Identifying National Monopolies

In this section, Saurabh Mukherjee talks about identifying national monopolies and how to invest in them.

Coffee Can Style Investing

• Saurabh suggests investing in national monopolies using the "Coffee Can" style of investing.

• He explains that as India joins the global economy, investors who have invested in these monopolies will be printing money.

Coffee Can Stocks

• Saurabh shares his experience with offering "Coffee Can Stocks" to a few people and how even if half of the companies are ruined, investors can still earn great returns.

• He recommends going back to read his book on "Coffee Can Investing" and seeing the stocks listed there that are still making good money today.

Learning for Wealth Creation

In this section, Saurabh Mukherjee talks about the importance of learning and hard work for wealth creation.

Reverse Brain Drain

• After working in London, Saurabh returned to India because he saw massive wealth creation opportunities. This is what you call reverse brain drain.

Importance of Learning

• Saurabh emphasizes the importance of learning every 5-10 years to become an expert in a subject.

• He believes that by pursuing our curiosity through learning, we will have so many things to do in one lifetime that money will become a byproduct.

Saurabh Mukherjee's Personal Life

In this section, Saurabh Mukherjee talks about his personal life and upbringing.

Childhood

• Saurabh grew up in West Delhi and went to St. Columbus School.

• His mother was a math teacher and his father was an engineer in a public sector enterprise.

Childhood and Education

In this section, Saurabh talks about his childhood and education. He discusses his family's migration to the UK when he was 15 years old, his middle-class upbringing, and how he chose to pursue subjects that interested him rather than following in his father's footsteps.

Migration to the UK

• Saurabh's family migrated to the UK shortly after he entered class.

• This happened around 1991.

• Saurabh completed his remaining schooling in the UK.

Middle-Class Upbringing

• Even in the UK, Saurabh had a middle-class lifestyle.

• His father worked as an engineer at a Norwegian company while his mother worked as a shop assistant before getting a public sector job.

Pursuing Subjects of Interest

• While growing up, Saurabh wanted to become something but didn't have any specific aspirations like becoming a doctor or engineer.

• He rebelled against his father's wish for him to attend IIT and decided not to pursue engineering.

• After moving to the UK, Saurabh chose subjects that interested him such as maths, English, history, and economics instead of being forced into studying physics, chemistry, and mathematics like in India.

Love for Reading

In this section, Saurabh talks about how reading books from an early age helped him develop critical thinking skills that were useful in his education.

Reading Books

• Saurabh developed a habit of reading books from the age of 5 or 6.

• The British educational system's focus on reading helped him develop critical thinking skills that were useful in his education.

• In contrast, the CBSE system in India had a lot of focus on mugging up.

Discovering Finance and Markets

In this section, Saurabh talks about how he discovered finance and markets after getting admission to LSE.

Admission to LSE

• After getting good numbers in class 11 and 12, Saurabh got admission to London School of Economics (LSE).

Discovering Finance and Markets

• Saurabh was not aware of what investing was or what the stock market or investment banking entailed since neither of his parents came from a financial background.

• Living a middle-class lifestyle in London meant that they were not aware of finance or markets either.

Pursuing a Career in Economics and Investment Banking

In this section, Saurabh Mukherjea talks about how he pursued a career in economics and investment banking. He shares his experience of working at an economist consultancy company and the UK financial regulator before pursuing CFA exams.

Pursuing Economics over Investment Banking

• Saurabh was offered jobs by several investment banks after graduating from LSE but declined them as he wanted to become an economist.

• He became an economist by joining London Economics, where one of his LSE professors had opened a consultancy company.

• John K, the professor who opened the consultancy company, is still Saurabh's Marcellus Guide.

Discovering CFA Exams

• While having lunch with a friend named Nikul Arnold, Saurabh learned about CFA exams.

• He downloaded the syllabus and decided to pursue it despite having no prior knowledge of investing or stockbroking.

• He studied for the CFA exams while commuting on local trains for three years before clearing them.

Overcoming Rigidity in Indian Culture

• Saurabh did not feel any rigidity in pursuing different careers because he grew up seeing his parents do various things to earn a living.

• He believes that there is no place for rigidity in today's complex world where endless knowledge and resources are available.

The Importance of Learning and Pushing Yourself

In this section, Saurabh discusses the importance of constantly learning and pushing oneself to try new things. He emphasizes that there is always more to learn about the world, and resources for knowledge are easily available in today's time.

