Investor Decoded

He is immaculately dressed. He offers you a chair the moment you walk in. Anirudh Rathore exudes an old-world charm which is sadly missing these days. He is the author of ‘Investing Decoded’ which has been well received especially by those who don’t understand investing at all and he runs two very successful hotels too. So, what more could a man want, you would ask! Well, a lot more investing, he would say!

He doesn’t have a degree in finance. He is not your typical bespectacled finance guy who spouts numbers at the drop of a hat. In fact, he and numbers didn’t see eye to eye a few years back but today people seek his advice on investing. When I met Anirudh Rathore at his hotel in Dera Rawatsar in Jaipur, I was expecting to meet some sort of finance whiz who would be talking on three different phones at the same time. But to my utter surprise, Anirudh Rathore turned out to be your friendly neighbourhood entrepreneur who owns two heritage hotels and is now a proud author of the best seller ‘Investing Decoded’.

He has written a book on investing which has been well received by the public. So, was he a numbers person from the very beginning? No, not at all! I was never into numbers at all. I used to run away! My weakest subject was mathematics in school (Mayo College, Ajmer). As a matter of fact, since it was such a nemesis, I gave up mathematics after my X class. I was so happy to leave mathematics after X. In XI and XII standard I studied arts. I studied history, geography and English. After that I did my graduation in history honours from St. Stephens.

So how did he get into investing? After I finished my graduation in 1993, I applied for a lot of jobs but got no calls. Now, that was the time when the Indian economy had just opened up and all the graduates were rushing to join the private sector. But there was obviously catch to it. If you wanted to join a good organization in a good position, you had to be an MBA. My classmates and me realized that we had to do more to get a good job. At one time, I was almost on the verge of joining the army. Both my army exam and the MBA entrance exam were on the same date. Although my parents wanted me to join the army, but that time, there was such a craze of joining the private sector that I sat for the MBA exam instead of joining the army.

But wasn’t the MBA entrance test all about numbers again? True! It was. In fact, before appearing for the MBA entrance exam, I devoted a year for preparing for the exam and learnt math all over again. I got through the exam and joined MBA in the Rajasthan university. After MBA, I joined banking.

From a history graduate to MBA to a banking professional. What made him go for banking? From my very childhood, I have a tendency to dive deeper and explore things I don’t understand. As a child when I used to watch these people in the bank, I was always curious to know what they did there sitting all day long! It seemed very impressive to me to see people working in Grindlays, Barclays and all such fancy banks. They spoke in a language which was understood by no one except them. So, I thought that was a very cool thing to do and be a part of. So, once I completed my MBA, I applied for a position and luckily, I got through and joined as a trainee assistant manager in IndusInd Bank and was posted in Chandigarh.  Initially everything was new to me. I enjoyed all the different aspects of my job for the next couple of years. However, after a while it became a routine and standard work and I wanted to learn more since banking and finance is such a big and diverse line. Just joining a bank doesn’t teach you anything about finance. Banks are massive, there are so many departments and when I was in IndusInd bank, I realized that it was only catering to retail banking. There was nothing about investment banking or things like that. So, I started looking out for new avenues. As luck would have it, I got to know about an opening in HDFC bank in the private banking segment. There was no other bank in Rajasthan that was dealing with private banking at the time. Although I knew nothing about investing, luckily, I applied and got the position. Suddenly a whole new world opened to me. A world which people were either quite clueless about or they found it very intimidating. That set the pace and tone for me. We were part of a very selective group of people who were doing something which was very unique. No other bank except HDFC used to do private banking in India and only we 20-25 people were doing it in India and I was the only person in Rajasthan doing it. There the quality of people I interacted were crème-de-la-crème.

