Share This Post

Alok's Posts / Startup

My simple quiz that every Investment Banker and Financial whiz has failed in..

So, I have the usual financial consultant ‘baraati’s’ coming to my doors (baraatis are the dudes who walk to the brides house in a hindu marriage – typically dancing along the way)

They pitch to me:

– High net worth banking services

– Portfolio Management services

– All kinds of ‘structured’ deals (most of them sound like eating radium pills and then going to pluto). 

Initially I used to poke fun at their ‘churn your clients money and get rich syndrome’

I also pointed out to the case where I got cheated by Societe General Bank (India ) – (link at the end)

But now I’ve stopped presenting all these arguments.

Whenever the Armani and Calvin Klein suited men and hot banking women come to my office, I present a simple printed chart to them (from

I ask them to study the numbers and to take their time and FILL IN the names of the funds on the left side that march the returns on the right.

The reaction?

ALL OF THEM SAY – ‘ Alok, it could be ANY MUTUAL FUND OUT THERE. Maybe the first fund that earned 25 % is HDFC or something and then the rest are the usual suspects’

hahahahahaha- just as they are say it, they see the smirk on my face and also realize that their PITCH JUST GOT KILLED.

I tell them what finally massacres them:

All these funds are publicly listed. I can take 15 lacs and spread them into 15 of these funds and then drink champagne all day long while these HARD WORKING FUNDS pay out 20 % (Blended) IRR for me – COMPOUNDED EACH YEAR. (Honestly, very few legitimate businesses turn out 20 % IRR each year) ! 

SO if you wanna work for me and suck up my money – Guarantee me that you will GET BETTER RETURNS than these for me  – AND ALL MY MONEY IS YOURS.

If you can’t then GET LOST – coz I have no reason to humor you.

So far, 5 years and counting – NO ONE has accepted my challenge.

And the reasons are very simple:

– ONLY FOOLS  think they can make money in ‘stock trading’. They are either trading because they don’t have a job or they are bored or they are mentally unstable. 

– What turns profits today  turns losses tomorrow – net net all stock traders barely afford to pay for their meals. 

– Most private banking services only churn money via deals because it makes them fees 

– Most clients of these private banks LOVE INSTANT gratification of DOING DEALS – buying, selling, trading etc etc – they don’t realize that they are lending money to these bankers to churn; generate fees and then pay their own salaries.


If you don’t believe me – ask your grandfather. Stocks are no different. 

My approach is to keep investing as and when I get liquidity, in the top listed mutual funds in the large cap ONLY EQUITY basket, and then SIT, SIT, SIT and SIT.

Waiting is the virtue of the rich. Ask Warren Buffett.

And then as the years stroll by, when I need money, I look at my portfolio and just shave (like parmesan cheese) some of the Mutual fund’s that I have HELD in the past 7-10 years and it allows me to buy my new car, my foreign trips etc etc

So, fire your bankers and stop wasting your precious time in trading.  

Just invest in the top mutual funds for a MINIMUM 10 year horizon and the DO NOTHING 

Unfortunately no one will ever give you this advise – because it doesn’t suit their purpose. 

But its THE ONLY WAY TO GET RICH with your investments.

Oh yeah, and just to add a cherry on this cake – read How Soc Gen scammed me (which really also inspired this blog)



First Published on: Nov 28, 2011



Share This Post


  1. Thank you for this simple explanation!


    This is so easy and basic for almost anyone not into trading or investments.


    I thought of the three reasons people worry about where to put their money :

    1) The Fund House will close down

    – This applies to ANYONE, more so a company that you would invest in (if you bought shares directly).  

    2) Want money quick

    – There is no solution – we (I) know of people who’ve made money on shares to go to that F1 Race or that Europe holiday, and they’re always an aberration – that person is simply unable to repeat the feat.  

