Book Review: Masterclass with Super-Investors

While books on Investing are plenty, very few are authored by Indian’s themselves and an even smaller sub-sect of them are actually worth spending time and money.

Masterclass with Super-Investors is one of the rare books that qualifies on both criteria. The book has been written in the style of Market Wizard series by Jack Schwager. The authors have chosen  Individuals most of whom are well known in the Industry and gone ahead trying to understand their path, their successes and their failures.

While the book is a good read for all class of investors – from beginners to experienced professionals, I do think that those without a firm grasp of the framework and who haven’t seen the cycles may actually get the wrong impressions on how to go about generating wealth through markets.

While the investors come from different paths and time-frames, there are acts and out comes that are similar in nature. In this short review, I shall limit myself to the take-aways that I found that while may not be the root cause of their success was a tremendous catalyst.

The first thing that you notice as you read through is that most of the big money was made by buying in the bear markets and participating in the ensuing bull markets. While for some it was the 1992 Harshad Mehta run, for many it was the 2000 Dot Com bubble.

Of course, as a participant in the 2000 bull market, I know that while making money was easy, holding onto the gains wasn’t. Credit definitely belongs to these individuals who were able to maximize the opportunity that was provided and yet were able to get off the tiger without being eaten.

Big money for most was through concentrated portfolio selection. Even post their success, most investors profiled here have a portfolio not exceeding 25 stocks. Big Bets in their initial years in market contributed significantly to getting them a head start.

Another common thread you will find across most of the investments that they have chosen to showcase is that they were mostly into small and micro-cap companies. Shyam Shekar for example talks about his investment in Hatsun which he started investing when its market cap was 40 Crores. Rajashekar Iyer talks about his investment in Nagarjuna Construction when its market cap was 37 Crores.

Yet another common thread save for a couple of investors were their expectation of returns. Most investors are of the opinion that they won’t invest if they don’t see a possibility of doubling their money in 3 years (CAGR of 26%). Vijay Kedia in that sense is an outlier for he won’t invest for just a doubler in 3 years but looks for companies which bears qualities that may provide him a 10x.

When it comes to Asset Allocation, majority of investors are fully invested into market with a couple of exceptions who have substantial holding of Real Estate. This is not surprising since they having seen their success and build conviction, many see no point in adding instruments that will derail the growth.

Personally for me, Hiren Ved chapter appealed the most. Most of the other chapters are very much readable though a couple felt like hot air. But over-all, this book is definitely worth reading, especially if you have participated in a market cycle.

In his presentation at Value Investing Pioneer’s Summit 2018, Samir Vartak had the following take on investor expectation

“If investor’s goal is to beat the market by 4-5%, he or she should not bother about this hard work. Easier way would be to invest in a steady long term portfolio of businesses, sit back and relax.”

The Hard Work referred to being Analyzing & Investing in Stocks. In fact, investing a few Multicap funds should generate Index+ returns and all this without needing to get off the couch. Doubling your capital in 3 years requires a lot hard work + Luck. Ability to do that consistently for decades is what separates the men from the boys.

As Morgan Housel wrote, “There are a million ways to get rich. But there’s only one way to stay rich: Humility, often to the point of paranoia”

You can buy the book from here: MASTERCLASS WITH SUPER-INVESTORS