Value investor and behavioural finance adherent Parag Parikh believes that in markets, as in nature, returns can’t be reaped overnight
Parag Parikh still remembers the bright summer weekend he spent patiently planting tiny saplings into large earthen pots at the leafy terrace garden of his Walkeshwar home. At the end of the process, pleased with his labour, the 60-year-old chairman and CEO of Parag Parikh Financial Advisory Services dragged the pots to their final spots around the tiled terrace. Parikh was grateful for the light drizzle that followed, till the drizzle turned into a shower, which then turned into a four-day burst that not only drowned his newly planted pots but wrecked some of his other favourites as well. “Nature, just like the markets, is extremely unpredictable. When I first started gardening, it took me several wasted pots and some seasons of ups and downs to understand the rhythm of the garden,” Parikh smiles.
This little piece of eden is located on the top floor of Parikh’s residence, offering two different views of the glittering Arabian sea. From up here, one can watch gulls and hawks swiftly swooping down on prey, little boats and yachts sputtering on the surf, the sun shimmering off the distant skyscrapers on the Queen’s necklace and, best of all, reach out for the brightly coloured butterflies floating around idly. “This beautiful scenery is what originally prompted me to buy a home here twenty years ago,” he says. Parikh had help at hand when he first decided to test his green thumb, with someone coming in from faraway Karjat every day to help him learn the vagaries of a garden.
Lessons from his practise of vipassana and gardening came handy after the tech boom around 2000 left Parikh depressed, with clients no longer willing to stay with long-term bets. “With FIIs and internet trading becoming the rage, our advice started falling on deaf ears and we started losing clients. Sometimes I would wonder who was sane, the markets or I?” At this time, “The greatest lesson from my spiritual practice was that of equanimity, which helps you deal with life no matter what direction the markets go.”
That learning got another boost from a course at Harvard. “I realised that the market is made up of people who make sentimental decisions that may or may not be in their best financial interest.” Confidence restored, Parikh went on to launch his own mutual fund in 2013, which now has Rs 385 crore under management. “From my little garden, I learnt to be accepting of change, as nothing is permanent, not even failure. As in value investing, there is no crop in nature that you can sow today and reap tomorrow. That is the most powerful lesson I can pass on to my employees, whom I nurture the way I tend to my plants,” Parikh smiles.
The similarities between growth and success in his garden and in the stock market are endless, Parikh says — both need a great amount of nurturing; it takes a fair bit of time and effort to figure out what works for you; and if everything works out, you get a chance to reap the benefits. For now, Parikh and his family are content consuming the rich harvest from his vegetable garden — from pudina, green tea, colocasia, spring onion, capsicum and baby spinach to chickoos, lemons, chillies, tomatoes, baingan and pears — perhaps the best kind of return on investment in life.
The original article could be seen here.