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Credo Capital

Sensex @60,000 !


In the last blog written in March 2021 ( a good 6 months ago!) had mentioned that what a difference a year can make comparing to March 2020 and how most of our investors had maintained social distance from their portfolios and it had helped as the markets bounced back from 25000 in March 2020 t0 50000 in March 2021.  See the blog here :

Today it seems euphoric to be at 60,000. But the journey has been anything but easy. For almost entire 1990s to mid 2000, it was a cyclical market with 5000-5500 being top and 2000-3000 being low, as one after another scams came and went and scary things like 9/11, Kargil happened. Somewhere around early to mid  2000 we had an infra boom and the world also had an excellent rally and broke above 5000 levels and went to 20000 in 2008 moving 4 times in less than 4 years, This was a rally like no other, global in scale from RE boom in remote areas of India to stocks world over everything rallied till Lehman brothers collapsed, from 20000 sensex fell to 9000 in a years time, though we moved up fast too, it took almost 7 years to reach 20000 again in 2013.

In 2020 just as the virus news was surfacing in early Feb, Sensex was near 41000 and it fell to 27000 (almost 35% in one month) but back then most of us were worried about health too much to bother about wealth but many pulled out of markets completely.

Today we are 60000 or almost 50% higher than Feb 2020 and that is a good return to get.

The gist of what im trying to convey the journey from 3000-60000 a 20 times return in 20 odd years comes with great ups and downs and from what we see above, 5000 was an euphoric high in 2000 but 9000 in 2007 was considered low as it had fallen from 20000 to 9000. And in 2020, 27000 was considered very low. These highs and lows will keep changing but what is clear is that over time markets keep making new highs, and that in between for many years may be 3-4 or even 7-8 years they move in a see saw doing nothing with no returns, and then in 2-3 years move up 5 times to make good all the years of no returns and much more.

The net result of all this is not severe migraine but wealth creation, Franklin Bluechip Fund rated just 2 stars, out of five,  has given around 16% p,a since 2000, in other words 1 Lac becomes 25 Lacs in 21 years at that rate of return. But not many held on or kept investing,  No need to keep invested in the same fund but staying invested in equities made a huge difference to many investors lives.  Indeed many of you who have been clients for almost since 2001 when i was working and since 2007 when i started out Credo, have been around and got good returns,  Thank you for being with us and happy to have helped on your investing journey in a small way.

On a closing note, need to understand that equities are not a place to be  euphoric at 60000 or despair at 30000 !  but keep asset allocation between equity and debt in good ratio, and have a plan for  higher equity as markets go down and lower as it goes up (this also depends on individuals unique circumstances). Do let us know if you want to check your equity allocation and take a call to reduce equity if need be. would be happy to help.

Happy investing,

Disclaimer :



A year on..

One year is a long time in life and markets, on 24th March 2020, India announced a 21 day lockdown, if anyone thought normal was boring, it made us crave normalcy.

Sensex crashed from 41ooo to 27000 in a matter of one month and lost 35% value, at the height of the panic on 17th March, We sent a note to clients as follows



Usually health and wealth of ourselves and our loved ones are the two most important things for anyone. This pandemic threatens both health and wealth temporarily, In this time best is not to panic, just as isolation keeps us safe from the virus, not doing anything in haste will keep us safe from markets too and when the tide turns as it surely will, both health and wealth will not only return back to normal but with a new sense of appreciation for life itself,
None of the past events have had any permanent damage to the economy in the long term and this too shall pass. Stay safe and along with social distance, keep social /business  media distance too !
Reach out to us for any information / query you may have,
Today a year later, economy is even better than before the pandemic. so wealth of our clients has not only come back but it is above last years levels too.  One of the best things most of our clients did was practise social distancing from their investments as well, helping them a lot.  This is perhaps a key to investment success, avoid seeing portfolios regularly, compare returns, move from X fund to Y fund etc. As Warren Buffett said, the game is won by players who focus on the field and not on the scoreboard. The score board is an outcome of what’s going on the field, and is not the game.
Sadly health wise it has been an ordeal for many of us and hopefully with vaccination catching up, we  can breathe a bit easily.
As we close this financial year 2020-2021,  we need to remind ourselves that good investment returns is about avoiding panic in bad times, not being greedy in good times and maintain social distance from portfolio most of  the times 🙂
Hope Financial Year 2021-2022 gives us a normal year both in markets and our day to day life.  As it is written on back of the lorries,  “Be safe and maintain distance”.


