I had just finished a class on investing, and then the next speaker was to take over. I had to do the follow up lecture too – so some spill over had to happen.

I had told the class that to retire one should have equity, and that is the only way.

The next speaker asked the class what I had said..and then to prove a point said “I have never invested in equities”.

When I came on for the follow up, the students asked me “he said he has no equity”. I had to quickly say “He is a failed businessman, and has no clue where his next meal will come from..but ….and he is the worst person you can look for investing advice”. It was true, he just sold his business, and he was bailed out by his father, wife, and brother. He is almost 50 years of age. No, Not all businessmen know their business.

IN another case a big investor came and said “I do not diversify…do not do asset allocation..all my money is in equity”.

I had to say “stupid, irrelevant advice” – because his net worth is in 4 digits crores, has a dividend income in excess of Rs. 40 crores, a salary of Rs. 50 crores – of course he calls himself middle class!!

YOU CANNOT COPY A BUFFETT, AMBANI, PREMJI…..because you are not them!!

What about listening to writers? or thinkers on investments? like Fisher, Jason Zewig, Markowitch, …..?

Well the mood seems to be “do as I say, not do as I do”. For example Markowitz was asked ..how he split his portfolio. Well he should have done intricate calculations, and arrived at a “perfect” ratio. However he said 50:50. Now, that was a very honest answer. The problem with many pesudo investment gurus is that they have not created wealth for themselves OR for their clients. They are only theory experts and think that “there is a perfect world and this is how it works”. So they will keep calculating – and this without realizing that “Economic value of perfect information is zero”. You just have to act.

Imagine the scenario when – Viv Richards hit Madan Lal and the ball went into the sky – I am talking of an incident from the World cup finals, 1983. Kapil Dev took an amazing catch, and Viv was out.

Now if we had an expert cricketer, he would have said fine catch. However a theory guy would have said “Kapil should have calculated the trajectory of the ball, found out the speed at which it was travelling – so that he could decide at what speed he should run….etc”

Kapil just said “I was trained in such a way that when a ball is in the air, my body takes over from my brain” – he knew the trajectory, his mind calculated the speed…..whatever, he ran and he caught. That was important.

John Bogle – the father of Index investing believed that people should allocate between debt and equity. So do I. However in an interview in 2010…John said “I leave my assets as it is…have not touched it since 2000”. He is an expert, right?

Malkiel the person who advocated Index funds for all said “I still buy shares, not necessarily for returns…but for fun”.

It took me 7-8 years before I started looking at mutual funds. So my first MF investments are in 1999 perhaps and not in 1993/4 when they came in a big way. I had luckily sold my dad’s US 64 and bought Mastershares (UTI). In the Harshad boom, Mastershares with a nav of 32 was quoting at Rs. 100…and I sold. That apart, my sip started only in 1999 or 2000 after I met Suraj Kaeley the intellectual salesman! Now I have investments in many “not so great” funds – but have stuck to 4-5 fun houses, and still my biggest asset is DIRECT EQUITY – hey I started my life there!

My dad was 89 when he died – and his asset allocation was about 70% equity, and 30% real estate. He had about Rs. 5L in his savings bank account. Now my mother has a similar portfolio! Where did the theory of 100-age (these days people say 110-age and even 120-age…).

I like theories. I love Markowitz’s bucket theory for withdrawing in retirement, but I have not used it.

Personally I do advice asset allocation – I can do a 3 hour talk on AA – but personally I am almost 100% in equity and cash. Very little money in “debt” or “gold” except of course the traditional PPF, and jewelry.