6 investing lessons from fund manager Pankaj Tibrewal that stand the test of time

It’s okay if you do not know much about investing. You can still learn from experienced fund managers who share how adhering to certain essential principles has helped them earn good returns for their investors.

Some mutual fund houses have delivered exemplary results, thus, prompting us to check on how they have performed differently from their peers and competitors. It helps to know which fund managers are deciding their investments and their views on finance and money.

You google for names of the best fund managers, and automatically details of Pankaj Tibrewal, Senior Executive Vice President - Fund Manager, Kotak Mahindra AMC crop up on the first page of various search engine sites. 

He has more than 13 years of experience in the fund management area. Prior to joining Kotak AMC, he was in the fund management team of Principal PNB Asset Management Company Pvt. Ltd.

Tibrewal is one of the most refined fund managers that this industry has produced to date. His well-defined approach toward the markets has kept him ahead of most others. While many know and reiterate the investing mantras that Warren Buffett swears by, only the most adept investors are aware of Tibrewal’s investing principles.

If you are new to investing, it would do a lot of good to you to learn how this fund manager managed to list his funds stand out among the more than 2,500 mutual fund schemes in India at present.

Here are the funds that are managed by Pankaj Tibrewal:

Management quality matters

You cannot afford to invest in a company run by crooks and frauds. That is why you must check the background of the promoters to assess the quality of their management. Identifying the work ethics of the promoters is essential to successful investing. Unless you are investing in a company run by trustworthy management, the inherent risk factor will also cause you to suffer losses in the long run. How a company functions and treats its employees tells a lot about its culture. A company that harps on ethical practices and boasts of a strong work culture has the broadest and deepest moat in today’s commoditised world.

Value must be high

Irrespective of how high the company grows, it makes no sense if the company’s return on equity (ROE) is lower than the price you pay to buy its shares. Though growth is essential to creating long-term value, high growth can backfire and destroy a firm’s value too. Check if the company’s growth is adding to its value too since a company must constantly raise capital to meet its growth needs.

Manage yourself first

You cannot manage money if you cannot manage yourself. As in markets, so in life, you must aim for self-control and awareness about your being. Know what you are good at. Realize your core area of competence before deciding your goals. If you are finding it difficult to focus on your goals, practice meditation first. You cannot focus on your future unless you are grounded in your present. Train your mind to concentrate on what is at hand before you consider focusing on your future. Do not be obsessed with your past and future. Your present matters more. 

Meditation for a few minutes every day will clear your mind of unnecessary chaos and strain. It will lend you much-needed mental clarity, and raise your emotional quotient, thereby, reducing stress. Do not let success get in your head. The more you are intoxicated with your success, the more you will feel drained because of your failures. Meditating for a few minutes every day will help you keep calm and find the necessary balance in your life, irrespective of which way the market sways.

Cut out the unwanted noise

It does not matter who says what. Focus on your strategies. You can outperform the markets in the long run only when you can cut the noise and remain focused on your financial goals. Novice investors tend to be carried away by news of stock-price movements without realizing that are obvious and permanent. What matters is how much advantage you can get out of it. Focus on quality businesses suffering a temporary setback; it is the best time to invest in them then. 

However, take care that the interim setback does not have a prolonged bearing on the intrinsic value of the company. More than what stocks you choose, it is important how you treat your stocks during the worst and best of times.

Timing the market is futile

There is a myth that one can sell at the top and buy at the bottom. You just cannot time the markets. In times of volatility, it is best to do nothing and sit tight with an eye on your portfolio.

Learn from your mistakes

The problem is that we pay no heed to our mistakes. Everyone makes mistakes in the market. The market ups and downs have a lot to teach. Learn from the mistakes that you made. Foment your own investing style and stick to it, no matter what. Many people tend to sell their winning stocks early. This is because they focus on the stocks’ valuation alone and not their growth. Often an unprecedented growth corresponding to certain macro factors can surprise us. Be patient with your stocks. Growth drives valuations. 

So, if a company’s stock is highly valued, check for the growth outlook of the company. Hold on to the stocks on realizing their business potential. Sometimes, you may tend to miss out on some really good stocks. This is actually the “Error of Omission” that can prove to be a costly mistake. This also explains the need to be open-minded and agile while investing.

The best fund managers have, time and again, proved that the stock market is not a place to gamble. It takes considerable learning about stock fundamentals and patience to grasp its technical aspects before setting afoot in it.