Finding My Investing Style
My journey of trial, error and (finally) clarity
“The amateur investor has numerous built-in advantages that, if exploited, should result in his or her outperforming the experts.”
The yellow candlelight flickered as I mused over the words.
Why was I reading One Up On Wall Street by candlelight?
It was the year 2016, Chennai had just survived a cyclone, leaving us flooded and without electricity for days. Our power backup had run out and my phone had also died. It was the only thing I could do to kill time—read books by the candlelight. For five days, that’s all I did. I finished One Up on Wall Street by Peter Lynch and The Intelligent Investor by Benjamin Graham.
If Mr. Lynch was to be believed, I had inherent advantages over stock market experts. Why should I pay a mutual fund manager to handle my money when I could do it myself—and potentially better?
My investment journey began with this question and has since taken a meandering path. From thinking I had to get the highest return to a tempered understanding and now clarity over the years.
Now, back to the candlelight.
The Amateur Investor
Fueled by what I had read, I began investing early as soon as I started earning in 2017. Whatever little I had left after my education loan and expenses, I put into a few stocks. I didn’t analyze financial statements, honestly, I wouldn’t have known what to look for. A ₹10k here, a ₹25k there. If I bet small there’s only so much I can lose right?
As my income grew, my monthly surplus started trickling into my savings account, where it stagnated in fixed and recurring deposits. I was earning interest on my tax-deducted salary—only to pay tax, again, on that interest.
Meanwhile, my investments in stocks remained sporadic, driven by bits of information I picked up and what I felt about a company. I was driven by curiosity but had limited time to fuel that interest and my investments.
“When I have more time, I’ll come up with a comprehensive, quantitative and perfect process,” I promised myself.
The markets didn’t care about my grand plans. They kept moving forward whether I was on board or not. A couple of years went by, my money paralyzed by the pursuit of perfection.
Feeling Like I Cracked The Code
When the 2020 lockdowns arrived, I finally found that elusive “more time”. To say I fell down the rabbit hole would be an understatement. I went through a lot of books and articles1 on personal finance, driven by both curiosity and the very lucrative side effect of making more money.
The book that truly changed my approach was ‘Warren Buffet and the Interpretation of Financial Statements’. It provided an objective way for me to assess a company’s financials. What constituted a good profit margin? What to infer from a 10 year earnings trend? I could finally build an excel template to evaluate a decade’s worth of data for any publicly listed company.
To me, this felt logical, structured and easier than combing through annual reports, listening to earnings calls or tracking every news article. (Note: This isn’t the only way—or even the right way—to analyse companies. But it sure didn’t stop me from thinking I had the perfect process at the time.)
With the gift of time and a growing analytical toolkit, I finally had two traits on my side. But I hadn’t yet developed the third—emotional detachment.
While my confidence grew in my ability to choose stocks, mistakes were made, one of which I recount here. One of the stocks I picked had given me phenomenal returns, yet it made no difference to my portfolio return. Though I felt like I had cracked the code to choosing stocks, I was limited by my asset allocation. I simply had too little equity exposure to make a difference.
Something needed to change.
Watch Me Time The Market
In 2022, I discovered ETFs (Exchange Traded Funds)—specifically, Index ETFs2. They had lower expense ratios than index mutual funds3 (at the time) and could be bought directly on the stock exchange. Even better, I could set up GTT (Good Till Triggered)4 orders to buy them at the lowest price each week. With a little effort, I could time the market!
I was wrong.
It started off well, I’d buy some Niftybees5. The following week the price would dip slightly and I would buy some more. But then the market did something inconvenient—it started going up, and it didn’t come back down.
I’ll set GTTs at lower prices and wait. It’ll drop next week.
Okay, not this week. Maybe next week.
Ignoring my patient waiting, Niftybees just proceeded to go up. Now what? How long should I wait for the prices to back down? Wait—isn’t it a good thing that prices are going up? Don’t I want my investments to grow?
As these voices debated in my head, I didn’t get much done. The constant second-guessing created so much friction that, despite my efforts, I had built only a 10% allocation in equity.
Not enough.
I could not distance myself from my investments, I had some time and reasonable analysis but not enough emotional detachment. I couldn’t get out of my own way. I was trying to control every tick of the market and it paralyzed me.
The Instrument I Thought I Could Outperform
By 2023, I came back to the instrument which I initially thought I could beat—mutual funds. If mutual funds could help me invest without all this friction, the additional fees (deducted through expense ratios6) was worth it. By being attached to my investments, I was indirectly bearing a much higher opportunity cost by not investing at all, keeping them parked in fixed-income products.