Learning Something New Every 10 Years

• Saurabh suggests pushing oneself into something new every 10 years.

• It may be uncomfortable at first, but after a few years, one can create expertise in regards to the new thing.

• By the 10th year, one can become a master of it before pressing the reset button again and moving ahead while continuing to learn.

Benefits of Constantly Learning

• Constantly learning makes life interesting and reduces complacency.

• There is no feeling of laziness when one stays humble, keen, and hungry to learn.

Generational Differences in Awareness

In this section, Saurabh discusses generational differences in awareness. He notes that his generation was more aware than his parent's generation, but Mandeep's generation is even more aware than his own.

Differences Between Generations

• Saurabh notes that Mandeep's generation has many opportunities due to plenty of jobs and mind-blowing resources for learning.

• His parent's generation had less risk-taking behavior as they were focused on taking a straight route through life.

• Saurabh's generation encouraged making good use of opportunities and pressing the reset button every 10 years.

• The lack of confidence that was present in his parent's generation is not found in Mandeep's or Saurabh's children's generation.

Investing

In this section, Mandeep and Saurabh discuss investing.

Who Should Invest?

• Mandeep asks who should invest.

• No bullet points available for this section.

Learning and Investing

In this section, the speaker talks about the importance of learning and investing. He emphasizes that anything worthwhile requires an investment of time and effort, including generating returns through investing. Patience is a key factor in successful investing.

Importance of Learning and Investing

• Learning something new every 3-4 years is important for personal growth.

• Pursuing engineering can be a good investment if you are willing to put in the effort.

• Anything worthwhile requires an investment of time and effort, including generating returns through investing.

• Patience is a key factor in successful investing.

Challenges with Investing

• People who struggle with patience should not try investing themselves but rather give their money to others to invest.

• The game of investing is fundamentally a game of patience.

• Investing is less about intelligence and more about patience.

Lack of Holistic Approach

• Small investors may lack confidence when it comes to making investment decisions without expert guidance.

• There is no one for hand-holding when it comes to making investment decisions.

Skill Required for Successful Investing

• Successful investing requires skill that cannot be easily replicated by simply watching others or reading books.

• Skill in investing requires more than just knowledge; it also involves reflexes and experience.

Conclusion

Successful investing requires both learning and patience. It also requires skill that cannot be easily replicated by simply watching others or reading books. Small investors may lack confidence when it comes to making investment decisions without expert guidance.

The Importance of Patience in Investing

In this section, the speaker discusses the importance of patience in investing and how it is a skill that is hard to master.

The Skill and Mindset of Patience

• The first dimension of the skill is about technique, but the second dimension is about mindset and patience.

• Using cricket as an analogy, the speaker explains how Rahul Dravid's game hinges around patience and wearing down the bowler until they have nothing left to give.

• Despite knowing that patience is what makes Rahul Dravid a great batsman, there is no second Rahul Dravid.

• Everyone knows that patience is important in investing, but it's not something you can just take like a vitamin tablet. It's both easy to explain and hard to do.

Why Retail Investors Lose Money

• Retail investors often lose money because they lack the necessary skills or patience required for successful investing.

• Many retail investors believe there is some conspiracy against them when they don't make money, but in reality, it's simply a lack of skill or patience on their part.

Marcellus' Solution for Small Investors

• Marcellus has bought a regulatory license for Registered Investment Advisor to provide solutions for those who cannot invest Rs 50 Lakh.

• The speaker hopes to announce these solutions within two weeks from when this show was aired.

The Availability of Knowledge and Time Wasting Content

In this section, Saurabh and Mandeep discuss the availability of knowledge in today's era compared to 15 years ago. They also talk about the downside of having too many ways to waste time and how it affects a person's ability to focus.

The Positives of Content Democratisation

• There are now a lot of resources available for learning finance.

• Anyone who wants to learn can do so because content is free and resources are abundant.

• There is a lot of high-quality content available for learning.

The Downside of Having Too Many Ways to Waste Time

• Youngsters today have too many ways to waste time, such as social media.

• Social media is an immense distraction that affects a person's ability to focus their mind.

• People spend too much time on useless things like social media, text messaging, whatsapping, email.

• Using time intelligently and focusing one's mind becomes difficult in today's era.

The Importance of Focusing Your Mind

• Focusing your mind becomes a very powerful skill in this era.

• If you work in a full-time job, using the weekend to increase your mental strength becomes a superpower.

• Drinking from high-quality content rather than wasting time on social media or other distractions can help you become successful.