    3) Don’t have sufficient cash to make lump investments that they can just wait on

    – When I look around people I know, those who are invested in happily are either rich in the first place, or have been investing regularly.  The really successful ones in this second group have either got fat-paying day jobs (rightly so) after getting into top companies globally (and all they’re doing is saving that money each year into funds, playing with excess into specific shares for the fun of it), or (2) have just focussed on improving their careers (their real wealth) and have jumped onto the hockey-stick of their salary graph.

  2. Ha, ha, your observation’s are so simple and dead-on-target…..and this is coming from an ex-investment banker and ex-equity analyst.  The reason I am “ex” is that I realized that none of these so called professionals know shit-all about anything.  As an investment banker, I was nothing more than a well-dressed whore….pay me my 6% commission and I will do any deal….with fancy spreadsheets and pivot tables, I can convince you why buying a crappy xyz company is a great deal for your shareholders.  As an equity analyst, I can come up with a thousand justifications why a stock should be a “Strong Buy” or a Buy or a Hold (notice they never say sell because their investment banking group would kill them if they did)!! but if the stock goes against my recommendation, you were dumb enough not to notice the 20 “ifs” and “buts” and “risk factors” that I peppered my report with, just so I could cover my ass at a later date!! 

    So back to stocks……I decided to re-confirm my firmly-held hypothesis – its called “none of these so-called professionals know shit hypothesis”.  I found a so called punter experienced trader from a big firm who set off on his own and gave him 10 lakhs and asked him to trade in any manner he wanted – just show me the final returns at the end of the year.  In 5 months he has lost 30% of my capital.  The market as of Nov 28th as lost only 16% in the same period. Experiment 2:  Gave a pestering Kotak broker 3 lakhs (with a promise of another 7 in a couple of months).  In 4 months of orgasmic trading – he is flat.  My conversations with him are exactly like yours “yes”, yes”, “yes” and “OK”. 

    A family member in the same busines also confirmed this, and to paraphrase him,”all the guys whose portfolio we mananage, only those guys make money who buy and hold a few good mutual funds for the long run……the guys who trade like maniacs are just doing it for the fun of it and always make much less money than the guy who did nothing”.

    So I am finally enlightened – ignore the ads, dont bother with a brokerage account – stick 70% of our money in large-cap funds, the remaining 30% in large/mid-cap funds and forget about it.  Eventually with patience, you will make absurdly good returns by just doing NOTHING!  If you need the money within 7 to 10 years – then don’t invest it in the stock market. 

    Cheers and happy inaction!



  3. Hi Alok

    Consider this suggestion very seriously.

    – See what role you can play in OCCUPY WALL STREET


    – Start and spearhead OCCUPY DALAL STREET

    It may not be out of place to share a profound quote : ““Those Who Can, Do; Those Who Can’t, Teach.”



  4. Shridhar – i get ur message. I can’t. So I teach.

  5. Yes Alok, The ROT IS SPREADING.

    I am with you when you say that the “rot is spreading”.   In fact, it is as old as the Advertising Industry. Just have a look at the Wealth Creation contribution of “Investment Bankers”(-7) AND “Advertising Executives” (-11)


    After reading the following research(, see the following videos.  Let me assure you it will take A LOT OF COURAGE to see the truth.

    – CENTURY OF THE SELF (Part 1) : Happiness Machines

    – CENTURY OF THE SELF (Part 2) : The Engineering of Consent 

    Cleaners ‘worth more to society’ than bankers – study

    By Martin Shankleman,
    Employment correspondent, BBC News

    Hospital cleaners steaming beds in a hospital

    Hospital cleaners play a vital role, the study found

    Hospital cleaners are worth more to society than bankers, a study suggests.

    The research, carried out by think tank the New Economics Foundation, says hospital cleaners create £10 of value for every £1 they are paid.

    It claims bankers are a drain on the country because of the damage they caused to the global economy.

    They reportedly destroy £7 of value for every £1 they earn. Meanwhile, senior advertising executives are said to “create stress”.

    The study says they are responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption.

    Waste recycling worker standing by a pile of plastic bottles

    Waste workers promote recycling, researchers note

    And tax accountants damage the country by devising schemes to cut the amount of money available to the government, the research suggests.

