Trading is a self taught journey: Weekender with Atul Suri

Watch the interview of Atul Suri, trader at Rare Enterprises with Mangalam Maloo on CNBC-TV18’s new show Weekender in which he discussed overcoming fears of scuba diving, transition from being a fundamental to a technical analyst and his take on investing.Below is the verbatim transcript of Atul Suri's interview with Mangalam Maloo on CNBC-TV18.Q: What happened you started out as a fundamental analyst and then you moved to becoming a technical analyst and now you find out that your true calling is travel and the water? What exactly happened, what is the transition?A: I guess in life you grow and you learn things and for me life has been about overcoming fears, you know the whole thing with water is all about overcoming fears, so my passion is scuba diving, I am a scuba diver, I am a certified open water advanced diver. I have done quite a few dives at all over the world and you won’t believe if I told you that four years ago I could not swim. I was fearful of water, I would love the water but I would just never go in that’s four year ago till on one dramatic, it’s very filmy but a couple of friends, we were out, we saw a nice movie it’s a guy bonding movie called “Zindagi Na Milegi Dobara” and we were coming out and we were all just raving about Katrina Kaif and like all that stuff.Q: Did you feel like Hrithik Roshan in that film.A: No, no, I am far from it. So what really happened was that we were coming out and these friends of mine actually dive, so I was coming and I said, “wow what a great thing to really go out scuba diving” and one of them laughed at me and said, but you don’t even know swimming and that really hurt me like that was below the belt, so I told him don’t challenge me, are you challenging me and he said yes. He said they are going diving three months from now and that was in Phuket and I challenge you to come diving with us and at that moment, once you see a movie like after couple of drinks you’re on bravado and you said yes and I took on the challenge and it was January, I remember. In the month of January at 6 in the morning, I used to enter the pool. I used to be the only guy to learn swimming and I learned swimming and three months later, I was in the ocean. My first dive was the most dramatic dive, I had a shark encounter and I haven’t look back since and I have been diving ever since whenever my wife allows me of course.Q: So now this speaks about your trader instinct as well, right. You have a deal you have to go ahead and make it, but then again on the trading desk there is a stop-loss, right. Was there a stop-loss in your first dive, was there a boat nearby that you had to actually climb upon.A: No, I mean, I jumped off the boat and it was the first time in the ocean that itself is scary and there was a big wave that hits me on the face, so my mask came off, water went into my nose and I was like fretting and I told the instructor that I am not good like. I want to go back on the boat, I hardly entered the water and he told me look around, the boat that had dropped had already moved away, so I had no option I was in the middle of the ocean with my instructor of course and he says you have two options either you stay here and get smashed on your face or lets go down. He asked me to look under water and when I saw that all fear vanished because there was such a beautiful marine life. It’s so gorgeous that fear just vanished at that moment and I agree to go under water and for me that was the turning point. Just at that stage if I had ever got back in the boat, I think I would never come back to the ocean. There were no options, the beauty was below went for it and for me a whole new world opened up.Q: So from that turning point of you seeing looking down and seeing that wonderful world and trying to figure out that you had just two options, has that changed something in you professionally as well. Have you tried to figure out when you look at trade now do you look it more differently then you did earlier.A: I don’t think it transformed so many things, I mean the principles remains the same. I guess for me that was something new where someone like me always being safe and getting it going by the book. This was a big let go and for me it happens whenever I go.Q: But you started out as a fundamental analyst, why the technical or what about the technical thing amused you or invited you the most.A: I am a very visual person. I love art, I love graphic stuffs more than a numbers person and technical and charts are all about the graphic side of things and that naturally pulled me to this form of analysis. It was not very populate it was not very centrist, not very right. It was even a big career downer, but the fact is that I was passionate about it and I went for it. As I said earlier, at sometime you just have to let go and trust and go for it and I guess I have done that a couple of times in my life.Q: Telling you what someone has to see you during the work week and then see you over the weekends and it’s an absolute change for a man who loves the visual art. You are a creative person but what apart from diving are your passions do you travel around what are the path that you all take, is it off the beaten path or regular touristy places that you go to.A: I have to thank my wife actually after we got married. I have been travelling a lot and obviously you tend to gravitate towards the sea in the last 3-4 years, so definitely my share of Southeast Asia because that’s where I dive a lot, but she likes Europe so we travel extensively there and for us actually our favourite destination is the Costa Del Sol which is south of Spain, the Riviera and there is a place called Torremolinos, so I guess between the two of us if you asks us we both say that’s our best holiday place.Q: You have a house in Goa. Tell us a little more about that you spend a lot of your time there as well.A: I don’t have a house actually but the fact is half of my wife’s family moved to Goa, so there are lot of homes out there and that’s why whenever we go there it’s a nearest place and for Bombay you need some sanity as the city sometime gets you down, so Goa is a place that you definitely go to. I mean I love my seafood for sure. At one stage in my life I was studying in Australia and I used to dishwash