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From the Publisher
In Conversation with Ritesh Dhoot
What is the significance of this book?
The book is a guide to pick winning stocks. The book highlights the many strategies an investor can use to beat the downside of markets.
The book ventures into the animal world to derive investment themes and strategies. Animal strategies have astonishing similarities to the investment world because, in the animal kingdom and the corporate world, the fittest survive. Animal kingdom obeys laws of nature. Nature does not change for anyone. It rewards adaptation and evolution (survival of the fittest). It is built around rationality and can be brutal. The hyena hunts and kills the weakest wildebeest, even if it is a new-born, but it also results in the remaining group of wildebeest getting stronger. This act is nature’s way of ensuring the fittest survive. Nature is as brutal as it is rewarding.
Studying the wild has offered a rich understanding of corporations and equity markets. I discovered many novel and interesting wildlife analogies that remain elusive to the investor communities. Perhaps, ethologists never took investment seriously, and similarly, investors never took time to go to the wild.
A work of caution—not all stocks that fall under these strategies will work, so other lenses are equally important. In other words, most of the winning stocks that I have come across can be traced back to one of these strategies. But not all stocks which are aligned to these investment strategies are winners as they can still present challenges such as questionable management ethics or ability, business fundamentals challenges, or other idiosyncratic shortcomings.
Why did you think of writing on this topic?
After my Kenya safari trip, I became an avid student of the animal kingdom, and it was fascinating to see that investors can learn so much from the animals. More so, it’s a shame that the investment community has been ignoring a wealth of knowledge and insights that wildlife has to offer. So, this book is an attempt to highlight the lessons from the animal kingdom, which can be gainfully employed while making investment decisions.
Most importantly, the book assures that stocks that exhibit characteristics from the animal kingdom have the right elements to outperform the markets.
How often do you use these strategies?
I have never invested in a stock that does not fall under one or more of the nine strategies highlighted in the book. These strategies are my key filtering criteria.
Are stock markets as risky as they are made out to be?
In the stock markets, the age-old mantra of buying low and selling high makes profits. However, humans are genetically engineered to do the exact opposite. Falling prices induce fear of losses, and this tendency keeps investors away from the markets. Alternatively, rising prices attract investors in hordes as humans are greedy and fear missing out on the rally. This behavioural shortcoming blind folds investors when markets become expensive, and they keep buying when rationally they should be selling. Yes, for the investors displaying the above tendency, stock markets are risky. To quote renowned investor Peter Lynch: ‘Stock market isn’t a gamble, as long as you pick good companies that you think will do well, and not just because of the stock price.’
Chapter 12 of the book talks about my investing principles and details philosophical and psychological principles I follow to curb the genetically acquired patterned irrationality, which is harmful to investment decisions.
• What is the meaning of wealth creation for you?
Wealth creation, to me, is a sustainable and gradual rise in wealth with limited drawdowns. It can be achieved by investing in a diversified portfolio of companies that are aligned to one or more of the nine strategies outlined in the book. They entail taking calculated risks with a high probability of outperforming the market over a two to five year time-frame.
• How do you manage both work and writing?
My writing is closely related to my work. So, in this sense writing compliments and is not an extra burden. More importantly, writing is not overly time-bound. This ensures that I write when I have an idea, and I feel like writing. When we remove the time and performance compulsions, creativity works at its best. I followed this approach and never realized how time passed, and a day came when the book was ready.