Many of you might think that it is very difficult to earn money from the stock market and many of you might even think that you need a finance background or a fancy degree like a CA or a CFA in order to succeed or make money from the stock market but today we are going to talk about someone who proved to everyone that you only need common sense to make money from the stock market and that person is Porinju Veliyath and many of you might not know him because he doesn’t show up on the media very often but he is considered to be India as one of the most successful small cap and mid cap investor
Who is Porinju Veliyath
Porinju Veliyath was born in a middle class family in Kochi in the year 1962. his early life was full of challenges because when he was only 16 years old his family had to sell their house because of deep financial problems and to repay their loans and this incident of selling their house and becoming homeless made a deep deep impact on young Porinju Veliyath and Porinju Veliyath are the secretly made a promise to himself that he will earn money and become rich and one day buy this house back for his family and from that very young age Porinju Veliyath started working in order to support his family and he started working as an accountant in a small company for a salary of 1000 rupees per month but Porinju was ambitious he wanted to earn more money and provide for his family and that’s why Porinju took his second job at a telephone exchange where he started earning a salary of around 2500 rupees per month and at this point of a time was still a teenager and found it very tough to save money after paying his rent and that’s why enrolled for a law College which offered cheap accommodation and canteen services to its students and for the next five years Porinju spent studying law and after graduating in the year 1990 he was unemployed for some time and found it very difficult to find a job back in his hometown and so hope decided to take a big step and Porinju Veliyath which is a popular train for care lights in the mid 9 to come to Mumbai and this is landed in Mumbai and at that point of a time he didn’t knew that Mumbai had greater plans for him
The City of Mumbai introduced Porinju Veliyath to the Indian stock market where Porinju Veliyath got a job in kotak Securities where he initially worked as an ordinary office clerk but this ordinary opportunity was enough for Porinju Veliyath to know what exactly to do next and Porinju Veliyath had to stand out of the crowd and people should know him on the trading floor and that’s why Porinju Veliyath even changed his name to Francis which was easy to remember and with his hard work and dedication very soon he got promoted as a Floor Trader in kotak Securities and after kotak Securities he even joined parak Parikh Securities as a research analyst and later worked as a fund manager till the year 1999 where he learned the skill of buying and selling stocks and out of all these skills puranjo vediath learned a very important lesson from the city of Mumbai about stock market and that lesson was common sense is the key to make money in the stock market I will repeat it common sense is the key to make money in the stock market and this simple learning was going to change the fortune and the future of Porinju Veliyath forever
Porinju Veliyath Journey in stock market
After working in all these jobs for about nine years Porinju Veliyath knew that he didn’t wanted to become that person who traded his own happiness for money and Porinju Veliyath made a very wise decision to go back to his hometown of Cochin and after moving back to his hometown Cochin his real journey as an investor started into the stock market where parents made his first investment decision and bought an eight percent stake in geojit Financial Services Limited and along with personal investing also started a portfolio Management Service firm which was called Equity intelligence in the year 2002 and when parent invested in geogen the star stock price was a trading in single digit and the whole form was valued at around only 2.5 crore rupees and at that time even told the founder of the company that his company would trade at around a thousand rupees per share in a few years of time but the founder of the company just simply laughed it off but here comes the question why Porinju Veliyath was so confident about the geojet because it was fairly very simple for Porinju Veliyath because he thought it from a common sense point of view where he saw that this company is
1. Paying dividends
2. The company is having good fundamentals
3. The management of the company is clean
4. The company carries no debt
5. On top of that this whole company was available for less than three crore rupees
considering all these advantages from a common sense point of view for Porinju Veliyath it was an easy decision to make and Porinju’s decision was right because within a few years of time in the year 2006 the stock price touched 280 rupees and Porinju Veliyath earned a fortune and made huge amount of money from this investment is officially very rich and he also has a promise to fulfill which he had made to himself for years ago if you remember when Porinju was a teenager his family had to sell their house and land to repay the debt and Loan and now parents bought back that same piece of family land sold decades ago and build a luxury Farmhouse for his family on that same land
Common sense strategy in Stock market