honestly and I was in the kitchen and make money to pay for my studies and that’s when I really get introduced to sea life. It was an Italian place for seafood on Bondi Beach, exotic destination and that’s where I got exposed to amazing marine life, amazing seafood.Q: When you started out as someone in the finance industry obviously the monies were not much at the start. Was the passion still there or has the passion come by because you have the money and you can now afford all these travels and stuff?A: No, really the passion was always there. In fact just getting back on our first holiday, I remember we just had one credit card between us and in those stages you couldn't carry unlimited foreign exchange. So, we had one credit card, we were in Paris and I remember we went there and some of the credit card didn't work and we had only just that much cash with us. So, we would share a bread between the two of us but with our feet dangling near the river and those are the best memories. So, for that matter you don't have to eat in a Michelin Star resto in Paris to make it a lovely holiday. As long as the romance is there, the place is great and you are up to it.Q: A lot of things that you spoke about happened by chance, how much of that would you allude to the professional success that you have got as well. Has it been very hard, or have you been relatively more fortunate than the others?A: I have had to work very hard. Because the thing I do, I do technicals and it is not mainstream, it is not popular. It is considered the heretics of finance, there is a book by that name about technical analysis. In a lot of areas you always have somebody out there, a mentor or somebody whom you can - for all fundamental analysts they gravitate towards Warren Buffett or somebody like that. I have never really had that one. I am self-taught, I haven't done    any courses, I haven't done any of all these new exams that have come in there but I have just sat on charts myself randomly for years and years, developed my own methods, systems. So, for me it has been a very big self learning journey. It has been a very long curve, a tough one. But it is rewarding._PAGEBREAK_Q: What kind of support has your family been in that aspect of your life?A: It is phenomenal. It is good that fortunately we don't really bring work home. Markets have finite hours and I am very clear about that. I really don't like to carry work home and that really gives you the balance, it gives you a chance to appreciate so many other aspects of life. Apart from travel it is my scuba diving, I love my wine, I love my coffees, I love my food being a Punjabi.Q: Around the travels that you have done across the world what has been the food that you have loved the most and which is the kind of food that appeals to your soul?A: I just love food. Wherever I have gone I have found excellent food but for all the travels in the world and for all the lovely cuisine the best food is what my mom cooks. I am true Punjabi boy at heart as far as food goes. I still love my Butter Chicken and Garlic Naan and I still love my Chole Bhature. So, for whatever it is mom's kitchen and every Sunday she lives very near where I do. So, every Sunday it is lunch with them and to be honest that is the meal I really pig out on.Actually Sunday is a perfect reset day. You kind of have this big lunch, then you sleep and as I love coffee and I make my own coffee at home which I think is the best in the world and I have my coffee and really after that I begin working. So, I am one of those rare guys who starts working on a Sunday evening.Sunday evening is a time when there is peace and quiet. No markets in the world are open. All your charts are frozen wherever they are. So, even if you look at them with no markets on, with a peaceful mind and that is when I kind of prepare a report for Monday morning.Q: What exactly have you gathered recently over the last few Sundays that you have been working upon or working your charts on?A: For me actually the last month or month and half has been very painful in the markets. So, 6900 or so which I thought        was the bottom, it kind of held on and it has bounced back. You have had a very good bounce in the index, but the stocks that have participated are actually the under-owned stocks, stocks where I didn't find myself.I was somebody who was a little overweight pharma and pharma in this whole phase has got battered. And of course I am a long term trend follower. So, I am not going to be selling at every 2-3 percent kind of things but a lot of stocks have had accidents actually. Some Food and Drug Administration (FDA) issue etc, real, unreal, how much it impacts, that is a later on story. But the fact is that it has been a difficult time but it has also been a time for me to really introspect and learn.There is a lot of learning, it is also your ability to take pain and threshold of pain. So, for me it has been very testing mentally, the markets have bounced but a lot of long term portfolios I think and that goes for most inventors haven't done as well because the stocks that have bounced back are what, your public sector undertaking (PSU) banks, I mean people had sold them out. In fact most people had exited. You had metals. So, these have been the dog sectors over the last two-three years. Of course they make the index look very good, but portfolios, the longer term portfolios have not bounced, but then that is a part of the game. You have to go through cycles and that is the joy of being with great investors, reading about them and I am fortunate to have good exposure with some of the best in the country.Q: These are the things that you do over the weekend. During the week is there anything that you do for yourself, for your own passion rather than just the profession?A: Fortunately our markets are very finite hours. So, one does get some space in the evening and then that is when I do get time to spend time with my family. I wake up very early, I wake up at 5.30 and I am probably the first guy in the gym, I am almost putting up the AC and the lights because that is the space you get. So, for me that workout time in the morning or that exercise time in the morning is a physical and mental journey. So, that really helps me to reset myself.Very often you have fears and clutters which are unreal, you