Under the “Read & Grow” series, MMA organised a discussion on the book “The Art of Execution: How the World’s Best Investors Get It Wrong and Still Make Millions” by Lee Freeman-Shor. Babu Krishnamoorthy, Chief Sherpa, Finsherpa Investments Pvt Ltd led the conversation with A.K. Narayan, Managing Partner, Scripbox.com India Pvt Ltd, and Loganathan, Chief Business Officer, Sundaram Asset Management Company.
Babu Krishnamoorthy: Investing has become much easier today. But as Warren Buffett said, “Investing is simple, but not easy.” That’s absolutely true. Anyone can invest in stocks or mutual funds, but there’s no guarantee of making a profit.
Just two months ago, SEBI Chairperson Madhabi Puri Buch, while addressing a seminar, revealed that 97% of all retail investors who traded in the Futures and Options (F&O) market ended up losing money. That’s a staggering figure. A large number of people—especially youngsters—are putting their hard-earned money into the markets, only to face losses. It’s important that we demystify some of the concepts around investing.
Each person enters the stock market with a different mindset and perspective. Moreover, there are no clear guidelines. Should you sell when the market goes up? Or when it goes down? Should you buy when stocks rise, or when they fall? There is no universally right or wrong answer.
The book The Art of Execution by Lee Freeman-Shor offers deep insights into this paradox. Lee is a practitioner, researcher, writer, mentor, public speaker—and most importantly, a seasoned fund manager. In 2012, he was ranked among the top fund managers, managing over $2 billion across five equity and five multi-asset funds. He also holds a master’s degree in psychology and neuroscience from King’s College London and is a certified mentor and trainer.
Lee’s investment strategy was deceptively simple. The book is based on real-life experiences gathered over a seven-year period. He worked with 45 of the world’s top fund managers, allocating each of them between $25 million and $100 million to invest on his behalf. His instructions were straightforward: they could invest only in their top 10 ideas at any given time.
It sounded like a foolproof plan—entrust the best fund managers with large sums and focus on only their best ideas. What could go wrong? These were some of the sharpest minds in investing. Yet, surprisingly, many of their top ideas lost money. In fact, randomly tossing a coin to pick a stock might have yielded similar results. And yet, despite being wrong much of the time, many of these investors still made significant profits. This brings us to a crucial question: How can someone be wrong in investing and still be profitable?
The answer lies in two key aspects of any action: knowing and doing. The doing part is what we call execution. There is something fundamentally different about how successful investors execute their trades—something that makes the difference between loss and profit, even when the stock pick itself turns out to be wrong.
A.K. Narayan: When we look at our investment portfolios, we often find ourselves dissatisfied. We tend to buy at the wrong time or sell at the wrong time. The author of The Art of Execution categorises investors and highlights their behavioural traits. For example, he describes a certain type of investor as a “rabbit”—one who is constantly anxious and impulsive, and therefore, unlikely to succeed. Ultimately, his core message is that successful investing is all about execution.
In real estate, the key to success is location—if you buy in the right place, you’re likely to see strong returns during a boom. Similarly, in the stock market, execution is the key to success. One of the biggest issues today is that people monitor their investment portfolios minute by minute. That’s unfortunate. When you buy a piece of land, you hold on to it for 20 or 30 years without checking its value. You buy gold and lock it away for years without worrying about its price fluctuations. But when it comes to equities, we become hyper-focused, checking prices constantly, and then conclude that the market is irrational.
The author emphasises that successful investors are regular and disciplined, and maintain a diversified portfolio. These are universal principles found in almost every investment book. They remain timeless: think long-term and practice patience. Unfortunately, while we all know this, we struggle to follow it. We essentially have four asset classes: fixed income, gold, real estate, and equity. Why do we treat equity so differently and label it as inherently risky? It’s not risky if you understand it and learn to manage it wisely.
Loganathan: As the author rightly points out, materially adapting is not just a valuable investing lesson—it’s a life lesson. Almost every day, we encounter challenges. What sets successful people apart from others is their ability to adapt—whether the situation is favourable or adverse. It all comes down to how we respond.
