Techno-Funda Investor Interview: E.V. Viswanath

Momentum Investor Interview: Manish Dhawan

E.V.Viswanath is an independent SEBI Registered Research Analyst. Earlier, Viswanath worked in I.T for over 10 years.

In 2019, I believe Equity is likely to outperform over other asset classes. It is going to be best year as we have had a good correction in 2018.
E.V. Viswanath TradeGyani
E.V. Viswanath
"Trade Gyani"

Abhinav:

Thanks for doing this interview Viswanath! Please tell us a little about your background and journey and how you got into becoming a Research Analyst?

Viswanath:

I started my career as a software engineer & worked with some of the leading MNC like Oracle, L&T Infotech & Tech Mahindra for over 10 years.

Both, the lack of interest to continue in IT Field & my passion towards financial market I decided to be in the stock market full-time. 

The journey was not easy, especially being an engineer. I spent a lot of time reading, applying those strategies putting my own money, learning through failures, etc to be where I am today. I must say the journey was quite fulfilling and the best decision of my life!

Abhinav:

What led you to start investment advisory business and the inspiration behind it? 

Viswanath:

I have been active on Twitter since 2016 & was following a Technical Analyst @ankurstech. ‏One day I posted a set of charts on Twitter, which he liked a lot & encouraged me to post more of my analysis (charts) on Twitter. It inspired me to take this as a full-time profession. 

Soon thereafter, I cleared both Investment advisor & Research Analyst Exams. However, due to technical issues, I preferred Research Analyst over Investment Advisor.

I think of Risk as the potential for permanent impairment of capital & which can affect our financial goals.
E.V. Viswanath TradeGyani
E.V. Viswanath​
"Trade Gyani"

Abhinav:

Which is one widely held notion that Investors believe in, which you believe is wrong or does not work anymore? 

Viswanath:

Technical Analysis may not work for Long term Investment – It’s not entirely true. One can use a combination of Technical Analysis & Fundamental Analysis to stay invested in stock for Long-term. Also, it helps to do pyramiding (Additional buy) of existing investment.

Abhinav:

Can you tell us in detail how you invest and trade? Let’s start with investing ?

Viswanath:

 Either I choose Topdown or Bottom Up Investing. 

TopDown Approach starts with evaluating favourite set of sectors, & eventually digging deeper to choose  1 or 2 Stocks in each sector for possible investment consideration.

Bottom Up Investing Approach starts with evaluation of favourite stocks, compare it with peers &  find an interesting Sector(s) for possible investment consideration.

In both these Approaches mentioned above, I thoroughly verify financial ratios of past 10yrs or so. Parameters like Sales %, OPM %, NPM %, FCF, D2E, Credit Agency ratings, etc will be observed. Here, comparing a stock with its peers of the same industry helps to take a final decision on investment. 

I use Technical analysis, which helps gauge short, midterm trend of a stock. Also, going to help to take appropriate entry & pyramiding, Stop-loss & exit of an investment.

Abhinav:

And your trading strategies? 

Viswanath:

My Trading Strategies are completely based on Technical Analysis.

Based on Time Frame, Trend, Momentum, Volume of a stock, Trade decision will be taken with precise stop loss.

Usually, A trading strategy is a set of tested rules and principles which have to make sense to you and which have to match your personality. A trader’s personality directly impacts choosing the appropriate parameters of a trading strategy and what to be aware of when it comes to trader strategy. 

Abhinav:

Were you always a “techno-funda” investor or did you try other trading strategies before closing in on the current form? What has been your Eureka moment in trading? 

Viswanath:

No. Earlier, only Technical Analysis is my cup of Coffee though I read financial concepts as part of academic interest. 

Later, I started using Technical analysis with Fundamental Analysis as both of them are complementary to each other. 

In other words, as i am comfortable in both T.A & F.A, I decided to use them together for the best interest of Investment Journey. 

Abhinav:

How do you identify which stocks to trade?

Viswanath:

The objective to buy trading stocks is to make some quick money. Thus, I usually check the cues (trend or momentum with volume) available in charts of stocks. For identifying Trend, one may use naked price chart with Moving Averages, M.A Crossover, Indicators like ADX, for momentum in the trend, RSI, CCI etc. Volume may also be used as an additional confirmation parameter in decision making.

In Addition to that, The criteria to identify investment stocks & trading stocks is completely different. Usually, Trading stocks are bought from short-term investment perspective or day trading. Also, trading stocks should not be considered for investment purpose or vice versa. In case of trading stocks, you must know when to enter & when to exit.

In case of Retail Trader, put a check on maximum number of Open Positions, Focus on position-sizing, Money management, controlling emotions as market fluctuates.
E.V. Viswanath TradeGyani
E.V. Viswanath​​
"Trade Gyani"

Abhinav:

 How do you decide your exits?

Viswanath:

Basically exit may depends on whether it is trading or investment stock. 

Regarding trading, I prefer to Exit a stock based on techniques of Technical Analysis & DOW Theory principles. Only Exception is market selloff, extreme bearish market conditions/sentiments etc.

