A bull run happens when you least expect it: Raamdeo Agrawal

Indian markets have not seen a bull charge since 2007-2008."It comes when you least expect it," says Raamdeo Agrawal, Joint Managing Director, Motilal Oswal Financial Services.It takes 7-8 years for a bull run to happen, he said.But Agrawal doesn't expect another bull charge anytime soon. He says this is because everyone has been expecting for it to happen and a bull run never occurs in such circumstances.A man of humble beginnings, Agrawal came from a small village to the big city in search of success. It took him 5 years to become a chartered accountant. Agrawal is very passionate about reading. He stresses on reading to become successful in life. He started with reading a lot of fiction in school and then slowly ventured in biographies. He also said he got most of his knowledge about the markets and companies analysing company balance sheets rather than theory books on how to understand the markets.Below is the verbatim transcript of Raamdeo Agrawal's interview with Anuj Singhal on CNBC-TV18.Q: What stands out for me is that your building has a unique concept, if the market closes is green the lights are green, if the market closes in the red the lights are red. Your lift when you go up there is a bull and when you go down there is a bear, so you give equal opportunity to bulls or bears. Is that your theory?A: See it is a bull house that’s why we don’t have a bear only bull here.Q: Why don’t have a bear then, why do you only have a bull?A: Then the whole purpose is lost. I don’t think bear is celebrated anywhere. I have not seen any office or even Wall Street, where bulls and bears both thrive they should have a bear. See stock market is for wealth creation, wealth is created when the bull charges there, not on the bear charge. Probably it is more positive than negative and people are here for positivity. People are not here to lose money, because in the negative market depressed market millions of people pay for few people to be successful. In bull market millions of people make money for few speculators to lose money. Most of the people make money in bull market.Q: Do you get a sense that this bull is going to charge more is that the sense you are getting?A: I have seen in my 35 years of stock market, I have seen four of them three as an entrepreneur or investor, one was more academic but 85 was academic 1992, 2000, 2007, so three I have seen full-fledged bull run, so definitely will happen. It take typically 7-8 years this time it is little prolonged, we saw it in 2007-08 and this is already 2016, so we have done 8 years and we are overdue for it, but it comes and it comes when you can’t see it is coming. It is going to come. You get so depress, you get so helpless that nothing is happening from there the Bull Run starts. Right now people are waiting for bull charge, it means that bull charge may not happen. Generally, it doesn’t come with a notice.Q: Right now you are not as bullish on the market as you were say 3-4 months back?A: The good thing is that I am always bullish. At 7,200 I was more bullish than at 8,000 of course because that much less return you will get in the short run.Q: The other thing that I want to discuss with you is your journey. You are an equal partner in the firm. A lot of people want to know why is this called Motilal Oswal Financial Services. Why is there no Raamdeo, I know you and Motilal Oswal share a great mutual respect, but is this a mutual decision, is that your decision?A: No, no it just a historical event that in 1987 when he started going into the ring. Earlier, there was one membership and there was six guys who were going into the ring, so we were one of them for Sundar Iyer. We started our career with Sundar Iyer as a main broker. We were sub-brokers, so he started going into the ring, I was the research analyst and the order taker, so I used to sit up in the office and he used to go and execute this thing, so there was a batch as a sub-broker who was authorised to write transaction because of physical transaction.After four years when we actually bought the membership you needed three years experience in whose name only it can be bought, so obviously the membership had to be bought in the name of Motilal. Clearly, there was no choice at that point I was not even a partner I was only a consultant after membership happened because I was not a blood relative, so I couldn’t have been a partner.In 1996 when the corporate thing came up when it became a Motilal Oswal Securities Limited. At that point of time there was again an opportunity to change the name. By that time you have registration with LIC, UTI all sorts of institution and all and we said we are not going to make it Raamdeo and Motital Oswal types. We will make some independent names some Prudential Popular Services or something like that, so it doesn’t really matter in whose name it is. This name is working and it’s fine.Q: Tell us a bit about your journey, you started in the 90s as you said, after that what have been the key milestones for you in this business?A: I struggle to become a chartered accountant let me tell you. Let me confess or whatever it took me five and a half year it took and I had a very bad handwriting. I