are worried that SGX is down, US is down, we are going to get smashed today, but the market surprises you that day. So, very often we take in more stress than there is and things fall into space.Q: You work with some of the best in the industry. You are among the best in the industry. Tell us for people who do not have such kind of exposure, what is the recommendation that you would make to them for guys who have gone long private banks, the guys who have gone long pharmaceutical at the top of the cycle and since then their portfolios have underperformed. And what would you say to people who have entered public sector banks as well as metals which have seen a bit of a rally. Do you think there are more legs to this rally?A: I personally think that pharma etc are very long-term bull markets. You have certain US Food and Drug Administration (USFDA) issues that come up and stocks go through sharp accidents, but I feel people just react to news; they first sell and then think what the financial implications are. So I think it is overdone. Yes, there may be underperformance, they consolidate but I do feel that these are in much longer term trends; these are big macro trends happening globally. So I do think these things will catch-up. Yes, you will go through moments of difficulty, underperformance, self doubt, self questioning but that is a part of game. Somehow when you spend a lot of time you realise it is not an intellectual game, it is an emotional game and you have to hold yourself or be superior emotionally to make money.I am so fortunate to work with a great investor, trader like Rakesh Jhunjhunwala and I see it in him, but the beauty is how he has been able to go through cycles and cycles and in the end create wealth. So it is not about being the best performer every day, every week, every month, you cannot be that but the beauty is how you come out of every cycle stronger, as in technical term we call a higher-top.      Q: Any example of your own trade that you can give. You had to go through a cycle, you faced a terrible amount of pain that time, there were moments of self doubt and then you came out victorious?A: In the whole 2000 IT boom we had all made loads of money and we got little arrogant and we thought it is the ultimate thing and we had concept like eyeballs and all these things. When the market corrected no one thought it is going to be so deep but I had got into a stock called Mastek in a very small quantity. After a few days it hit downsides circuit and it was traded. I could have exited. My stop losses should have been triggered through whatever methods I use. However, you get arrogant; you things it is all going to bounce back because in past you have been smart and cheeky and you have made money. I saw that thing go into nine circuits after that, so I just couldn't exit the stock for nine days and each time it was almost like 8 percent, 16 percent kind of circuits. When I assessed myself on a small ridiculous position just because I did not cut my losses I found that I had given back 25 percent of the bull market profits. So, a small trade, an arrogant trade or complacent trade whatever you call it and you land up giving up. So, because of that I have learned two things; one is to cut my losses and the second thing I have learnt is not to trade Mastek. I haven't traded that stock since.Q: With the cut that you have seen in lot of these pharmaceutical stocks have you cut those losses?A: It is a more case to case basis but I still don't think that the bottom is in place. They may take some time of consolidation. So as I said everything has cycles and it is the ability to survive through cycles is what really creates long-term wealth and it is not been reacting. I am not the kind of guy who comes and thinks that I have to buy five stocks today. I don't have those compulsions. For me it is five stocks a year probably that is a great hit even if I get somewhere there.   Q: We are almost in the first 25 percent of this year; any stock ideas?A: It is not going to be easy for me to recommend stocks because of compliance issues but I think that it's more important that -- this market is really very interestingly poised; we have had a rally for over 1,000 points or so, from 6,900 to 7,900 and it is a very important inflection point, not just India globally. The issue that comes up is that we have had a bounced back. Is this a technical bounce back in a larger downtrend or is it a trend reversal? I do think that the markets are going to get challenged shortly and the quality of correction is going to decide. If it is going to be sharp and deep then I think we may actually spend a lot more time and may need to do a lot more work. In case that correction is shallow or may be sideways and then it takes out this 7,900-8,000 Nifty level I really think that we can have a bottom and a trend reversal of a larger trend. So, I am looking at the next, I would say 100 or 200 point on the Nifty with great interest. Not just the 100-200 point's story but how the market behaves. Is the correction shallow or deep and that for me is very important. What are the kinds of stocks that are going to move around, what are the new leaders that are going to emerge. Therefore, I am really looking at the next 100-200 points with lot of hope.Q: Give me one green flag or any such cue that you will get from the market that would signal a larger uptrend or a red flag that these stocks are going up or going down?A: I think crossing 8,000 or so on the Nifty it will also, we will have in place a kind of a higher bottom-higher top which is a longer term trend. If you draw a big trend line which is from the top of 9,119 to this whole one year fall you will find that also gets taken out. This will also be confirmed or very often you will find that the earlier breakouts would happen in the global markets, so this is a story globally.   You have had this very big fall and you had a bounce back and in the emerging markets it is more, so because the fall has been sharper. So, we are at a point of decision point really of whether it is a correction in a larger bear market or is it a bull market reversal. I for one thing it is a bull market reversal that is my sense my thought but obviously ultimately the price in the markets tell you the whole story. Who am I to run ahead of it?