I eliminated active mutual funds7, frankly I could not fathom how to analyze and choose the good ones nor did I know when it was time to exit the fund. I was at a stage when interest was strong but time was scarce: I was pursuing my CFP certification while also managing my two year old toddler. By then my analytical muscle had become stronger but I had no time to put it to use. Passive Mutual Funds were the perfect fit.
I knew that the returns I might get from Index/Passive mutual funds but that was certainly better than the alternative of keeping them in fixed-deposits. I set up weekly SIPs (Systematic Investment Plan) to invest into five index funds I had chosen. I let go (with difficulty) of the need to control and time every single purchase and managed to emotionally detach from my portfolio.
Passive mutual funds finally helped increase my equity allocation bringing it up to a meaningful 50% in my portfolio. I had by this time come to the realization that what mattered was my total equity allocation rather than choosing the best mutual fund or stock.
Changing Perspectives
The final piece of my investment evolution came when I joined a financial advisory firm and began working with two mentors: Sanjay Santhanam and Sunil Sebastian. They had chosen, what I’ve come to appreciate as the intellectually difficult path to investment success: one that demands patience, discipline and a willingness to go against the noise of the market. Their investment models, shaped and refined over years of market cycles, didn’t chase the latest trends and recent outperformance. Instead, they selected funds for their consistency, prioritizing reliability above all.
This convinced me to start investing in actively managed funds—something I had previously avoided.
What I hadn't anticipated was the advantage I found beyond just picking the best funds. There was immense value in sounding out my decisions and seeking second opinions. As both my net worth and responsibilities grew, I realized the value of not being alone on this journey. Like anyone, I still have my biases, (well-hidden from me) but working with trusted partners provides the reassurance that my blind spots won’t steer me too far off track.
Finally, Clarity
Eight years of investing, from managing just my portfolio to now managing that of others’, has brought clarity. My bubbling interest in finance started me off as a Do-It-Yourself investor, driven by curiosity but lacking the time and the analytical depth to sustain momentum. I then migrated to a passive investing style, where I felt a semblance of control while not demanding as much time. Finally, as my responsibilities grew, I found comfort in collaborating with advisors, valuing expertise and peace of mind.
The lesson became clear: each instrument I’ve invested in, served its purpose depending on which of my traits were prominent at the time. None were inherently superior to another. The right instrument was always the one that suited me and my circumstances at that phase in life. In the article, Investing in Equity Around Your Constraints, I explore a framework to identify the investing style that aligns with your dominant traits.
Everyone’s investing path looks different. If you’d like to figure yours out with some guidance, you can drop me a note at malarkodi@quinstinct.com or complete the form below (5 questions) with your context.
I will respond to you within 3 days. Should your situation align with my expertise, I’ll send a link for us to meet online. This is a no obligation meeting on either side.
Read more about me here, and for disclaimers see here.
Some of the notable ones include, Let’s Talk Money by Monica Halan, Varsity by Zerodha and Value Research.
Index ETFs are exchange-traded funds that seek to replicate and track a benchmark index like the Nifty 50 as closely as possible, less the fees. They are like index mutual funds, but whereas mutual fund shares can be redeemed at just one price each day (the net asset value (NAV)), index ETFs can be bought and sold throughout the day on a major exchange like a share of stock. Source
Passive/Index Mutual funds follow a type of investment strategy that aims to mirror the performance of their underlying benchmark index, such as the Sensex or the Nifty. These funds invest in underlying instruments of the index they track and have fund managers to make sure that the fund constituents replicate the constituents of the index. Source
GTT (Good Till Triggered) orders are those which automatically execute when the stock/ETF reaches the specified price
Niftybees: An open ended index scheme listed on the stock exchange in the form of an ETF tracking the Nifty 50 Index. This ETF is offered by Nippon India Mutual Fund. Source
An expense ratio reflects how much a mutual fund or an ETF pays for portfolio management, administration, marketing, and distribution, among other expenses. The cost is taken out of the fund's returns before they're passed on to investors. You'll almost always see it expressed as a percentage of the fund's average net assets. Source
Active mutual funds are a type of mutual funds where the fund manager plays an active role in deciding whether to buy, sell or hold the investments. Active funds employ a variety of strategies in order to construct and manage their portfolios. For example, to outperform the entire market and others acting as powerful hedges against unforeseen market declines or corrections. Source