Suppose you buy a stock today, and by next week it’s down 20%. What will you do? Most people react like a rabbit caught in the headlights—frozen and unsure. The author emphasises that you should not make decisions in that emotionally charged moment, because they are likely to be wrong. Instead, you should plan your course of action in advance. To me, that was a very powerful insight.
Lee Freeman-Shor suggests that before you enter a trade, you should have a predefined plan: What will you do if the stock drops 10%, 15%, or 20%? Not taking any action is not an option. You will have to act—either buy more, sell, or exit. Simply waiting and hoping is often the worst mistake an investor can make.
The key takeaway for me is this: we need to materially adapt, have a clear, pre-defined plan, and then execute it without hesitation. Ideally, this execution should be automated—through stop-loss orders or predefined buy/sell instructions—so that emotional biases don’t interfere with our decisions.
Babu Krishnamoorthy: We’ve all gone through the challenges of COVID and adapted, eventually bouncing back successfully. A couple of months ago, I came across a YouTube video of Roger Federer speaking at a graduation ceremony. He said something that really struck me: over his entire career, he lost 54% of all the points he played. Now, as someone who was the world champion for the longest time, we’d expect him to have dominated most points. But that wasn’t the case.
Similarly, Lee Freeman-Shor says that even the best fund managers often get it wrong. They’re not very different from you and me. The only difference is—when we get it wrong, we freeze, like rabbits, unsure whether to buy more or sell. A professional fund manager, on the other hand, acts. Federer also said that whenever he lost a point, he would immediately forget about it and focus on the next one. That mindset is what made him a champion.
This book categorizes investors into five behavioural types: Rabbits, Assassins, Hunters, Raiders, and Connoisseurs.
When things go wrong, a Rabbit does nothing. They just stay put, hoping the situation will resolve itself—which, more often than not, never happens. In contrast, the Connoisseur is a successful investor. The term reminds me of a wine connoisseur. He doesn’t gulp down the wine. Instead, he carefully selects the finest wine, smells it, swirls it, takes a tiny sip, and truly experiences it. Over an entire evening, he may have just half a glass—but he fully savours it.
Lee describes the Connoisseur investor in a similar way. This type of investor identifies high-potential but overlooked companies—businesses that are not yet in the limelight. He does deep research, finds beauty in the ordinary, and has a strong conviction that these companies will perform well. He’s not content with modest returns—he looks for multibaggers that can give 5x or 10x returns. He invests a significant portion of his capital into just two or three high-conviction stocks. And if the market tumbles, he doesn’t panic—he buys more of those stocks.
When someone once asked Warren Buffett about his preferred holding period, he said: “Forever.” That’s the mindset of big investors. They hold with conviction over the long term. What Lee says in the book strongly resonates with my own observations of the stock market and investing. It’s not just about picking the right stock—it’s about having the right mindset and executing with discipline.
A.K. Narayan: I began investing in 1984, gradually accumulating shares of various companies—both through IPOs and the secondary market. Back then, even SEBI didn’t exist. There was no regulatory framework, and the system was quite chaotic. Despite that, some of the IPOs I invested in turned out to be phenomenal.
I remember one such company—GSK, which used to manufacture Iodex. They issued shares at a premium of ₹8 on a face value of ₹10. I was allotted about 50 shares in that public issue. I’ve held those shares since 1984 and they’ve consistently yielded dividends of ₹5,000 to ₹6,000 every year. Eventually, GSK transferred the Iodex brand to SmithKline Beecham, but the value of that investment has continued to grow steadily.
During the dot-com boom around 2000, stock prices soared. I recall a company named VisualSoft from Hyderabad. It had a face value of ₹10. I bought the shares and later sold them at ₹2,000. But the stock eventually went on to hit ₹10,000! When I pick stocks, I focus on three key things: good management, strong corporate governance, and a quality product. If the promoter is credible, the product is sound, and the company is generating profits, then it’s worth buying. If not, I don’t even consider it. That’s the approach I’ve always followed, and it has served me well. I often share this principle with others too.
Equity is just another asset class—like real estate or fixed income. Buy good companies, hold them for the long term, and expect reasonable returns. Don’t look for phenomenal returns, and definitely don’t expect to get rich overnight. If you lose 10% or 20%, it’s best to exit and consider it a learning experience.