had to change the handwriting also, so that was a big struggle. To me the biggest prize is to become a chartered accountant. My biggest asset if you ask me is my degree in chartered accountant.Q: Not creating Rs 1,000 crore of worth.A: There is a list of it. That was a gateway like. First gateway was becoming chartered accountant and even the bout stock market I learnt in chartered accountancy and chartered accountancy gives you lot of skill to analyse balance sheets, be comfortable with the balance sheet, understand cash flow, all kinds of ratio. The first big milestone for me was in 1993 to pass out chartered accountant. Second was that I did one training called, what is right now called “Forum Training” that time it was “EST Training” it was an American training self development training, so I was quite confused and I did that training very reluctantly with one of the recommendation and it was a very powerful training at least that was an eye opener for me because I was completely confused because I was standing on a square and didn’t know which way to go, but that was a kind of Buddhatva for me and I knew now what I want to do. At least there was a mental clarity. That was a huge event for me and then I think I did my equity research two years. I got an advertisement, on a Sunday I was travelling somewhere - - Economic Times Sunday edition - - there was a quarter page or at least a corner advertisement for analyst and I was the only guy who applied for that.Q: So you got the job?A: When I went I used to have 250 balance sheets of my own. I went to the job with the balance sheet. Those two years of research and that point of time there were not many books and all, so I read up all the balance sheets. The foundation of understanding the market was not through the theories and books and all. It was all from the balance sheets and since I was chartered accountant I could understand that very well.There was a clear map of all the business how it works, how it makes money and all. That became foundation of it, so that became one of the big breakthrough for me and then once you start the business, then the clients come. One of the thing, I realise is that right from beginning, I don’t know which book I read or where I got this but we were very clear, we are not going to speculate. Maybe I have heard enough stories about speculators going wrong. In any case we didn’t have much money to lose. We are starting from zero. To be successful speculator you should have monies to lose, so I didn’t have monies to lose and we didn’t want to go back to our village. That was also very clear.Q: You were very clear that you want to succeed in this business and you had no other option, but to succeed?A: See otherwise you can’t get married. You have to go back to village and last thing I want to go was my village. My village didn’t have electricity. We didn’t have pucca road.Q: Fascinating story you were telling us that you grew up in a village, which had no electricity and of course you were struggling and here you are and now you can do whatever you want to do in life and all of this was because in your young age you focussed a lot on the foundation. Is that the big lesson of the life?A: I had a family culture. I had my brothers, my parents so you get value system. Somehow, I don’t know from where it come, maybe I was reading books right from beginning. I was an avid reader maybe from eight-ninth standard. I remember maybe I was 9-10 years old the movement I used to get up the first thing even before opening the eyes I used to go and pick up the newspaper. I had that reading habit and you read all sort of stuffs, then you read the fiction. You start with fiction – in undergrad you jus carry one fiction huge circulation library for five bucks you get a thick one and carry that. So that was a foundation of understanding lot of things. There you understand the power of value. I was very clear right from beginning that I have to pay full taxes. I have to be honest to the Court and we have to be very professional and on ethics no compromise. Ethics and research became twin pillars of this company. Obviously, when you follow that you are slow, takes lot of time to build a foundation.Q: Do you also agree with this view that to be a successful money manager you got to read a lot. You got to assimilate as much knowledge as you can?A: My sense is to be excellent in any field even in driving you need to be ready. You want to be a terrific anchor you have to be reading a lot. I mean of course our profession is about reading only what else you get. Apart from a degree wherever we left lakh of chartered accountants are chartered accountants or MBAs are MBAs where exactly you make a difference only when you read different types of books, different biographies whatever you read then the accumulation knowledge that the mixture of it in the head that takes you to a different level.Q: You were telling me that there are only 28 or 29 countries that you have not visited. Which is now on your bucket list?A: It is not 28-29 countries but those are countries which I would like to go. For sure those destinations are yet to be done.Q: Russia is next?A: Russia is next month. Q: What fascinates you about Russia that you are