How did you react when you made your first million, do you remember the day you made million dollars, how did it feel like?
I have an account right over there on my desk to this moment. I had not had any money at all when I went to Wall Street. I had 600 US dollars and that is all I had. I did not have any debts but when suddenly a few years later I had a million dollars, I could not believe it. It was unbelievable.
Today information is freely available and it is no longer an issue. People have access to the internet, Whatsapp. What happens in Singapore I can figure out in 10 seconds sitting in India. Do you think now that information is readily available, investors and traders are much more mature than when they were in the 70s and 80s and 90s?
No. If 100 people go into a room and turn on the internet, they all hear exactly the same thing at exactly the same moment. Only 7 or 8 out of them are going to get it right. Judgement is what they have not been able to give us all. If we can all get a good judgement, we would all be rich, none of us could be rich if we all know the same thing. Yes, we get the information very quickly but unless you have the judgement, the experience, it is not going to do you any good.
Lots of people have got influenced with your writings, with your interviews, your assessment of commodities and the assessment of risk. Who has influenced you personally the most in your life and in investing career?
Well, there is no name except for the fact that I learned early on that some people did their homework. When I first went to Wall Street, I thought everybody knew everything because they were educated, they were experienced but I quickly learned most people do not know anything. They do not even read the annual report. So, I learned very early that if you just read the annual report, you do more than what 98% of investors do on Wall Street. And if you read the notes to the annual report, then you would more know than everybody. I learned early on from the experience of looking around and that if you do your homework, you might be successful. But nobody wants to do their homework, everybody wants a hot tip, everybody wants to get rich this week. It is boring to do your homework and to read the annual reports and find out about companies. Give us a hot tip; do not tell us to go and do research.
Let me ask you a hot tip…
You want a hot tip? Watch ET Now. If you watch ET Now, you get all the ideas you need. Now do not buy just because it is on ET Now but that is where you can start, you can get your ideas and then you do your research.
We are using digital technology, sitting at home had taught us that we can work from home. Importance of travelling out and doing work is getting reduced. What is your view of the world? Where do you think disruption will take place and where do you think winners will emerge?
Well, it is not a question. You just pointed it out. You and I are talking on Zoom or something like that. These technologies did not exist 10-20 years ago. So, the world is changing very dramatically. I can go to my doctor now. I can ask him to look at my eye right here, over the internet. My children are not in school, school is closed. So, they are doing their education over the internet. So many things are now accelerating. Many things that were in the process are getting accelerated and it usually happens in any kind of crisis throughout history. In Singapore, you cannot go to a restaurant and so the home delivery is booming. It is going to boom everywhere in the world.
When we spoke last you also said that you like India because of its demographics. You like India because you love the food here or do you like India because you think it is a great investment destination?
I tell people all over the world that if you can only visit one country in your life, you should go to India. The man-made sites, the natural sites, there are no places in the world. China had that but they destroyed much of it. If you walk down the streets in India, the women, the men are just astonishing. The rich ones and the poor ones, everybody. The food, the religions, the languages, there is nothing like it. So, if you could only go to one country in the world it is a sensory feast. It is a constant sensory feast. I know I am on ET but I do want to say that the first time I was in India, I read this newspaper called Economic Times and I could not believe what a good newspaper it was. There are a lot of great things in India, a lot of very educated, smart Indians. It is your bureaucracy, it is the worst bureaucracy in the world but it is a fabulous country.
Have you extensively over the course of investing career invested in Indian companies?
Extensively, I do not know. I have certainly at times in my life. Probably, my first time was 25 years ago. I have nothing in India now probably because you heard my views on the world. I used to be a big fan of Mr Modi, he is still a wonderful guy but he is not doing for India, for the Indian economy what I would do. So, I do not have any investments in India now. I have had them in the past.
Is it true that before investing you like to travel, you like to observe and then you make your decision?
