Sep

2

Rakesh turned a regular man's PA into $1bn+ on the Sensex. He is known as the Indian Warren Buffett. However, he is more of a stock operator than an investor and will gear up when he thinks the chips are ripe to bet. He claims to "leverage to the hilt, when tailwinds are favorable"

But his rules for leverage are: –Ability to service interest cost and principal repayment –Dividend enough to repay interest, establishment costs –Principal not to exceed more than 10% of portfolio value –Liquid Assets to be 5x of leverage

Debt Principal <10% of Gross Assets does not seem to match to "the hilt". Can anyone reinterpret? Are there unusual rules for Indian brokerage borrowings?

One other interesting thing to think about w.r.t. Rakesh is the nature of "core bets". The high teens inception CAGR of the SENSEX helps a lot. If one had done the following (top three lines courtesy RJ) then a lot of heavy lifting and vig paying could have been avoided:

1970s GOLD 30% CAGR
1980s NIKKEI 21% CAGR
1990s NASDAQ 26% CAGR
2000s SENSEX 15% CAGR
2010s ?

Obviously figuring this out on a forward basis is the issue. But the short side is automatically there for you in the historic data (I am implicitly saying the SENSEX is a short?). But is this, combined with out-taking of canes at appropriate junctures, the way to bliss?


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