Conquering the investment turf

Little do people in the posh locality of East of Kailash know of Vinod Aggarwal, a 'young' man of 70 years, who can put even the most risk-loving investor to shame. An eccentric mix of conviction, ideas and execution has made this retired Army officer approach investing in a whole new way. "I think that my strategy or lessons may not be suitable for the average investor," Vinod cautiously starts the interview. Recounting his days at Army, his investment journey, the Harshad Mehta scam and his innovative way of investments, this Value Research follower tells us a fascinating story. Read on.

Falling in love with technical analysis
Vinod's forefathers hailed from Punjab. After partition, they came to Amritsar. Vinod's father was a banking professional. He even had the honour of assuming the chairmanship of a bank. Vinod chose a different path, and that tells you a lot about him. He joined the Army and had the opportunity to serve in some of the most operationally active areas. After retiring in 1991, a period marked by the initiation of economic liberalisation in India, Vinod had an opportunity to observe share trading from close quarters due to a professional assignment. "I was responsible for developing an equity-research unit for a corporate group. There I found out that not one of the analysts, with fancy degrees, knew about technical analysis. It was in pre-1995 period when I first developed a strong liking for technical analysis and then for Elliott Wave Theory," says Vinod.

For the uninitiated, Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s by discovering that stock markets, thought to behave in a somewhat chaotic manner, in fact traded in repetitive cycles. Vinod uses this theory to decide the timing of his investments, which are mostly in equity-based mutual funds and shares. A self-taught, do-it-yourself investor, Vinod uses technology and the direct route to conduct his investment moves.

Before his retirement from Army, finance was a world unknown to him. "Army was a very different place altogether and so were the experiences. The first night in Dhaka during the 1971 war, we stayed at the presidential palace but the next morning we were shooed away. Army life was very different. I remember that anybody who used to talk about finances then was told by seniors that he was not a good officer as he wasted time in useless things instead of concentrating on the job at hand," Vinod, a full-time investor today, recalls.

During his stint with the corporate group, Vinod, like most retail investors, used to buy or sell shares based on some recommendation. There the manager of operations used to suggest some stocks, and he used to buy them. Before the Harshad Mehta scam broke out, he had made some money. He used to sell one profitable position and invest all the money in a new stock in another company. When the market crashed, everything fell. The market is a tough teacher, Vinod reminisces.

Coming across Value Research
His first brush with Value Research happened a long time ago. Even though he studies Elliott Wave Theory, Value Research mutual fund ratings are one of the most important things for his investment process. "The way I do my investment is based on the star rating given by VR. In my view, small and mid caps should go up faster. So, I am keeping 20 per cent exposure in large caps/hybrids and the rest 80 per cent in mid and small caps. All these investments are based on Value Research ratings," he says. Vinod invests in four- or five-star-rated funds and before buying them looks at their performance over a five-year period.

Cognisant of diversification needs, Vinod also invests across multiple fund houses and funds. Right now he manages six-seven accounts of his family members. Each account has six-eight funds. To make it manageable, many funds are repeated across accounts, he says.

Investment preferences
Vinod is not wary of taking risks and 100 per cent of his investments are in equity-linked products. "I have withdrawn most money from bank deposits. Whatever is left in bank accounts is for day-to-day use," says the 70-year-old.

For new and old investors, Vinod has a piece of important advice. He categorically asks fellow investors to stop checking NAV movements on a daily or a weekly basis. This type of behavior causes lots of problems. "First of all, you will jump out of the market at wrong times. Secondly, when you exit, you will wait for markets to come down to those levels. But as you will find out, those levels will hardly ever come back," Vinod quips.

Vinod does not believe in keeping profit targets for exit from funds, unlike some other investors who exit with 10 per cent or even 25 per cent profit. He lets his 'profits run', switching out only when the intermediate trend of the broader market turns negative or a fund consistently underperforms.

Today, Vinod uses the direct route to execute his investment moves. Buying and selling is just at a click of a button. This route is also cheaper in terms of management fees charged by mutual funds. "I generally set up my investments at night as I can take more rational decisions in a cool and calm environment. This saves valuable time and energy," he signs off.

This story first appeared in the July 2017 issue of Mutual Fund Insight.

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