Elections over. What next? World Cup? Confusing events and investing

A friend called to say now that elections are over, can he start investing as markets are up. I get asked questions like these all the time, Think about would you decide what do with your career based on elections? Does your dentist say you need a filling but lets wait for election results!

Above examples sound funny, postponing investing based on events like election is not only not funny but injurious to your wealth too ! A simple way to invest is when you have money and wait for a decade and then sell if need be or withdraw partially. A better way would be to invest methodically monthly via SIP or STP and get your asset allocation right. And let the magic of markets and compounding do its work patiently.

It is fine for traders to take event based decisions be it elections or anything else but investors need to keep calm and invest rather than wait for events to be over. Future is never clearer hence it is better to invest and wait rather than wait to invest and miss the bus, train and flight !

Happy weekend !


3 Things to avoid in investing

Having had conversations with at least a few hundred investors on their investments, goals they invest for and what money means to them can say that most investors make some common mistakes. Have listed 3 most important things to avoid in investing.

1.Delaying planning & investing: It will probably take just one day to sit and compile all your investments across FD, Mutual Funds, Govt Savings schemes, PF balance etc to find out what exactly are you worth as the answer to most financial questions is do i have enough !

Do i have enough to retire?

Do i have enough to give good education to my children?

Can i run the family for 6 months to a year if i loose my job or meet with an accident

Yet, we delay this important point of planning saying who has the time etc. while spending hours every day discussing endlessly about politics,cricket and movies ! Take a day off if need be and get this going. Recent setbacks faced by employees of Jet Airways tells us this very clearly.

Once you have the details in place, start investing in all earnest. 30% of income is a good place to reach. After all, if we are paying 30% taxes to govt, shouldn’t we pay ourselves 30% too for our future?

We all seem to have starting trouble..Have met dozens of people who want to start planning and investing, we have a hour long conversations about goals and current investments etc., they promise to get back soon but the “soon” never happens. Again take a few hours off if need to be set up the investments.

2. Invest randomly : Ask about their favorite sport, gadget or car and you can see peoples eyes light up while they talk about nano level detail but ask about where they have invested, they reply, i don’t know, my banker asked me to invest in ABC High Return Fund with guaranteed high returns so i invested 10 Lacs! On checking it will turn out that ABC High return is not a Mutual Fund but an insurance scheme that can at best give 5% returns that too after 15 year lock in. Instead if we check with couple of of sources, compare returns, take time to understand, most mistakes can be avoided, but no, we decide hurriedly and regret in leisure.

A thumb rule to avoid this mistake : Any investment that is new, has a closing date, and is hurriedly sold is most likely not in your best interest.

3. Expect linear and regular returns in equity funds : Have you wondered why equity mutual funds give high returns ? You may answer because they invest in stocks and stocks give good returns in long run but why do stocks give good returns in long run? It is because by nature they are volatile, people pile upon stocks on the way up and sell them on the way down, this makes as sense as buying a car as its prices keep increasing but start selling minutes after its prices go down, We would in fact buy on the way down and avoid buying at high prices but we do do opposite with stocks and hence they are volatile, this is what gives the high returns. If we understand this and seldom sell equity but keep buying them then results though not guaranteed are likely to be very satisfactory.

I said three mistakes but there is a fourth one of not having proper asset allocation. Investing is never EITHER / OR it is AND. You can have FDs or bonds for safety AND Equity for high returns. Do not expect FD to give high returns ( remember it is for safety and not returns ) or equity to give regular annual returns safely ! a 7.5% 5 year FD will give 7.5% every year,

An equity fund on the other hand would give you something like this

Year 1 : -24% (ouch!)

Year 2 : +26%

Year 3 : +10%

Year 4 : +41%

Year 5 : -2%

Year 6 : +32%

Year 7 : -1%

Apprx returns of the above equity fund is 15% but depending on when you invested you might have seen either great returns of 40% or a loss of 24%. Even if you stayed invested from Year 1 to 3, you might have just about got small returns after 3 years. Most investors sell in 2-3 years but those who stay longer experience better returns.

Avoid these mistakes for a peaceful and prosperous future..


