every loan that they give out. And in an OPEC business, such as lending. Your primary bet is trust in the management.

[00:55:31] Gautam Baid: So, Management factor is the most important when investing in a highly leveraged business like lending. This is also what Warren Buffett has advocated in the past when he invested in many leading banks in the U. S. Management is what he looks for. That is the foremost important factor in his mind when investing in banks and lenders.

[00:55:49] Gautam Baid: What you want to focus on in lending is growth is very easy to come by because you’re giving away money. What is important is the cost of that growth. So be very wary of lenders who are chasing hyper growth or trying to grow at a very rapid clip by just giving away money indiscriminately. Focus on the asset quality or the quality of the loan book.

[00:56:06] Gautam Baid: And the more granular, the more number of accounts that you have, instead of being concentrated in a few large accounts, the better off you will be as a 

[00:56:17] Clay Finck: I wanted to read one last journal entry here and give you a chance to share your thoughts around it. Most experienced investors will attest to the fact that it’s not about money after a certain level.

[00:56:29] Clay Finck: It’s about passion and love for stocks and investing. You can’t really make it big if you are doing this only to get rich. So I’ll just throw this over to you and allow you to expand on it. 

[00:56:40] Gautam Baid: This is a topic which I’m very passionate about, Clay, and Investing success is very challenging over a long time period.

[00:56:46] Gautam Baid: It is essential to have great enthusiasm for the intellectual process of investing in order to sustain in this field for a long period of time. Because without the inner strength of our passion for investing to carry us during the periodic phases of pain and suffering, it is unlikely that we will be able to survive in this field for long.

[00:57:06] Gautam Baid: Personally speaking, stock market investing remains the most fascinating analytical sport I have ever come across. And it is my lens to understanding the world. Because of investing, I feel more connected to the world around me. To be a truly passionate investor means that you’re always thinking about the future and the direction of the world.

[00:57:24] Gautam Baid: And as a result, you’re always enthusiastically… Observing everything around you. And investing isn’t just a process of wealth creation, Clay. It is a source of great happiness and sheer intellectual delight for the truly passionate investor. I wouldn’t want to live life any other way. And I feel that, you know, I feel really fortunate and blessed that I’ve discovered my passion in life.

[00:57:43] Gautam Baid: And I truly love what I do every day. 

[00:57:46] Clay Finck: Well, I can really resonate with what you say there. I’m, I feel very grateful to have the opportunity to have you on the show yet again. And, you know, grateful to, you know, say I get to read your books as a source of income, which is just really amazing. And you mentioned, uh, you know, investing being a sport and Dan Rasmussen, a previous guest here on the show, he referred to investing as the intellectual Olympics.

[00:58:09] Clay Finck: And I just love that. And it’s just so interesting and the learning never ends. So thank you so much for joining me for the second time. And as always, I want to give you a chance to give a handoff to your book, your fund, and anything else you’d like to share with our audience.

[00:58:28] Gautam Baid: If anyone wants to learn more about Stellar Wealth Partners India Fund, they can visit StellarWealthIndia. com. 

[00:58:34] Clay Finck: Awesome. Well, thank you so much again. 

[00:58:37] Gautam Baid: Thank you so much, Clay. This was fun.

[00:58:39] Outro: Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by The Investor’s Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or re-broadcasting.