I remember once during my MBA class, I got up and asked my teacher about the Harshad Mehta scam which was in the news at that time. But the professor himself didn’t know much about the scam and said that he could not answer the question and that I should meet him after the class. Then I went out to all the bookstores of Jaipur which could help me to understand this scam. But to my great surprise, I could not find a single book on the topic in the entire city! After some years, I went to Delhi and got books like The Intelligent Investor and Security Analysis that gave me an understanding of the subject. To put it in perspective, it was only when I got into this private banking sector, I completely understood the Harshad Mehta scam. I doubt if even today people in those MBA classes have a clear understanding of it.

What made him write this book? A couple of years back, I noticed that though there seems to be a lot of information regarding banking, investing on the internet, there also is massive confusion and gaps in that knowledge. People who want to know about investing feel as if they need to climb a mountain to understand investing. Most books on this topic are either difficult to understand or they simply talk about the experiences of the author. They don’t explain the main things you need to know or the kind of psychology and mindset you need to succeed in this field.   I also feel that people who do talk about investing are just saying or doing things that have been said before or are hearsay or are in vogue. Even many investors are just blindly following news channels or influencers. Of course, some of them are right about a lot of things but there is a gap which made me think about writing a book which can simplify things. I myself am no professor in finance and neither do I work as an asset manager in a company or handle people’s money. Like most people, I am self-taught and I have learnt these concepts on my own and have learnt to apply them on my own. So, I thought that maybe I could relate to people by writing a book which they could understand. 

What is investing from his point of view? According to me investing is a combination of  about 70 percent psychology and 30 percent analysis. For example, when there is a sale in a department store, all of us will rush to buy but when there is a sale in the stock market, people will cringe in fear because they feel that whatever they are going to buy will fall in price even more. We are programmed to operate in either fear or greed or ego. If you notice at any point in time, you will find that either you are exuberant about something or you are scared about something or you have a personal ego about something. These things if you cannot master, you cannot master the stock market. We have so many vices build inside us. Let’s say you have a sum of 1000 rupees that you can invest. You have even analysed the company. Now the hurdle that most people face is when to invest and how much to invest. They keep wondering whether they should spend these 1000 rupees ten days later or today or should they wait for the price to come down or they follow the television which tells them that the market is going to collapse or this is going to happen or there is war in Palestine or Ukraine. There is so much of interplay of information that is going on which confuses and scares the person and he is unable to take a decision. Instead of one thousand rupees, he ends up investing only 100 rupees. This is because there is so much of chatter in his mind because of these vices. He is not able to make a rational decision.

Is there a way to mitigate this fear and banish this misconception amongst the common people? Yes, there is. I can give you small and easy example. Let’s say some one has five crore rupees to buy a flat in a place like Mumbai. In a real estate market, that five crore rupee flat will fluctuate between four crore seventy lakh and five crore thirty lakh. That is the price range of plus or minus five to ten percent that it fluctuates in and hence people are not afraid to invest in it. But in case of a stock, if you happen to invest five crores in a company, that stock may fluctuate between three crores and eight crores in the same year. It is volatile and that’s why it scares people because the fluctuation is uncontrollable and then it plays on the human emotions. But a good investor takes advantage of this volatility. He plays on the same emotions. He doesn’t get scared when the value is down. He knows that the true worth of this company is five crores but right now the stock is for three crores so he buys the stock and waits. He knows that the stock will again hit eight crores and that is the time he will make a huge profit on it. Here the bottom line is that a true investor knows the worth of that particular company since he is done his research. For me, if the stock market goes down tomorrow, I am not afraid. In fact, I will buy more stocks since I will get them at a cheaper rate rather than getting worried or upset or fearful. For people who are quite new to stocks can first get their feet wet with mutual funds and understand the market.

What is the reaction of his family and friends to his new found love of investing? Anirudh laughs! There is this constant tussle for the remote between my wife, my children and me. I would always watch the finance news and they would get irritated since they wanted to watch their own channels. I had not told them about my book being published with Penguin Random House. But when I revealed this bit of news to them, it was then that they realized why I was hooked on to those channels! My classmates who had studied history with me were totally taken aback because they had all expected me to write a book on history!

This article by Shailaza Singh appeared in Rashtradoot Newspaper’s Arbit Section on January 8, 2024