Ikea and herding

“We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.”

Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one – Charles Mackay

Ikea store crowd

Charles Mackay knew a thing or two about herd behaviour (In investing it is everyone jumping from one investment to another ) having researched and written the book, “Extraordinary Popular Delusions and the Madness of Crowds” in 1841 ( Yes, in 1841!) . The book shows the manic schemes of those days such as Tulipmania, South sea bubble etc. But why am i discussing that along with the opening of the Ikea store in Hyderabad?

We are wired for herding as humans are social by nature living in large societies.

We are wired to what our neighbour’s are doing, if it was bell bottom pants for previous generation it is buying torn jeans today. it is biological not logical.

We herd into investments too, it was real estate 4-5 years back, bitcoin last year and midcap funds this year

For a bubble to break there is no need for anything, like the proverbial last straw on a camels back, bubbles collapse on its own weight

So as an investor how to prepare our minds for long term ?

Investments are a vehicle to reach your goals and are not a game to maximise returns quickly.  Would you hop in and hop off twenty different vehicles to reach your destination or take a direct flight ?

Investments are for your children’s education, your retirement, your wish for the good things of life like travel. It is for important goals so that we don’t have to depend on charity of others im old age and to educate our children in a better way. If we think about money this way, neither would we stand in queues infront of a store to buy something that we were perfectly fine without till the day before.

We are wired for short term flight or fight response which makes long term thinking difficult. Which is why so little people meet success in investing. We herd into investments at the wrong time and exit at the wrong time too.

Media plays a large part in it as bad news sells more than good news. You will never see a headline that says this investor made a fortune by being in it for the long term and not herding.

Successful investing is simple but not easy as it requires us to not move in and out of investments on short term performance.

Successful investing is more like farming if it takes 1o years for a mango tree to grow it will take 10 years, you can’t plant a tree today and expect fruits in 3 months. But once it is grown then it will give fruits for decades.

One easy way to beat short term outlook is not to look at our investments regularly,

Another way to avoid herding is to invest regularly so that you build wealth and you are not too bothered about short term fluctuations. This takes the trouble out of investing but remember this is for goals at least a decade away and not a money making machine where SIP’s go into one end and high returns comes out 2-3 or even 5 years later.

Hope you are part of the small set of people who invest for the long haul and avoid herds.


Happy weekend


What Forrest Gump can teach you about investing ?

Sounds ridiculous? After all, Forrest Gump was an immensely successful movie and rightly so.  But what has it got to do with investing?

In the movie there is a scene where Gump says that his partner Lt. Dan has invested the money they got by selling their business in to “a fruit company” and that they don’t have to worry about money anymore.The fruit co is actually Apple !  When i saw the movie way back it was interesting to see how financial independence ( The stage where your investments return via dividends/interest is enough to cover all  your expenses +life goals)  was spoken about in a real practical way.

Not having to worry about money was in Gump’s words “One less thing to worry about”

The movie was released in 1994, others have written about how if Gump was real and they did invest in Apple back then it would be worth a few billion dollars or something like that ( Link : Forrest Gump & Apple ) . That is nice but the IPO came in 1980 and the stock till about 1998 hardly moved an inch for 18 long years, not sure if people would have waited that long! So the lesson is not that.

The real lesson is that financial independence is having ‘ One less thing to worry about’ and if we see around this is the number one cause of worry for most people, even among the middle class and sometimes even among the rich ! And the surest way to reach financial independence is finding out where we are and planning to get to the next stage till the final one of Independence is achieved. This is not an impossible task, there are few steps to financial independence whereever you are aspire to go up the next level and diligently plan for it.

Step 1 : Stop living EMI to EMI and pay off all debts. ( Home loans for the house you are living in is fine!)

Step 2 : Start saving for a rainy day. Aim for 6 months expenses saved in a FD, may be tall order for many but this is essential.  Get enough Insurance cover both life and medical, buy plain term plan in life and opt for a healthcare insurance for all members of family.

Step 3 : Start investing if possible monthly or quarterly, this should be for your future goals and financial independence. This should be invested in equity and bonds and not just saved, ie the money has to work for you and not sit in the bank FD where you lose half the money to inflation and other half to taxes !

Step 4 : You are now financially secure, your investments in step 3 earns now enough to pay for most of your living expense, ie your money works for you now. You may still have to work to meet life goals like your childrens education or luxuries of life like being able to go on trips abroad, etc but the basic expenses are covered by investment returns.

Step 5 : Financial Independence is some time after stage 5, income from investments via dividend or interest is enough to pay for all expenses small plus the luxuries that you want. In Indian context generally step 4 itself is financial independence as we don’t indulge in big luxuries but times they are a changing.

On the coming Independence Day take a pledge to be financially independent too !




When a science teacher teaches finance !

Life changing thoughts from ‘Guru’s around the world, those whom i met and those whom i have only read about. This Guru Purnima thought i would list some of them.

My school science teacher once told me the equation of happiness as  “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” This was from Charles Dickens novel David Copperfield. He told this when i met him after i got a job. The sincerity of the great teacher,his love for our welfare and the simple advice has stayed with me very long. Actually it is that simple, no need for fancy plans or big spreadsheets. The basic is you spend less than you earn is the first step to financial freedom, it is something to remember in this world of zero % EMIs.

I saw the cover of business world magazine somewhere in 1998 if i recall correctly, the image was that of an elderly man jogging sprightly on the beach in Mumbai and the title was Wizards of Dalal Street. The man on the cover was the Late Chandrakant Sampat, an ace investor who has been called as Warren Buffett of India by many highly respected investors in India. The article said that Sampat would never miss his jogging come rain or shine. The magazine was a turning point for me to move to the world of investing as opposed to trading, for the first time i read and saw about long term investing that was by Indian investors. I still have that magazine 🙂 You can read about Sampat here : Grand old man of Dalal Street

In my hometown of Trichy there was a gent who lived near us, his was a small house and he used to park his TVS50 in the hall of the house every night ! He used to tell us to invest in good businesses and not to trade as trading terminals had just begun to spring everywhere. I was employed in a stock brokers office and he would come in every day to read papers and check some prices. He gave examples of good companies like Crisil, Gillette, Hindustan Lever, Ponds, Colgate, Thomas Cook etc. I came to know later that he had portfolio which was few crores,big money that too way back in late 90s. He taught me to be humble and happy but also that one can be very successful too !

Around 2001, I was working in a wealth management co in Chennai and markets were very quiet and down, it was the after math of dot come bubble, and then in September of 2001 the twin towers collapsed and so did markets in India the next day ! People were afraid of some world war happening and panic was very real but a client walked in to office and invested few lakhs the day, I understood what contrarian being meant and how tough it is to say to buy when panic is there in the markets but quite another to actually do it as he was the only person to buy that day !

One was  a real life teacher who is a sort of cult celebrity among our school students,  Chandrakant Sampat was a long distance teacher who talked about value investing, quality and corporate governance which are being bandied today almost 20 years later. The third was a happy neighbour who would tell everyone within earshot to invest for the long-term  and not speculate. The fourth was a client who taught me what being a true contrarian investor was ! Each one different from another but all gave valuable lessons in life and investing.

Happy to announce that our website has been redesigned pl do check in and let us know how it is :


Happy weekend and try to see the longest lunar eclipse of the century,promises to be a sight to behold !




Credo Capital




Churning investments vs planting a tree


In most aspects of our life, Be it buying a house to selecting a school, to hiring for a job we look at the track record of the person or the place, in other how good they have been in the past. For example we look at buying a house based on how ‘good’ the location is, reputation of the builder, reference from family etc before deciding, Same goes for hiring, we look at the education back ground, experience, performance in previous job etc before we short list someone for a job.

However this checking the past to decide the future seldom works in investing,sadly. Especially in the short time frames like a year or two.  Many investors think that it is better to check performance regularly some times even less than a year and change the funds based on the returns that short time frame. They forget that they have planted a tree for the long term, it is not going to grow if we keep pulling it out and seeing how fast it is growing, it is not going to grow if we pull it out as we feel it is not growing fast and replanting it near to big trees, In fact we ensure that the tree does not grow by doing this and all of know this. But, in Investments we do it as we feel that there is a need to do something regularly, yes, sometimes there is a need to do change just as we take the weeds out and add manure, we need to check the investments too say once a year or two but only to check progress and not to change anything. If we keep moving from Fund A to Fund B every time as Fund A gave low returns vs Fund B over every few months or even a year or two, we are in fact pulling the plant out and replanting it elsewhere!