In case of investment, my exit depends on either Timeframe selected or Risk willing to take or at a critical price level based on T.A, etc.

Abhinav:

Which is your favourite trade so far? 

Viswanath:

There are many such trades. However, the one which comes to my mind immediately is GUJFLUORO. It is taken with a short term trading prospective. It has been achieved its target with in short span of 2 weeks.

Abhinav:

When you look back at your investment mistakes, were there any common elements or themes? A real-life example would be helpful? 

Viswanath:

My common investment mistakes so far are

1. Averaging of a Loss making investment.

In case of Investment of Sudar industries, multiple times averaging has been done though it had been falling continuously. Because of the lesson learnt in this regard, I started referring financial statements & try to apply concepts of Fundamental Analysis.

2. Casual attitude of not placing Stop-loss for a stock in trading terminal.

Abhinav:

How do you think about risk? How do you employ that in your investing?  

Viswanath:

I think of risk as the potential for permanent impairment of capital & which can affect our financial goals. 

Especially, Investing in equity stocks is risky and subject to the volatility of the markets. As per Modern Portfolio Theory, risk must be measured in terms of all of one’s investments, not a single investment made out of context.

Consistently monitoring of the risk at both the individual stock & portfolio level is very much required.  Factors which may affect risk such as debt levels, Credit Rating Agencies remarks & rating and sell side sentiment, etc are should be monitored carefully.

Abhinav:

What advice will you give to a retail trader?

Viswanath:

In case of Retail Trader, put a check on maximum number of Open Positions, Focus on position-sizing, Money management, controlling emotions as market fluctuates etc. Period.

Abhinav:

How does one know whether he is capable of being a trader or an investor?

Viswanath:

By evaluation of an individual’s Risk Profile by his/herself or by taking the help of professional advisors. Here, Risk Profile Assessment helps to know more about risk requirements, Risk Capacity & Risk Tolerance of an individual. Risk profile Assessment may also mitigate potential risks & threats.

Abhinav:

How can an investor improve the quality of his/her decision making? How have you done it?

Viswanath:

Periodically do Post Analysis of all trades taken to understand the reasons behind success & failure of a trade. Also, see if you can find either a pattern of similar mistakes or random mistakes. This whole exercise may help you in your decision making journey of investment.

Abhinav:

Which unconventional books/resources do you recommend to a budding investor for learning investing and multidisciplinary thinking? If you were to give away all your books but one, which one would it be and why?

Viswanath:

I am sorry, I am yet to find such book. I am a bit lazy w.r.t book reading.

Abhinav:

What are the most important qualities an investor needs to survive the complexity of the financial markets? 

Viswanath:

Controlling Emotional temperaments, Adaptability to change as per market sentiments, Zeal to experiment with learnt Skills, & Last but not least Patience are very much needed to succeed in financial markets.

Abhinav:

What’s your concluding advice to students wanting to get into Investing? What are the most important things they must practice, and the pitfalls they must be aware of?

Viswanath:

My general advice is Investment should be started aggressively at an early age or as soon as one get a job as it is going to help them understand markets & create wealth over a period of time.

In specific, one must inculcate great zeal to learn, practise, explore either of T.A or F.A by oneself. Frequent Practise makes them know the pitfalls in the game of investment. Post trade analysis is going to help avoid mistakes in future investment journey.

Abhinav:

Which investor/investment thinker(s)/business owner you hold in high esteem? And why?

Viswanath:

W.D.Gann(1878–1955).  Believed to be a legendary commodity trader who used market forecasting methods based on geometry, astrology, and ancient mathematics.. One of first trader who wrote a book on Technical Analysis. As well as trading, W.D.Gann wrote a number of books and courses. Some of his books are cryptic in nature.

Abhinav:

 What other things do you like to do apart from running an advisory business?

Viswanath:

 I  like Interacting with people on finance & politics, Playing with my kids, watching Cricket, Reality shows & Movie Award functions etc..

Abhinav:

Thoughts on 2019?

Viswanath:

In 2019, I believe Equity is likely to outperform over other asset classes.  It is going to be best year as we have had a good correction in 2018.

Abhinav:

Finally to the new portfolio that your will be introducing on TradeGyani – what can the retail investors expect from it? 

Viswanath:

In simple terms, Retail investor may expect a thoroughly handpicked portfolio of stocks with decent fundamentals & technical support with considerable upside probability, but with minimal downside risk.

Short term Trend Sailing Strategy(STSS) is based on Technical Analysis

Mid-Long term Value Investing Strategy (MLVIS) is based on Techno-Fundamentals.

Abhinav:

Anything else you might want to add ?

Viswanath:

Always give time to yourself for Continuous Learning & Understanding of concepts of trading/investing. These may help in your future investment Journey & decision making process.

Abhinav:

Thanks for your time Viswanath!

Viswanath:

Pleasure talking with you.

One must inculcate great zeal to learn, practise, explore either of T.A or F.A by oneself. Frequent Practise makes them know the pitfalls in the game of investment. Post trade analysis is going to help avoid mistakes in future investment journey.
E.V. Viswanath TradeGyani
E.V. Viswanath​​​
"Trade Gyani"
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