Most importantly, you must be a contrarian. When things look bad for a sector, that might be the right time to invest. I remember when Ashok Leyland was trading at ₹27. People said the company was operating only three days a week due to a lack of orders. But I thought, if it starts operating six days a week, the stock might shoot up to ₹150 or ₹200—and it did. That’s the mindset you need: think ahead, apply your judgment, and stay calm in the face of market noise.
Loganathan: Roger Federer lost 54% of the points he played and still became a champion. Why? Because he won the points that mattered. This is exactly what applies to investing as well. These investors—when they win, they win big. You can suffer several small losses, but one big win can more than compensate. The key is: first, have patience, and second, make the most of the winning opportunities.
I’d say I’m a connoisseur-type investor, but I became one purely by accident—not through deliberate learning. My first real investing experience dates back to 1991, when the Harshad Mehta scam wiped out whatever I had invested. It was a painful but valuable lesson. I realised that markets can burn you badly.
For the next five or six years, the market went nowhere. During that time, I moved toward mutual funds. I instinctively avoided direct stock picking. Because stock investing involves two critical and difficult steps: analysis and execution. Analysing a stock is one challenge—but executing your plan is a whole different ball game. As Lee Freeman-Shor rightly says, “Buying is easy. Execution is harder.” Just like how making money is one thing, but preserving it is even harder.
I stopped investing in individual stocks partly because of the information asymmetry and potential manipulations. Instead, I stayed a mutual fund investor. Interestingly, I was overseas at the time, and there was no app to check the portfolio every day. I looked at it maybe once in three or six months. And the best thing I did? I did nothing. I didn’t react. And surprisingly, that worked. After five or six years, I realised that this hands-off approach was the most profitable. That’s how I inadvertently became a connoisseur investor, and it’s a philosophy that has served me well for the last 15 to 20 years.
In a country like India, it’s not difficult to be a connoisseur. If you believe in the long-term growth of the Indian economy—and if the economy grows at 6–6.5% real GDP, and 12–13% nominal GDP—then any decent company should grow at least 1.5x that rate. So a 14–15% return over the long term is very achievable, with a diversified portfolio.
I also disagree with Lee Freeman-Shor when he suggests that mutual fund managers are doomed to fail. That might be true in developed markets, but not in India, where long-term patient investing can still deliver double-digit returns. The structure of the Indian market still supports disciplined investing through funds. It would’ve been difficult to be an Assassin or a Hunter—the other investor archetypes that Lee describes.
For instance, an Assassin ruthlessly cuts their position if the stock falls 20%. But how many times can you do that? It requires immense discipline and courage. You have to take large positions, and when 20% of that is gone, you have to cut it. That’s emotionally and behaviourally very hard for most people.
Similarly, being a Hunter—someone who buys more when the stock falls—is also difficult. Sure, in hindsight, we say we should have averaged down. But in real-time, when your stock is down 20% or more, putting in more money feels terrifying. And as Lee points out, only 30% of stocks that fell by 20% eventually recovered. The remaining 70% never bounced back. So just buying more at lower levels doesn’t always work. The key question is: If you didn’t own the stock, would you buy it now, knowing what you know? That’s a tough question to answer honestly when you’re already nursing a loss.
Then there are the Raiders—probably the most common type among today’s retail investors on platforms like Groww and Paytm. They buy, see a 2% gain, and sell immediately. But over time, these small trades don’t add up. In fact, you might make five rupees, lose seven, and the only one making money is your broker.
Considering all this, I believe it’s actually easiest and most rewarding to be a Connoisseur. You don’t have to be a genius. All you need is patience, belief in the India growth story, and a long-term view. If the economy grows, your stocks will grow. Sit back and stay the course. That, I think, is my biggest takeaway as an investor: know your type, and be comfortable in your own skin. Don’t try to be an Assassin or Hunter if you’re a Rabbit or a Connoisseur. Investing is not about becoming someone else. It’s about finding what works for you—and sticking with it.
Babu Krishnamoorthy: In our life journeys as investors, I’m sure all of us have made our share of mistakes. I certainly have, and I still do. Some of those early mistakes stay with me even now, and I can clearly relate to them when I reflect on the past.
