10 lessons S Naren learnt over 34 years and that help him manage over Rs 6 lakh crore

Sankaran Naren is ED & CIO at ICICI Prudential Mutual Fund. He has over 34 years of investment experience and is one of the most respected figures in the fund-management space. In this video, we have compiled 10 key points from a talk that he gave at the Tamil Nadu Investor Association meet.

1. You cannot be a full-time investor to be successful: Successful investing requires part-time involvement and not full-time. Full-time investors often don’t do well.

2. Investing is not a business that gives you monthly income: In investing, you make returns over a period of time and not regularly.

3. You will make mistakes and that’s fine: All investors, including the very successful ones, make mistakes. That’s part and parcel of the process. The real point is that such mistakes should be as few as possible and you should get many things right.

4. The easiest job in investing is buying: There is a lot of literature and help available around buying. But that’s not the whole process. To be successful in investing, you must also know risk management, when to sell, how to track performance and so on.

5. There’s a time to measure your performance: Measuring your portfolio performance during bull and bear runs is not advisable as you will get a wrong picture. You should measure performance when the markets are in the middle.

6. Beware of reverse asset allocation: Reverse asset allocation happens when you allocate more to the asset class that has gained in value. The right thing to do is to buy the asset that has lost in value but not many investors do that.

7. Tap the power of structural investing: Structural investing is investing in a sector/stock that has a long-term tailwind behind it. Many sectors in India have created wealth for their investors on the back of economic growth.

8. Act big when the markets go to extremes: When the markets crash, you should be able to act in a big way. Such occasions are rare but if you act during them, you stand to make fantastic gains.

9. Use market caps at extremes: By investing in a sector whose market cap has fallen sharply, one can make high gains as the situation reverses. PSUs are a classic example. After suffering for many years, they have bounced back in the last year or so.

10. Don’t follow just one style of investing: Different investments work during different market phases. Rather than stick to just one style, it’s better to be a contrarian and deploy the style which is the most promising at the moment.

Last but not least, Naren says that the most important thing in investing is common sense. If you are managing your money, it’s much easier for you to be sensible.

Reference videos

Mutual fund mistakes:

   • Top 5 mutual fund mistakes investors ...  

Asset allocation:

   • Do long-term investors need asset all...  

   • How to do Asset Allocation the Right ...  

Chapters
00:00 Introduction
01:40 To be successful at investing, be a part-time investor
03:02 Investing is not a business that gives you monthly income
03:51 You will make mistakes and that's fine
04:59 The easiest job in investing is buying
05:54 There's a time to measure your performance
07:11 Beware of reverse asset allocation
08:50 Tap the power of structural investing
09:53 Act big when the markets go to extremes
10:44 Use market caps at extremes
11:28 Don't follow just one style of investing
12:03 Conclusion

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