    By contrast, child minders and waste recyclers are also doing jobs that create net wealth to the country.

    The Foundation has used a new form of job evaluation to calculate the total contribution various jobs make to society, including for the first time the impact on communities and environment.

    Eilis Lawlor, spokeswoman for the New Economics Foundation, said: “Pay levels often don’t reflect the true value that is being created. As a society, we need a pay structure which rewards those jobs that create most societal benefit rather than those that generate profits at the expense of society and the environment”.

    Ledger sheet and pen

    Tax accountants are said to destroy £47 in value for every £1 generated

    She said the aim of the research was not to target individuals in highly paid jobs, or suggest people in low paid jobs should earn more.

    “The point we are making is more fundamental – that there should be a relationship between what we are paid and the value our work generates for society. We’ve found a way to calculate that,” she said.

    A total of six different jobs were analysed to assess their overall value. These are the study’s main findings:

    • The elite banker

    “Rather than being wealth creators bankers are being handsomely rewarded for bringing the global financial system to the brink of collapse

    Paid between £500,000 and £80m a year, leading bankers destroy £7 of value for every pound they generate”.

    • Childcare workers

    “Both for families and society as a whole, looking after children could not be more important. As well as providing a valuable service for families, they release earnings potential by allowing parents to continue working. For every pound they are paid they generate up to £9.50 worth of benefits to society.”

    • Hospital cleaners

    “Play a vital role in the workings of healthcare facilities. They not only clean hospitals and maintain hygiene standards but also contribute to wider health outcomes. For every pound paid, over £10 in social value is created.”

    • Advertising executives

    The industry “encourages high spending and indebtedness. It can create insatiable aspirations, fuelling feelings of dissatisfaction, inadequacy and stress. For a salary of between £50,000 and £12m top advertising executives destroy £11 of value for every pound in value they generate”.

    • Tax accountants

    “Every pound that a tax accountant saves a client is a pound which otherwise would have gone to HM Revenue. For a salary of between £75,000 and £200,000, tax accountants destroy £47 in value, for every pound they generate.”

    • Waste recycling workers

    “Do a range of different jobs that relate to processing and preventing waste and promoting recycling. Carbon emissions are significantly reduced. There is also a value in reusing goods. For every pound of value spent on wages, £12 of value is generated for society.”

    The research also makes a variety of policy recommendations to align pay more closely with the value of work.

    These include establishing a high pay commission, building social and environmental value into prices, and introducing more progressive taxation. 

  6. Hey Alok

    As you know, I teach too.

    I’m enlarging the quote : “…Those who REALLY CAN(but don’t want fanfare),  MEDITATE”.

    “Great minds discuss ideas; average minds discuss events; small minds discuss people. BUT THE GREATEST MINDS WORK IN SILENCE”.

  7. Alok, echo your thoughts completely… I do this for a living and my take has been to invest into good stocks and funds and just forget about it.. Fill it shut it forget it.. If you remember the very old tagline of Hero Honda and thats true for investments as well..

    Reminded of a story where a little boy asked his father how to grow a mango tree.. His father gave him a seed to sow..this kid came back after a couple of weeks complaining it isn’t working.. The father said it requires good soil, sunlight, water to grow to which the kid confirmed that he did that.. Then the dad consoled the kid saying all seeds may not germinate, some could be just bad seeds. The kid replied it’s not possible since he cleaned and washed it everyday before putting it back in the soil..

    How many of us just invest and allow it to grow into a mango tree!!! You need to invest in good funds and give it plenty of time.. My problem is that people ‘talk’ long term but ‘behave’ very short term.. When there is bad news and everyone talks of doomsday it perhaps is a sale which nobody is buying into.. Unfortunately some of the biggest sale in the stock market is known to us after it is over..

    When 2008 meltdown happened how many went against the Market and dared to buy.. Admittedly you might look stupid in the short term to be buying in a Market which is correcting but over the longer term you will be the one who will be smiling ear to ear..

