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  • Ankur Kapur

Why equity investing can’t be taught but only learnt?

Recently I completed 10 years of running my investment firm. I carried a long history of big corporate baggage when I started my work. Very soon I realized that proving myself will take time. And during the interim household expenses had to be met.


Why equity investing can’t be taught but only learnt?

It is not unusual for investment professionals to get teaching assignments. I still remember I had the first assignment within a week of leaving corporate life. Since I came from a very sound corporate and educational background, I was well-received as an expert.


I taught equity investing for almost around five years, and then I stopped. I felt equity investing is not about running a few screens or financial analysis of company statements but is way beyond. A lot of hard skills must be learnt over time and a lot of other mental models must naturally form interlinkages. These things can’t be taught in totality.


I am happy now as a student of investing, rather than being treated as a guru of investing.


There are two types of systems, a complex system, and a simple system. Let’s reflect on the simple system first. For example, self-interest.


Kar Bhalla to HO Bhalla


Adam Smith wrote a chapter on self-interest in the book Wealth of Nations. If people take care of themselves, they take care of others and ensure long-term sustainability. A mithaiwala who uses good quality products will continue to survive for generations.


Now let’s look at the complex system. A system that has too many moving parts is complex. Our body, life, relationships ..these are all complex systems.


It took me a while to understand that investing is also a complex system. A simple formula or financial model can’t indicate a good investment opportunity. If a complex model is created to identify a great opportunity, time will prove otherwise. There is no way you can understand complex systems in totality.


As a student of investing, I have concluded that there are so many equity investing styles that bracketing them all as one is not logical.


  1. Price – Some investors believe the current price is the best reflection of value and place their bets accordingly.

  2. Quality – Investors who invest in high-quality businesses available at a reasonable price.

  3. Growth – Investors who are ready to pay any price for growth.

  4. Value – These investors compare price and value, as far as there is a margin of safety, they will pick stocks.

  5. Special situation – Mergers, acquisitions, spin-offs, demergers etc., create event-driven opportunities.

  6. Regulatory play – There are a lot of investors who specialize in picking sectors/stocks based on regulatory advantages.

  7. Cyclical – Commodities and financials are cyclical. Any bets placed during the right time can be high return-yielding.

  8. Short-term growth movement – Short-term sales and profit growth can help in picking momentum stocks.

  9. Clean accounting – Some investors prefer investing in companies with clean financial books and are ready to pay a premium for these companies.


The list continues including ESG-based investing, dividend stocks etc.


As an analyst, an interplay across these styles is very helpful. If you are so true to one style, you may ignore what other styles can offer. As a student of investing, you develop a deep understanding of 1-2 styles and acknowledge others.


A specific style can be taught in depth. For example, introduction to behavioural biases, valuation techniques, financial analysis, business strategy, financial history etc. However, creating interdisciplinary linkages is not where anyone can help. These mental models develop over time with practice.


A decade back I thought I know so much, today each day I have a feeling that I hardly know anything and a long way to go.
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