Vijay Kedia is a successful name in the investment world. His investing success could be inspiration for those who are thinking to have success in investing career.
How he started
Vijay Kedia was born in the family of stock brokers. His father grandfather were stock brokers. Vijay started his career in stock market in 1978. He joined stock market not because of his interest but because of compulsion when his father passed away. To run the family he got into the family business of trading and stock broking.
For the next 10 year Vijay was only trading in the market making money sometimes and losing sometimes. Not earning enough from trading, Vijay also started side business of supplying tea. The biggest lesson that Vijay learned from trading was using Stop losses. Proper risk reward and stop loss is important ,without stop loss a trader can’t survive in the market. A trader can make money in many trades but can lose all the money in a single trade if he doesn’t uses stop loss.
With trading Vijay realized he can’t have the life he wanted. He read about the successful investors and decided to switch to investing. He started learning the fundamentals of the company. He was living on the rented house and just had 35,000 ₹ to invest. He did some research on his own and select a stock Punjab Tractors and invested all 35,000 in that stock. In 3 years the stock multiplied 6 times and his 35,000 ₹ became 2,10 000 ₹. Whatever he made from Punjab Tractors he invested in ACC at the price of 300 ₹. The stock didn’t moved for a year but it multiplied 10 times and became a 3000 ₹ stock in the second year. He sold ACC at 3000 and bought an apartment from that money.
After that it was no looking back and Vijay Kedia continue to make successful investments in various companies. Vijay believes a investor must have three qualities
1. Knowledge : Knowledge to find out quality stocks. To acquire this knowledge one has to read, read and read there is no shortcut. If one doesn’t have reading habit he can’t be a successful investor.
- Check out: 10 Best books to learn about investing
2. Courage: Equities are risky assets where you can lose your whole capital. There is always the fear of loosing money. This fear prevents people from investing in the market and when they invest they invest in small amount. Vijay says when you find something good to invest, you should invest a meaningful amount in it.
3. Patience: Patience is a very important quality a investor must have. Stocks can take years to perform. You should not lose patience when the stock remains silent for years. Vijay says investors must have the patience to hold the stock at least for 5 years.
In his speech at IIM Banglore he talked about the 10 points that gave him success in share market.
VIJAY KEDIA’S 10-POINT FORMULA FOR SUCCESS IN STOCK MARKET
(i) Never be dependent on the stock market for your livelihood or day-to-day living. Have an alternative source of income. This will insulate you from the volatility of the market and give you holding power;
(ii) Never buy a stock except after thorough study into the stock’s fundamentals. The stock market is not a gamble. You must also be fully aware of news and developments that affect your stocks and learn to “connect the dots”;
(iii) Invest according to your risk profile. Ensure that other asset classes also have an allocation. This will again insulate you from the risk that equities carry and give you holding power;
(iv) Never trade in stocks. Never use borrowed funds to buy stocks. It is extremely risky and can lead to “instant death”. Less than 1% of the trading population makes money. Also, trading requires special aptitude which a normal person lacks;
(v) Invest for a minimum period of five years. “Rome was not built in a day”. It takes time for companies to mature and grow;
(vi) Invest only in the best managed companies and don’t worry about day-to-day volatility in stock prices;
(vii) Remember that the “Investment belongs to the market and only the profit belongs to you”. In other words, don’t get carried away by notions and paper profits;
(viii) Book profits periodically. When a stock looks overvalued, don’t hesitate to cash in the gains;
(ix) Be balanced in your approach. Don’t be very optimistic in an uptrend and very pessimistic in a downtrend. Also, never have regrets;
(x) Do good karma and be a good human being. Stock market is a mind game. Good deeds will ensure that your mind is calm and is able to think rationally.
Watch the speech of Vijay Kedia at IIM Bangalore
Abhishek is an Engineer MBA in Finance and Certified Research Analyst. He is an active trader and investor in the stock market since 2010. Follower of the philosophies of Warren Buffet and Peter Lynch in investing and trend following in trading.