    My simple hypothesis, the sensex inception was 100 in 1978. we have seen licence raj, harshad mehta, ketan parekh, Asian Market crisis, kargil war, nuclear tests, tech bust, NDAs defeat, parliament attack, 9/11, 26/11, global financial meltdown, Lehman bros, satyam fraud and now european crisis!! It encompasses political, economic, corporate and all types of crisis and the sensex is still at 16k+. A whopping 165 TIMES RETURN over 30 yrs. Need I say more… 17% CAGR over 30 yrs.. Any PE. Investor would give a hand and a leg to get that!

    Just shut yourself from all the noise and remain invested and we will all be very wealthy.. My question is what or we looking for.. Mangoes or mustards????

  8. Well i thought only my parents feel so bad about trading but its not. I feel addressing traders as fools and mentally stable is something that surprised me because i don’t think one should talk crap about some legal profession just because you had no one taking up your challenge or something else and that’s why you felt so or something else. You seem to have written this as if you were an experienced trader ( were you?). I also feel that you jump into conclusions so soon. And your 5 years waiting for someone who can get you 20% return a year should end as i want to accept your challenge and how about 20% per month just for a change with paper money i mean not your real money. And regarding guarantee, no one in the market can give you guarantee and if someone is giving, he probably is a liar or may be he might compensate the losses with his personal money. And if you want guarantee you can get risk free return of 8-10 % a year from the banks and so, all in all the risk and reward are inversely proportional. You can get a 100% return in a year but this comes with a risk whereas with banks, its just 10% guaranteed. And that’s why its told to put in only that much money in the markets that you can afford to lose so that even in the worst case scenario, even if you lose the entire money, your life quality doesn’t change except that now you know what markets can do.

            Kindly accept my apology  if i have somewhere crossed the line. 

  9. Reading your articles is a mixed bag for me. While I strongly agree with your views, I often find myself amazed at your (IMHO) shallow study.

    Your advocation for the MFs is based on the premises that the funds will, in any case, continue to generate 20% return over the years to come,

    Also, your are considering the TOP MFs, and not the average ones. The ones in the TOP today might be at the bottom tomorrow.

    No one. I repeat. No one can give you a near-risk free 20% RoI. And numerous mutual funds even fail to outperform the market.

    I am not defending the despicable bankers. 

  10. 20% per month??

    this is why i dread people like you

  11. Nishant,

    whole point behind Alok is very simple.

    let me try simple trick, let say you want hire somebody to as CEO of IT company (that has atleast 100 employees). now what kind of person you would prefer?

    a fresh graduate or experienced pro?…..answer is simple…..experience guy.

    if i want my money to grow…why shud i give to a person who has no proof of doing it ever or has very small history? rather give it to existing guy who has been doing it for long. money making is difficult task, alok’s quiz.

    i agree with standard risk that market has and any mutual fund can be at bottom tomm, but stock market is one of those places were one gets lot wiser and intelligent as days pass and if a guy has been generating return of 20% for past 10yrs….boss hats of to him….warren buffett has generate in region of 15-18% over some 50-60yrs. plus alok mentioned spread over few mutual funds…why risk it one…that is rule of diversification.

  12. Thank you :-))

  13. no need to dread bcoz its just paper money just to try to prove that what you think might not be what it is. Let me know whether the challenge is still valid.

  14. Alok sir, i can’t answer ur quiz, but i disagree that no money can be made from stocks trading. It can be made but if ur tgt is just 20-30% annual return not 50% monthly (usually all traders have this tgt) or brokerage generation (usually all broker have it in mind not profit). 3rd u should  take it as proper business, give proper time, have regular updates, control emotions (all other business also need it ). it’s not only share mkt where people get loss, in all type of business there are failures.