going there?A: It is just that I have not visited that. It is a second pillar of power, super power in 60s,70s we grew up with and suddenly it got busted. So, history must be there, there must be museums where you can and see how they grew and what really happened. We have not read much about it. You get to read so much about US but very little about Russia. They must have done something wonderful. In everything they were parallel, whether it is space voyages, military, aviation, sports, everything they have done parallely as good or excellent except for the economic performance finally. So, we would like to see the history. So, I am looking forward to it.Q: You like to go to countries and stay there for 10-15 days. Which are the big countries that you have covered in the last 5 or 6 years?A: All the big countries except for this big one, right from Japan, Australia, New Zealand, Singapore, Hong Kong, Bangkok to Mumbai, Kolkata, Nepal, Dubai, Doha, Qatar, Kuwait, Saudi Arabia, entire Europe, Turkey, France, Germany, Italy, Iceland, Canada, America, Latin America, Brazil, Argentina. Greece and South Africa I have not done, it is part of the 29. Q: What excited you about Brazil and Argentina?A: Brazil carnival. It was my marriage anniversary and she said lets go to carnival. So, it was 3-4 years back that I went and it was lot of fun. Actually I did not enjoy the carnival because it is at night and very noisy and you don\\'t understand anything as it is all in Latin. You enjoy the dance to some extent but if you can connect with what is happening there, the story, fairy tales and all then it is much better. There language is a big problem. In lot of countries I realised - Japan, China, Brazil, you are standing in a pharmacy shop you cannot ask for something because they don\\'t understand English. However now I see some guys who know everything in English, so acceptance of English is increasing and life is becoming much easier.Q: You last time told us that you don't have stress because you love your job so well but apart from travelling what else is your passion? Sports, reading, anything else? How do you spend your time?A: Movies we see, we go to plays. I love going for shopping in the weekends with my wife.Q: Do you shop for yourself or do you carry the bags for your wife?A: No, it is generally how small things are being bought, what is the consumer doing.Q: So, you look for stock ideas even while shopping? A: Lot of ideas come like that also but it is nice to see the market place and how people are behaving, what kind of promotions are on, what are the sales guys saying, so it is nice to be there. Q: Let us talk about your book reading. You have such a vast collection, I was going through that. I saw at least 10 books on value investing.A: Half the library is about value investing.Q: That is your biggest mantra - value investing?A: Yes.Q: Which is the best book you have read?A: I think The Buffett Letters were the best. I got my biggest insight from those letters. He has been the biggest source of inspiration.Q: You have a assimilation of these letters with you?A: Yes. In 1994-95 when we picked up all the letters, we had to xerox ourselves, make a bonded book and then read that. Now it has come in printed form. They have made compilation of it and you can buy it for USD 5-10.Q: So, many images of Buffett all through your office. A: No. You particularly came to the floor where assets are managed and there the mantra is only Buffett.Q: Only Buffett or is there any other investor that has impressed you? A: Whole lot of guys. I like Peter Lynch, Benjamin Graham.Q: Any Indian name that you have been particularly impressed with?A: Indians have not made it to academia. They have not really written really great books and all. Some guys are showing signs of writing great books but original books are yet to come. So, I don\\'t think I have anybody particularly in mind.Q: What else do you enjoy over the weekend, what is your favourite cuisine?A: Eating out is also a big fun. Eating out, spending time with friends. Stand-up comedy I love. So, whenever you get bored, you want to laugh it out or you have got something big insight, so you can keep thinking and have fun. So, that is a good place to spend time.Q: Let us talk about movies, your favourite actor?A: Govinda because of his entertaining movies, you don't have to apply your head. He does some crazy things, very good song sequences, dances.Q: Your favourite movie of Govinda? A: There are so many of them. I like his sequences with Karishma Kapoor and Raveena Tandon.Q: What about your favourite actress?A: It changes with the season.Q: In the current season who is your favourite?A: I think Kangana Ranaut is good.Q: Any regret in life? You say that you don\\'t have regrets about stocks whether you sold them or whether you stayed put for too long or whatever. Any regrets in life general?A: No. Whatever I have got I am pretty happy. I only wish I have good health for a longer period. Wealth is there, now good health I keep praying. From here onwards health is more important than wealth. I am lucky to say that I got an opportunity to have meaningful post of CA. I took the decision to pursue my passion which was in stock market. So, it is always a fun.