Success Factors: Mental Strength and Decision Making

In this section, Mandeep talks about two factors that contribute to success: mental strength and decision making.

Mental Strength

• Focusing your mind and working on it can make you a superstar in this era.

• Successful people spend less time in tempting situations.

Decision Making

• People often make decisions unconsciously based on what is ahead of them.

• Making conscious decisions and focusing on high-quality content can help you become successful.

The Importance of Discipline and Training

In this section, Saurabh and Mandeep discuss the importance of discipline and training in one's life. They talk about how it can help create a pattern that becomes a part of one's life.

Creating Habits Early On

• Saurabh talks about how disciplining oneself at an early age can help create habits that become patterns later on in life.

• By the time one reaches Mandeep's age, these patterns become a part of their life.

• Mandeep emphasizes the importance of learning and pushing oneself from an early age.

Choosing Productivity Over Entertainment

• Mandeep shares his preference for podcasts over movies as they help push his mind forward.

• While he admits to consuming junk food, he has created policies to ensure productivity in other areas of his life such as work-related travel.

Modeling Oneself After Good Company

• Mandeep talks about how modeling oneself after good company can lead to positive changes in one's life.

• He emphasizes the importance of surrounding oneself with people who have good habits and creating an environment that pushes towards productivity.

The Importance of Reading Books

In this section, Saurabh and Mandeep discuss the importance of reading books and creating a habit out of it.

Making Time for Reading

• Mandeep shares an anecdote about his son making time to read Atomic Habits during a school trip.

• He talks about how modeling oneself after good habits can lead to positive changes in one's life.

The Struggle of Reading

• Saurabh talks about the struggle of reading books and how it requires effort to create a habit out of it.

Encouraging habits during Covid

In this section, the speakers discuss how people are inculcating good habits even during lockdown and how it is encouraging.

People are learning to move ahead in a free market economy

• People are getting to know that in a large free market economy where the government doesn't stand as your parents, one needs to learn, train their mind, move ahead and earn a lot.

• Through people like the speaker, this message is being forwarded and a positive vibe is created about reading and learning.

Coffee Can Investing

In this section, the speakers talk about coffee can investing and why it works.

Criteria for Coffee Can Investing

• The criteria for coffee can investing involves picking stocks based on ROC (Return on Capital) and revenue growth.

• Once you buy these stocks, forget about them. It's like putting them in an imaginary coffee can.

• ROC and revenue growth are important indicators of a company's quality just like a batsman's average and strike rate.

• The criteria itself brings out strong companies whose numbers meet the criteria over 10 years.

Benefits of Keeping Stocks for 10 Years

• Keeping stocks for 10 years helps investors reap benefits from compounding.

The Benefits of Compounding

In this section, the speaker explains the benefits of compounding and how it can be used to create a portfolio of good companies.

Compounding as a Benefit

• The compounding acts as a benefit for you.

• Assume, I bought 2 stocks Stock A and Stock B.

• Assume, Stock A gives you 26% compounded over 10 years.

• Stock A became 500 out of 50.

Creating a Portfolio of Good Companies

• If you create a Portfolio of good companies

• You will still earn great returns. Because, the good companies were allowed to live for 10 years.

• So, there are 3 major strengths of Coffee Can The criteria itself does a lof of heavy lifting

• Of the great companies

• to more than make up for the damaged caused by poor companies.

Government Reforms and Micro vs Macro Investing

In this section, the speaker discusses government reforms and their impact on businesses. He also talks about micro vs macro investing.

Impact of Government Reforms on Businesses

• When we watch a match Commentator says, Today's condition is helpful for swing bowling or it is helpful for spin bowling' Then, that becomes Macro Right

• Commentator speaks about Macro

• Whether he talks about spins, pitch conditions etc.

• So, in that sense,

• When we watch a match Commentator says, Today's condition is helpful for swing bowling or it is helpful for spin bowling' Then, that becomes Macro Right

• Once you are given the Macro

• Even after that,

• There is importance of the player's skill

Micro vs Macro Investing

• Do we have to focus at the bigger picture Which are the developments happening in the country? According to that, In which sectors or industries will there be growth?

• Then, you should do it and you shouldn't as well I will give you an example of cricket.

• Overall Government reforms are important. About Micro But, If I don't know how to bat

Importance of Micro Analysis in Investing

In this section, Saurabh Mukherjee talks about the importance of micro analysis in investing and how macro analysis alone is not sufficient for successful investing.

