In this blog, we delve into the investing wisdom of Mr. Anil Goel.
“I lost all the money I had made till then! But the desire to succeed in the stock market was stronger than ever. I exited steel business to concentrate on the stock markets full time.”
Mr. Anil Goel (Veteran Investor)
When you’re born into a business family, running a business often feels like destiny. That’s exactly what happened with Mr. Goel. After school, he would manage his father’s factory, absorbing everything. In the 1960s, he moved to Chennai to help his grandfather, handling lakhs of rupees at just the age of 16.
In 1992, after predicting (but not investing in) a market crash, Mr. Goel decided to test the stock market with ₹50 lakhs of family money. Within a month, it fell to ₹33 lakhs, prompting his family to consider exiting. But Mr. Goel was undeterred.
Investing is more about temperament than skill. Mr. Goel kept learning and investing. By 1993, he had invested ₹5 crores in the market, mainly in newly deregulated NBFCs, which surged with the entry of FIIs in India. By 1994, he had turned ₹5 crores into ₹20 crores.
It might seem like he was just lucky, but the market took back all his gains in the following months. That’s the nature of the game—it can give you immense wealth and take it all back.
Mr. Goel’s temperament and conviction kept him going. He exited the steel business and sold land to emerge from the losses. In 1998, he re-entered with lessons learned, investing with more seriousness and maturity. Over time, he developed his own investing style, becoming one of India’s most successful investors.
So, here are 7 key learnings from Mr. Anil Goel:
1. KCPLTD Investment Philosophy:
Overtime, I developed my investment philosophy, which I call KCPLTD
Knowledge – First, one should have a deep Knowledge of the business.
Conviction – Once, one has deep knowledge, one will develop conviction in one’s assessment.
Patience – Then One needs to have patience for the market to properly value your stock.
Luck – You need to have luck, that you have done the work, and the price comes down to your price.
Timely Deploy – You should have the nerve to Timely Deploy when the price comes down.
2. Return Filter for Investment:
I don’t invest from a normal return of 15-20%, but look for multiplication of capital…Mostly, I invest in small caps or out-of-favour companies or industries where there is no competition among investors.
This way you can buy stocks at very low P/E. If you can pick the right company, you can make a lot of money.
3. On P/E Rerating:
Most returns come from P/E rerating. If you buy at 2-3 P/E, you might sell at 20-30 P/E, so it’s ten baggers from rerating itself, while earnings go up by only 3 times, making it a 30 bagger.
4. Research Process:
Mostly, if I like a company, I start with a token amount – less than 1% of the portfolio and it enters the watchlist. When I see the company meeting my expectations, I keep adding and increasing my holding.
We normally research for a year and then meet the management. By then our understanding is so good that we share our understanding of the business potential with them.
5. Analyzing Commodity/ Cyclicals stocks:
You have to understand the underlying commodity and its cycle. Hard metals have a 30-year cycle, many agro commodities have a 3–5 years cycle. So, you have to study each commodity sector separately and individually.
These things are difficult to anticipate in advance and have to be judged there and there, based on the scenario at that point in time.
6. Cycle Stock Value:
About valuing cyclical stocks, asset value doesn’t matter in the stock market. They become a value trap. Market values stocks on earnings. You should be able to see the reversal of the business cycle – when earnings will come back. You can invest only on that basis
7. Disruption:
You have to segment the markets into two parts -industries that will be disrupted and that will not be disrupted. What are the products that are basic necessities and are not optional? The process is to choose a company and then see whether it can be disrupted.
We hope you found it refreshing to gain insights from an investor who approaches investing differently from the norm. Thank you for reading!
Source: Masterclass with Super-Investors
Until next time, happy investing!
Fin Meme of the Week
