Fortunately or unfortunately most of the net wealth that I have created is by being in the markets and for long periods of time. However this did not lead to a career in Portfolio Management Services – simply because the method of compensation and the amount of compensation did not attract me at all. If there was a business where there is a conflict between ‘action’ – and he client feeling that something was happening and me feeling that nothing was necessary, it was in the PMS ‘profession’. Let us take an example if I had bought Gillette, Colgate, Wipro, Hdfc, Hero Honda – say all in 1985 – and held on till today…how many of you would have paid 2% per annum (on increasing prices) for INACTION? Want an honest answer.

So to make money I would have had to sell Wipro buy Silverline (you want action, I have to make a living), sell Hero Honda to buy Kinetic Honda, etc. maybe both of us would have been happy, you would have been poorer.

If I had done nothing, but just sent the bill, you may not have paid at some stage.

Of course there is another set of clients who would have said..’I agree Hero Honda has done well from the year 1985 to 2009, however, we could have sold it, bought it back, ….and thus improved the return. Very difficult to talk to people who have 20-20 hindsight.

Why I know of an amazing lady who had a messy equity portfolio (Rs. 100,000 perhaps in 2000) – and very scared of equities. A friend of mine who also happened to be her neighbor introduced her to a PMS provider (again a friend of mine!) – in the years from 2002 to 2004 her portfolio doubled. Then again doubled in 2005-6. This was FAR superior to a mutual fund – forget the index. So crudely put her returns went up from sub-7% of her own making to about 42% p.a.

She was not happy….because the PMS manager had not captured some tops and bottoms.

So happy not to be in PMS ..but in training. Hopefully my client knows what I want, and the requirements are for a day, not a decade.