To begin with Porinju Veliyath is a value investor which means he likes to buy those stocks which are fundamentally very good and are trading at a lower price or we can simply say like to buy those stocks which are undervalued and according to Porinju Veliyath the value investing is all about buying a rupee worth of assets by paying only few pesos and Porinju Veliyath only looks for good fundamental stocks which are trading at lower prices and he doesn’t care about the size of the company whether it is a small cap large cap or a mid cap and for that reason you might see that majority of his Investments are in either small cap stocks or mid cap stocks his investment strategy is very simple pick and shortlist to those companies which have some of the best businesses and out of this pick that company whose stock is available at most discounted price and the overall valuation of the company is also very very attractive and with the strategy Porinju Veliyath has found out that there might be few stocks which might fail to deliver but most of them succeed and give maximum returns and this is Porinju Veliyath’s common sense strategy to make money in the stock market and also as an additional check Porinju Veliyath also looks for the companies which are having best financial practices strong balance sheet and honest business management and Porinju Veliyath also has a separate investment strategy to invest in those companies which are facing temporary troubles or deep problems for example in the year 2014 Bajaj group was exiting Force Motors and thus stock price of force Motors was falling because people were selling the stock along with Bajaj group and at this point of time everyone was selling the stock of force Motors and even a lot of experts and analysts were suggesting to sell the stocks and exit completely but at this point of time did the exact opposite and he bought the stocks of force motor at around 420 rupees per share and guess what happened in the next 1.5 years of time the stock of force Motors became a six times multi-bagger stock and from the price of 420 rupees it reached a high price of around 3000 rupees per share and here as well didn’t use any complicated method to analyze the stock but instead he simply used a common sense to make a decision to take advantage of this opportunity and what did Porinju Veliyath’s common sense told him it was very simple the exit of Bajaj group from Force Motors would not change or impact any fundamentals of force Motors in other words you can say the that the quality of the company was unchanged and the stock price was simply falling because of the bad news and unnecessary Panic among the investors and this is where parents saw an opportunity to buy a value stock at a discounted price just used his common sense to earn a six times multi-bagger returns and another example of his Common Sense investing can be seen in an interview which he gave to ET Times News Channel where parents said that companies like sun Pharma and TCS may be some of the best companies of India but Porinju Veliyath believes that they are not the best stocks to buy and according to him if you really want to make serious money then you have to look at companies in mid cap and small cap segments and identify those companies which have the potential to become the future Blue Chip companies that can actually make a lot of money for you in the stock market and according to parents the real fun in the game is identifying the future Blue Chip companies or future multibagger large cap companies and that’s why parents always likes to invest in stocks from mid cap and small cap segment and also many often criticize for investing in mid cap and small cap stocks because mid cap and small cap stocks carry more risk compared to a large cap stock or a blue chip stock but you have to understand that if something is working for you in the stock market then it becomes your belief or your reality and maybe this strategy of investing in mid cap and small cap stocks has worked really well for Porinju Veliyath and that’s why it is his belief or reality that the best stocks are in the mid cap and small cap segment and Porinju Veliyath also claims that the compound annual growth rate offers portfolio management firm Equity intelligence is around 33 percent from year 2003 to 2017 where in the same time period Nifty has delivered only 18 percent of compound annual growth rate
If you see the investing strategy of Porinju Veliyath has earned better than expected returns not only for him but also for other people who invested through his firm and maybe this is is the reason his firm Equity intelligence in today’s time has an asset under management of around the 7000 crore rupees and if you look at stocks in which parent has invested personally then the majority section of his portfolio consists of small cap stocks which is the reason why he is known as the small cap investor and the small cap companies in which has invested many stocks have turned to be very big multibaggers and have delivered very big returns for Porinju Veliyath
Learning
1. Always keep learning no matter what job you are doing whether you are earning 1000 rupees 2000 rupees or 5000 rupees salary it doesn’t matter you should always keep learning because learning is that key which can Elevate or take you to the next level and can unlock new opportunities which can change your life just like it happened with kept learning even when he was an accountant when he was a telephone operator when he was earning merely thousand rupees or 2500 rupees of salary but that learning ultimately opened doors which led him to the stock market which changed his life and Fortune forever
2. Don’t complicate instead use common sense because a lot of people in stock market overthink and over complicate things and end up not investing or investing in bad stocks or bad companies but instead of making things complicated try to make things simple look for good companies good fundamentals good management and if those kind of a companies are available at a discount then go for it few might fail to deliver returns but but most of them can deliver great returns
3. Know what works for you in the stock market because if you see for Porinju Veliyath investing in small cap and mid cap stocks works really well and it is his key to success but it is not necessary that the same strategy which has worked for Porinju Veliyath might also work for other people and for that reason you have to find those things which works for you in the stock market and follow that strategy to build your wealth and make money from the stock market
so this was the story of Porinju Veliyath who started as an accountant worked as a telephone exchange operator and now he is one of the most successful investors in India
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