As a part of my series about the The 5 Essentials of Smart Investing, I had the pleasure of interviewing Vijay Valecha, Chief Investment Officer of Century Financial. Valecha is the Chief Investment Officer at Century Financial, a key position he has held since January 2015. Vijay has over 10 years’ experience trading the financial markets, with a deep knowledge of both fundamental and technical analysis, specializing in asset management and derivative trading. In his current role, Vijay tracks economic and market trends for global markets, bonds, shares, commodities and currencies, formulates trading strategies and plays a key role in educating clients. He also frequently produces research reports which give an in-depth look at topical financial and economic events that have the potential to impact regional and international markets. He works closely with clients to help them understand their risk and return expectations and provides support to novice and experienced traders, HNI investors and corporates. Vijay is very passionate about spreading the critical message of prudence in money management and is especially interested in the economy, behavioral finance, fin-tech, retirement planning, systematic & modeling methods as well as short-term trading and long-term investing strategies. He has delivered several seminars on trading strategies and technical analysis and has been regular contributor to business channels across the country. Before joining Century Financial, he spent over 5 years as a Financial Analyst in firms like Edelweiss (India) & Hira Global DMCC (Dubai) and as a quant analyst at Rasmala Investment (DIFC).
Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Being from a technical background, exploring avenues that requires intense brain crunching was the most logical choice for me. Learning about financial markets & different nuances during my MBA & FRM courses only motivated me to take up finance as full-time career option.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
The story relates to one of the most volatile days we have seen in the global markets recently — US Presidential Election that happened in Nov’2016. One of the most surprising aspects of this event was how most of the public & global markets got the final outcome wrong including the opinion polls. Perhaps the most amazing thing to watch out was the complacency with which markets were hoping for market fall post Trump win. However, markets were again proved wrong and what we saw was a huge spike across the US equity benchmarks as well as the dollar post the initial decline.
Important lesson to learn from this is to trade cautiously and even not be overleveraged during such volatile days. Think twice before you act.
Are you working on any exciting new projects now? How do you think that will help people?
Yes. We are in the process of launching our new wealth management firm — Century Private Wealth Limited. With this firm, we hope to provide better & niche product offerings & services to HNI & Institutional clients in the wealth management space. This would also provide client space with more avenues to look out for.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers?
While the US is the world’s largest economy, as per recent survey by US FINRA — major US financial regulator, 4 out of 5 Americans apparently failed to answer on basic financial questions including on common topics like interest rates, inflation, bonds, etc. The survey which was done during 2009–2015 period highlights the extremely gloomy picture for average American’s financial awareness. One of the worst effects of this is the growing correlation between lack of knowledge & increase in fear/anxiety especially amongst millennials. Case in Point — Current US Student Debt liability of around $ 1.5 trillion & Credit Card Liability of approx. $ 880 billion. Majority of the economist blame lack of adequate knowledge amongst elders as well as college grads who fail to understand basic repercussions of growing debt.
If you had the power to make a change, what 3 things would you recommend to improve these numbers?
As per the same survey, one positive aspect that comes out is the fact that 70 % of the prime age working population understand the need to be financially secure at some point of time. The number is around 60 % for the rest of Americans.
3 things that would improve these numbers –
1.) Breaking the big taboo on “Money talk” — Individuals need to be given tools / space to talk about what they have learned about past financial mistakes that have been committed by their nearest & dearest ones (Close friends, parents, siblings, etc.)
2.) As they say — ‘Teach Em Young!’. Providing for effective financial education course to the young and budding generation
3.) Parents are first line of defense — Financial education has to start at home & wise financial literacy habit is something that is inculcated over a period of time & not overnight
Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart Investing what would you say? Can you please give a story or an example for each?
1.) Be Realistic & Goal Oriented — One of the foremost & prime objective in determining investing goals for oneself is to identify the current situation & financial expectations e.g an adult child coming from a medium income family with very conservative background is bound to follow a moderate to conservative risk approach while investing & determining future goals
2.) Avoiding the herd mentality — One needs to rely on the underlying facts / data from credible sources and not simply rely on word of mouth e.g. buying stocks and other investment assets based on tips without any sound fundamentals
3.) Mixing of emotions & forming bias — One needs to stick to plan and not get emotionally involved while holding onto investments e.g. Very often people who prefer one sort of investment or investment style tend to stick to it even if the investment is loss making. Avoidance of such bias is the need of the hour as financial markets get increasingly complex day by day
4.) Diversification of underlying investment & risks — The 3 traditional asset classes — stocks, bonds & cash have always performed differently during major market events e.g. stocks tend to perform well when economic growth is strong while bonds tend to outperform when growth slows. Diversification ensures optimal balance of risk/return matrix
5.) Borrowing to invest — One should avoid borrowing in the current time period to invest in something whose return will only start accruing in future. e.g. borrowing money from bank and using the funds for high risk investment activities will unnecessary burden the investor. This would probably cause him to make more bad decisions under mental pressure
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Our CEO Mr Bal Krishen Rathore has been the pillar and reason behind the success of the firm’s growth. We at Century owe him a whole deal of gratitude for riding the firm through all difficult times. Having featured in the list of 100 inspiring leaders in Middle East, his hands-on approach has always helped and added value to the firm’s rich legacy.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Life is inherently risky. There is only one big risk you should avoid at all costs and that risk is of doing nothing” — Denis Waitley, American Motivation Speaker.
The quote rightly summarizes side effects of the current complex world we are living in — Not being confident enough to undertake new and non-explored avenues. Being in financial sector, the biggest risk we face is not timing our moves properly or even missing out on good opportunities. Being intelligent with risks has in a way ensured that self-efficacy has become part of overall personality profile.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger.