Stay put in investment-worthy stocks for at least a year: Kisan R Choksey

With over five decades of experience in the stock market, Kisan R Choksey, chairman-founder, KRChoksey Shares and Securities, is also the trustee of the BSE and the investor protection fund of the exchange. In conversation with Puneet Wadhwa at his office in the BSE building in Mumbai, Kisanbhai, as he is fondly called, shares his mantra for investing successfully over the years and what investors should do to create wealth. Edited excerpts: 

How have the investing habits changed over the decades, especially since you started investing?

Things have changed quite a bit. Companies have become more efficient, and that’s due to the technologies available now. Promoters, on their part, have started to take money out of their companies now.

What about investors? A lot of investors are here to make a quick buck, as opposed to earlier times when value-based investing ruled.

I think if one has to make money in the stock market, one should have patience and identify stocks worthy of investment. One should stay invested in investment-worthy stocks for at least a year.

How does one identify winners? What has been your strategy?

I look at the industry first, then the companies operating within that industry that could do well. I buy such stocks and keep them in my portfolio for a minimum of a year. I hold the shares up until the time the company does well.

What’s keeping you busy these days? What are you buying/selling?

Buying and selling decisions depend on how an industry is performing. If the industry is doing well, I try to identify stocks that could be worthy of investment. I purchase these stocks for myself and also ask investors to buy them.

Today, the automotive (auto) sector is doing very well. Therefore, auto-ancillary companies will do well. I identify the stocks that are investment-worthy for my portfolio and recommend them to investors or clients.

A lot of experts give ‘buy’ recommendations. At times, it is difficult to determine when to sell a stock. How does one go about doing that?

When you purchase the stock of a company, you need to continuously follow/track it. Companies announce their financial and operational performance every three months. One needs to analyse that to ascertain how the company has done in the past three months and what the road ahead looks like.

Also, one needs to check how the company is performing compared to one’s expectations. If the growth plans are intact and the company appears to be on solid footing, one should continue holding the stock.

Are there any particular metrics you used to follow and still follow?

In the scheme of things, the management (commentary) and the capability of the company’s management are very important. If the management is good and capable, it can take advantage of a good situation.

A lot of investors sell and book profits at the end of the year just to plan their taxes.

One should not do this at all. 

Selling shares to do tax planning is not advisable.

In terms of market size, where do you see the markets in the next three, five, or 10 years?

The government is very active and is taking stock of companies in the public sector. A lot of changes have happened in the economy. As long as Prime Minister Narendra Modi retains power, the economy will continue to grow.

Today, the Indian economy is ranked fifth-largest globally, which has been made possible by good governance.

Would you like to see more capital market-related reforms?

Promoters need to become more open and see that investors understand the industry and the internal workings of a company.

What’s your one overarching message to young investors who have started dabbling in shares?

Those who indulge in trading make money, and so do those who invest for the long haul. The key is to identify sectors and companies within sectors that could be potential winners. 

Good promoters are also essential. If all three are good and the basics are in place, it is possible to make money over time.

Making money fast is not possible in the stock market; one needs to hold the stock/shares for at least a year. 

For the company to show good performance and for this to reflect in the stock price, it takes time.

Observe the performance of the company each quarter for a year and assess whether to continue holding the stock or not.