Macro vs. Micro Analysis

• Understanding macro conditions alone is not enough for successful investing.

• The skillset required for successful investing includes patience and forensic analysis at the micro level.

• Without knowledge of micro-level stock analysis, macro analysis is not useful.

Shallow Thinking in Media

• Media often encourages shallow thinking by oversimplifying economic trends and encouraging people to make investment decisions based on incomplete information.

• People with no knowledge of a subject often think their opinions are valuable, leading to further misinformation.

Impact of Government Reforms on Business Growth

In this section, Saurabh Mukherjee discusses how government reforms can impact business growth and shares his personal experience with Jio's impact on his career.

Jio's Impact on Business Growth

• Jio's arrival in 2016 had a significant impact on businesses across India, including Labour Law Advisor.

• Prior to Jio's arrival, Saurabh Mukherjee was already writing reports about India's infrastructure development under Prime Minister Modi.

• Other government reforms such as Aadhar and RBI banking reforms also contributed to India's economic growth.

Overall, Saurabh Mukherjee emphasizes the importance of micro-level analysis in successful investing and highlights the impact of government reforms on business growth.

Reports on Confluence of Modi, Rajan, Technology and Jio

In this section, the speaker talks about reports published in 2014-16 on the confluence of Narendra Modi and Raghuram Rajan with technology and Jio. The speaker also discusses how to identify successful investments in such a situation.

Identifying Successful Investments

• Investment success depends on identifying national monopolies that emerge when countries form networks.

• The speaker's career in India was made during this time, and their philosophy was built around identifying these monopolies.

• The Milk Man example is used to illustrate how small players are cleared out as national monopolies rise up.

• As smaller players reduce and bigger players rise, investors need to find national monopolies.

Understanding Monopolies

In this section, the speaker explains what constitutes a monopoly and how it relates to market share.

Defining Monopoly

• A company charging 20-40% more than its competitors without losing customers is considered a monopoly.

• A successful company will inevitably become a monopoly.

• Apple is given as an example of a company that has achieved monopoly status through premium pricing.

Misconceptions About Monopolies

• Many people mistakenly believe that market share determines whether or not a company is a monopoly.

• Companies often give different stories to the media and brokerage community than what is actually happening.

Apple's Monopoly

In this section, the speaker uses Apple as an example of a successful company that has achieved monopoly status through premium pricing.

Understanding Apple's Success

• Apple earns 80% of the world's smartphone profit despite only having a small market share.

• Analysts at Marcellus can understand how Apple achieves its success by analyzing the company closely.

Understanding Diversification

In this section, the speaker discusses diversification and how it is often misunderstood. He explains that wealth is created in equity and that most diversification strategies are intended to make zero money.

The Problem with Traditional Diversification

• Many people are taught to spread their investments across multiple assets such as equities, real estate, gold, bonds, private equity, etc.

• However, this approach is not effective for making money because it spreads your money too thin.

• For example, buying bonds in India will only earn you around 7.5%, which is the same as inflation. Buying a flat may not appreciate in value for years or even decades.

• Most diversification strategies are intended to make zero money.

Wealth Creation through Equity

• The speaker believes that wealth is created in equity.

• While traditional diversification may not be effective for making money, investing solely in equity can be risky.

• Having a diversified portfolio of high-quality stocks can help mitigate risk while still allowing for wealth creation through equity.

Investing in Equities

In this section, Saurabh Mukherjea talks about the importance of investing in equities and how to do it successfully.

The Logical Way to Invest

• Saurabh discusses the concept of Coffee Can Investing, which involves putting a massive chunk of your wealth into a good equity portfolio.

• He suggests that anyone between their 20s and 50s should invest in equities.

• If you can't afford a professional portfolio manager like Marcellus or PMS, then buy a tracker fund.

• Saurabh warns against spray and pray investing, where you randomly invest money without any strategy.

Creating a Rainy Day Fund

• Saurabh recommends creating a rainy day fund for emergencies or calamities.

• Calculate your annual expenses and multiply them by the number of months you want to cover. For example, if you want to cover three months of living expenses, then save that amount in an FD.

• Invest the remaining amount in equities.

Staying Invested

• Mandeep asks what happens if there is a market crash like in 2008. Saurabh explains that as long as you stay invested through the downturn, your portfolio will recover over time.

• Provided you don't sell at the height of the crisis, your retirement portfolio's 20-year CAGR could be around 15% on dollar terms.

• To be successful with equity investing, one needs fortitude and patience.