Well yes, I learnt that the hard way. If you go to some place you will find out what is really happening and you will find opportunities, likewise for the company. Some companies, some industries especially when they are beaten down and if you go and talk to the people, you might find very good opportunities. I told you that I bought a Russian shipping company last week. Well, it is a disaster but things are changing and things are probably going to be okay and so I have been buying the stock.
Let us say if you had the option of investing only in one instrument or one commodity for next three to five years, will it be crude or will it be gold?
Why is that?
If you look at the ratio of silver and gold, it is highest it has ever been in recorded history. Never in history has silver been this cheap compared with gold. Maybe there are reasons but there are always reasons when something like this happens. I want to own precious metals. And certainly, in the next five years, I would prefer to own gold or silver. But if I had the option, I would own silver just because it is cheaper. I own both. I bought more gold recently but I would rather prefer to buy silver today than either of the two you mentioned.
Before the Covid crisis also the FAANG stocks, which is Facebook, Amazon, Alphabet, Google and Netflix, were essentially the most sought after stocks and even after the crisis when the world is a bit shaky, the US internet or tech companies have emerged as the real survivors. What is your view on buying, investing in some of the US tech bluechip companies?
First of all, I am not smart enough to understand most technologies. Unless I really understand something, I do not like to invest. Second, I do not like to buy expensive stocks. Yes, they went down some but they are still very expensive compared to most other industries and stocks. I know plenty of people make a lot of money investing in those things. It is just not for me. I have my own way and that is not my way.
What do you think will change in terms of customer behaviour and psychology till the time a vaccine is not discovered?
Well again, the problem is everybody wants hot tips, everybody wants me to say listen buy this stock or turn to page 37 of this book and you will find out how to do it; it is not that easy. If I told you that you could only have 20 investments in your life, you would not jump in and out, you would not see some guys speaking on the internet or on ET Now, you would be very careful about what you bought and sold and that is the single-most-best investment advice I can give anybody. Do not invest unless you yourself know a lot about it. Do not even listen to ET Now. Maybe you will get an idea but do not invest unless you yourself know a lot. What If I told you to buy X and you went and bought X. You would not know what to do to next. If it goes up or down you have no clue. Stay with what you know if you want to be successful.
Warren Buffett is, again and again, talking about investing in low-cost ETFs. Do you think that is a good way to start?
Yes, yes, yes. I am a fan of ETFs, well certainly they have grown a whole lot. It is an easy way and efficient way for many people to invest in markets, whether stocks or commodities or bonds or anything else. I am a fan of ETFs but I hasten to tell you the next time the stocks and ETFs are going to get killed because that is what everybody owns. All the ETFs own Apple, all the ETFs own Amazon. So when people dump all these ETFs, they are going to be dumping all the same stocks and you are going to find that it is the stocks in ETFs getting crushed much more than they would in a normal bear market. If you can find stocks or any investment that is not in an ETF, you should do a lot of research because it is not overexploited, it is not overpriced and that it is not going to get decimated in the next bear market, please send me an email because I want to look at them too.
What is the better way to buy gold – gold ETF or physical gold?
I prefer physical gold myself but own ETF. If you really know what you are doing, you can buy gold mining stocks. The problem is there are hundreds of gold mining stocks in the world, you got to get the right one. There was a famous American author who once said: A gold mine is a hole in the ground with a liar standing at the top. There are hundreds of gold mines. But if you know the right one, if you know a company that is going to find gold in Mumbai, you should buy all you can. But if you do not know that and if you are good in futures, then trading is a wonderful leverage, you can buy gold futures or silver futures. You get wiped out in two hours if you do not know what you are doing but that is a great way to participate. Many Indians, especially Indian wives have lots of gold, she loves to get gold and I do too. Physical gold is certainly good. I have a lot of gold coins probably because if there is a crisis, you cannot go down to the shop and take a gold bar. First of all, the guy would do not know if it is real, second if it is, he cannot make a change. You cannot buy a loaf of bread with a gold bar. More likely they will know they are real or silver coins. So, I own a lot of gold and silver coins too but I own ETFs. I do not own any mines at the moment and I do not own any futures at the moment.