    Stock mkt have bigger number of failures bcoz this business can be started with 5000 onwards (so all paanwalas to dabbawals to MERCDEZ walas do it ). i love to play e-games that don’t make me out a successful  alok kejriwal (successful e-games entrepreneur  ). if i knew that XYZ is gud pain killer tht doesn’t make me certified doctor, same way stock market is about knowledge.

    i am doing stock trading from last 6 years, in begin 4 years i was net looser as i use to do trade on others view & knowledge & in stocks which even i can’t spell out, without risk management etc. but last 2 year i improvised myself & now stock trading is my full time job from last 2 years & i am earning my bread butter. i haven’t came near to even 1% of rakesh jhunjhunwala  but still i feel i m a successful trader.

  15. cant agree that traders dont make money, they do make money but for their employers and clients because all the traders normally are middle class employes who dont have that kind of big and deep pockets,all american ivesment banks make huge money in trading oil futures,commodities,forex etc. mutual funds are awesome but cant beat individual stock picking ..

  16. ONLY FOOLS  think they can make money in ‘stock trading’. They are either trading because they don’t have a job or they are bored or they are mentally unstable. 

    – What turns profits today  turns losses tomorrow – net net all stock traders barely afford to pay for their meals.”

    Totally cringed reading this. Perhaps you should put a caveat at the beginning of the post (This is for those who don’t have time to follow their investments or spend years learning about trading/investing).

    You were dealing with commission brokers who are just sales and marketing guys.

    There are successful trader, some extremely so. Like any business, most traders will fail or just breakeven. Does this mean all traders fail?

    Big funds churn to earn. So they make trades to earn commissions of the spread or on Management fees. Any profit commissions are bonus.

    Then there are private traders who work only on profit basis. If client earns, they earn, so it is in their best interest to make a profit and trade conservatively.

    Third, there are value investors like Warren Buffet who sit on their investments for decades or more. Even then he did not make his money in Mutual funds. He always says that he invests in undervalued businesses and does not care about whether the stock goes up or down. This does not mean he does not study the fundamentals of his stock pickings.

    Your views are consistent with the “Random walk theory”. Thankfully it has been proved wrong.

  17. I bunch “traders” as category 1 and “investors” (be they be Warren Buffet who directly buys stocks or people who buy into Berkshire or HDFC 200 (because they are not stock pickers and sitters)

    What is RANDOM about that?!

  18. “What is the best advice for an average investor?”

    “Don’t be average”

    If your investment strategy is ‘buy and pray’ (for the market to go up), you won’t make good money anytime.

  19. Warren Buffett on how his wife’s money will be invested when he passes away..

    “My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”

  20. Hey Alok, I fully agree with what you’ve said in this blog. i left my job at a top multinational bank precisely for this reason. I suggest buy stocks directly if you have time to do your own research or leave it to mutual funds to do the job for you for a small fee.

  21. I agree with you too Alok. However, the real problem is not active vs passive. Alok you did your research w.r.t where/amount to invest, but mostly people do not have time/skill to perform that research. And even if they do, filling out application form and submitting it with an AMC would never happen due to paucity of time/other priorities.

    The other reason is lack of patience and improper investment execution. Think about it, an individual who invested in early 2008 is still not making more than FD’s return. Why? Answer is wrong timing. Can you time the market? No one can. Then what do you do? You understand your investment objective, figure out what return will be sufficient and invest into mix of asset classes. This automatically takes care of the return you want to generate.  Usually a hand holding is required to equip investors with basics of personal finance understanding so that they appreciate why investing into equity is also important.  

    Basis our experience @ Finqa, most of the investors are not even aware of their starting point. This is where Finqa helps all its clients. We understand client’s requirements and help them achieve their investment objective without churning their portfolios.


  22. Very great advice and your last line says it all. Well I have experienced the joy of investing in 2008 recession. However lack of discipline too is factor. Many times we forget or get too much concerned.

  23. wow that was very well analysed

  24. I first read this post in 2011, and have followed this advice ever since. So much so, that I have my own printout of the blanked out top-20 list. I can tell you that my investments have earned over 25% (5-years), averaging 11-12% on the 2-3 year window.
    Thank you for this brilliant piece of advice for all market newbies.

Leave a Reply

Lost Password