Types of Investors

In this section, Saurabh and Mandeep discuss the type of person who cannot become an equity investor. They also talk about other investment options that are better suited for such individuals.

Equity Investment

• The type of person who lacks fortitude and patience cannot become an equity investor.

• Such individuals should consider investing in bond funds, fixed deposits (FDs), real estate, or endowment policies instead.

• Mental mindset plays a crucial role in determining whether someone is suited to invest in equities.

Retirement Planning

In this section, Saurabh and Mandeep discuss the importance of retirement planning and how investing in equities can help secure one's financial future.

Importance of Compounding

• Retirement is not just an optical number; it requires careful planning to ensure that one's compounding remains intact for the next 25 years.

• Investing all your money into FDs at the age of 60 can be disastrous as inflation will erode your wealth over time.

• Assuming a net return of 4% from FDs and inflation at 6%, every year, your wealth will be destroyed by 2%.

• In 25 years, you could lose up to 70% of your wealth due to inflation alone.

• It is essential to keep some money invested in equities to ensure that you have enough funds for a comfortable lifestyle during retirement.

Wealth and Happiness

In this section, Saurabh talks about his observations on wealthy people's happiness levels and their relationship with money.

Wealth vs. Happiness

• There is no correlation between wealth and happiness, especially in countries like India.

• People beyond middle-class lifestyles are generally happy, and wealth does not necessarily make them happier.

• Saurabh has met people worth billions of dollars who are least concerned about their wealth and more interested in learning and personal growth.

• Wealthy people tend to have sharper minds and a ferocious habit of learning, which contributes to their happiness.

The Importance of Wealth and Understanding Reality

In this section, Saurabh and Mandeep discuss the importance of wealth for a decent existence in India. They also talk about how understanding reality can make life easier.

Wealth and Poverty

• Saurabh believes that a certain level of wealth is required for a decent existence in India.

• Poverty makes people vulnerable as the government does not provide social security, making education, health, etc. an issue.

• The less you think about money, the more money you will make.

Understanding Reality

• The world treats people kindly if they take the trouble to understand it.

• Thinking emotionally or getting into nonsensical things deviates our understanding of the world from reality.

• Having paranoid thoughts or fantasies makes it harder to make money or do anything in life.

Weddings and Dreams

In this section, Saurabh and Mandeep discuss why people spend so much on weddings and how dreams can be problematic.

Weddings

• Saurabh doesn't understand why people spend so much on weddings as he didn't spend much on his own wedding nor did anyone have any expectations.

• People spending too much on weddings affects their retirement plan as they don't save enough.

Dreams

• People waste time unknowingly by being lost in dreams or a fantasy world.

• Watching videos of rich lifestyles can lead to unrealistic dreams that are hard to achieve.

The Importance of Hard Work

In this section, Saurabh discusses the importance of hard work and how most people are not interested in putting in the effort required to achieve success.

The Desire to Learn

• Saurabh emphasizes that those who have a desire to learn will watch webinars and read books to move ahead in life.

• He acknowledges that there are people who are not interested in learning and prefer easy things or fantasy as a relief from life.

• Saurabh notes that while some people may not be motivated by webinars or books, even if 1% of the 1.4 billion population is motivated, it can positively impact millions of lives.

Living Frugally

• Mandeep asks Saurabh about his guilty pleasure since he doesn't watch movies or shop and has an 11-year-old car.

• Saurabh shares that he enjoys traveling with his family within India and around the world since it has become more affordable due to various websites.

• He mentions that they invest their money and donate to charity, hoping to give back more for non-profit causes.

Indulging in Fantasies

• Saurabh warns against indulging in fantasies since it can be dangerous not just because you will spend money but also because your mind will deviate from reality.

Cred App and Saving Money

Mandeep talks about the importance of saving money and paying bills on time using Cred App.

Benefits of Using Cred App

• Paying bills through Cred App earns users Cred Coins which can be redeemed for discounts on various products.

• Users can enjoy discounts on a variety of products including tech, cosmetics, and food items.

• Discounts offered on Cred App are not available on other platforms.

• Paying credit card bills in full and on time through the app helps improve credit score and earn rewards.

Conclusion

The hosts wrap up the episode and discuss their plans for the future.

Episode Wrap-Up

• The next episode featuring Deepak Shenoy is being uploaded.

• The hosts will be traveling to Chennai tomorrow.

• Mandeep jokes about finding two crores in the office of rich people.

• The hosts sign off until the next episode.