A good counter example for this is how  we treat our other investments such as Real Estate or Gold, how many of us sell all the jewelry we have only to buy it back again ? In fact most of us never sell jewelry nor do we sell Gold and buy say diamonds if diamond prices are moving up . Would we sell our houses every year and move to another area where prices are moving up more compared to the place we live in ? We won’t even think about it but when it comes to investments we happily sell one fund to buy another and then that to buy another in the name of chasing ‘good investments’.

Changes may be needed in our investments due to some factors but they are required far, far less than we imagine. In investing, frequent work actually hinders growth, the hard work here is to buy and hold. The best returns have been got by not buying the right fund at the right time but by buying and sitting on equity fund for decades. Buying and selling funds once a year to buy some other funds is a sure way to loose money A rock solid big tree takes years to grow, similarly investments would also grow in size, only if we patiently allow them to grow in the first place.

Happy weekend, May Day & Buddha Purnima wishes to all.







Rahul Dravid – Return of capital vs return on capital part 2

Last week i had written about some fraud investment scheme had promised sky high returns and conned many in Bengaluru, ( turns out that the celebrities who lost money included the likes of Rahul Dravid, Saina Nehwal Prakash Padukone  etc.  As per reports they were promised upto 40% returns but did not get even their capital back ! The lure of return on capital blinds us to forget return of capital !

Seems Dravid had invested the amount 35 crs 3 years back today his complaint is that the firm owes him 15 crores in capital, the chances of recovering the money appears slim. Let us for arguements sake assume that he had invested the same 35 cRs in boring equity MFs 3, 5 and 10 years back. Taking the average return of 7.5%. 15% and 10% over last 3,5, & 10 years respectively we can see that the equity fund returns have not been that great ( 10% for 10 years ?? i can see people asking in disbelief).  Mints Expense Account column did an article with similar bent recently though on a totally different topic ( see here )

Amount Invested 35 Cr
No of years Returns (Large Cap Equity Funds average)
3 7% 42.87 Cr
5 15% 70.39  Cr
10 10% 90.78 Cr

At a not so great return of 10% the initial 35cr has become 90 Cr, Yet instead of this simple and well regulated form of investing, what was chosen was a high return get rich quick scheme that seems to have promised 40% return on capital but today many high profile celebrities are getting only 60% of their capital returned and 40% gone ! ( though they may get some of it back, it will be a long wait likely)

The tragedy of this story is that most of the celebrities involved can afford good lawyers plus they have other sources of wealth to tap into, which small investors who get sucked up in schemes like these dont have.

Would be better if investors focus on known risks (such as in equities) and get rich slowly rather than invest in get rich quick schemes that seldom give return of capital !

Happy weekend,





Return of capital vs Return on capital

As investors our focus should primarily be on return of capital ( can we get our money back)  but we tend to focus more in return on capital (what is the % we will get !) Tell someone to put his entire wealth in equities and they would shudder in horror, what happens if the markets crash would be the question. Which is why we dont put everything in equity but some in safe options like PPF, FD or even bond funds.  This is sensible especially for a first time investor, but as we mature as investors, some of us may be fine with high equity allocation as the capital itself grows in equities the most. These investors understand that equity is a rocky boat but are fine with it since it is the boat that creates wealth.  So, equities create wealth but with risk involved, debt safeguards wealth but with low returns and high taxes.

Trouble starts when we want high returns with low risk !  Which is what seems to have happened recently in Bengaluru ( where in people were lured into high returns ‘safely’. So these investors gave money to someone who advertised himself as commodities trader, investment consultant etc promising very high returns, and like all good MLM Ponzi schemes they paid the high returns for old investors from new investors capital 🙂 this continued till one day they shut shop. The people affected seem to be big businessmen, doctors, sports professionals etc, but no one seems to have asked any questions about whether the investments were regulated, the company had license etc. Even with all of that the high returns promised should have raised an alarm but no, in fact the high returns seems to have made the gullible blind into investing with out checking anything at all. This is not the first time, though, and will not be the last time.

Return on capital ( interest, growth etc) is very important, but return of capital is the most important thing. After all the capital is what one has worked and saved over a long period of time.  Being lured into unregulated investments, MLM Scams, etc may give high return on capital initially but chances of geting your capital back is almost nil.