One such story is about Times Bank. It was a bank owned by the Times of India group, and they came out with an IPO. I was one of the lucky ones to get allotted 1,000 shares. For a year or two, the share price barely moved. It remained stagnant—until HDFC Bank came along and acquired Times Bank through a share swap deal. I received a bunch of HDFC Bank shares in exchange for my Times Bank holding.
After the conversion, the price went up slightly. I was sitting on about a 15% gain over three years—just 5% a year. I rushed to my broker (this was before online trading, when everything was physical) and told him to sell. I thought, “15% is good enough.” I sold it all—around 400 or 500 shares of HDFC, face value ₹10 each.
Years later, I realised that if I had held on to those HDFC shares, they would have been worth ₹12–14 lakhs today. The most frustrating part? I don’t even remember what I did with the money. It came into my bank account, and just disappeared—spent somewhere, forgotten.
That’s exactly the kind of situation Lee Freeman-Shor describes when he talks about “Hunters” in his book. He says: Don’t chase small gains in stocks. Don’t sell out for just a 5–10% profit. It’s like cricket—when you step out of your crease to take a big shot, you’re taking a risk. You could be stumped or run out. So if you do take that risk, make sure the payoff is worth it—go for a six, not a single.
Similarly, in investing, if you’re going to take the risk of equity investing, then have the conviction to stay in—hold on, do your homework, and aim for a big multiple. I didn’t do that back then. I lacked the conviction, and frankly, I didn’t do enough homework either. That was 20 years ago. I’d like to think I’m wiser now. I don’t invest much in individual stocks these days, but I truly believe that you have to give time for investments to mature. That’s one of the biggest learnings from my journey.
A.K. Narayan: Anyone who has been investing for decades is bound to have some regrets—myself included. Over the years, so many companies have come and gone. I started investing in 1984, and one memorable story goes back to the time of the Ketan Parekh scam.
I had sold some shares and went to my broker to collect around ₹40,000. He said, “Sir, I don’t have the cash right now. I can give you shares instead.” I was surprised—but he added, “The Ketan Parekh scam has broken out, and I’m shutting my office tomorrow morning. Take the shares now.”
So I asked what shares he had. He said, “I’ll give you 1,000 shares of Eicher Motors.” I’d heard of the company and thought it was decent. He also gave me some shares of Shipping Corporation of India for the rest of the amount. Before I left, he said one thing: “Sir, don’t sell Eicher Motors.” I laughed and thought—here he is, closing his office, and still giving advice!
Anyway, I didn’t do anything with those shares. The next year, Shipping Corporation gave a huge dividend—₹18 per share. That covered most of my original investment, so I considered that part a bonus and forgot about it.
Then Eicher Motors suddenly jumped from ₹10 to ₹100. It had grown 10x. I wasn’t in touch with the broker anymore, but others told me the company had good potential. Eventually, the stock hit ₹1,000. I started selling in lots—100 shares, 200 shares—until it hit ₹2,000. But can you believe it? The stock went on to touch ₹35,000! That’s ₹3.5 crore from an initial ₹10,000 investment. And the worst part? I still hold the Shipping Corporation shares—because they were “free”! That’s regret number one.
Another time, a gentleman came to me and strongly recommended a stock called J. Kumar Infraprojects (J Corp), priced at ₹5. I hesitated but eventually bought 1,000 shares. It shot up to ₹100—a 20x return—so I decided to sell. He came back and said, “Sir, buy more!” I refused. Then it went to ₹500. Again, he said “buy,” and again I said no. At ₹750, I started selling in parts. By the time I exited fully, it was ₹1,500. Can you guess how high it went? ₹21,000! From ₹5 to ₹21,000. That’s not just regret—that’s a masterclass in loss of potential profit.
Loganathan: My most recent regret is not fully capitalising on the post-COVID market rally. In hindsight, had I seen it clearly, I would have invested a lot more—especially in mutual funds—and perhaps stayed away from direct stocks.
Babu Krishnamoorthy: It just shows that even after so many years in the investment world, you can still make mistakes. You believe you’re well-informed, that you understand the markets, but when the time comes, emotions take over. Investing right after COVID required more courage than usual, and I didn’t act decisively enough. My biggest takeaway is this: no matter how experienced you are, emotions can still cloud your judgment.
