Asit Sharma is a senior analyst at The Motley Fool and a frequent guest on the Motley Fool Money podcast. In today’s episode, Asit talks with Motley Fool host Mary Long about “the long and winding road” of his investing journey, mistakes he’s made along the way, and advice for navigating a career pivot.
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This video was recorded on June 15, 2024.
Asit Sharma: If you’re looking to get into this business, is just try to be a synthesist and not a reductionist. What by that is take different learnings from your life and apply them to the narratives you hear about a company and start looking at what might be an outcome of business performance. It takes some time. It takes like three years to get a feedback loop on how good you are.
Mary Long: I’m Mary Long, and that’s Asit Sharma, a senior analyst at The Fool who works on our stock advisor portfolio. This weekend, we’re spending some time with a couple of the analysts you hear from regularly on Motley Fool Money, so that you can get to know them even better. I caught up with Asit recently to learn more about how he wind from writing poetry and reading esoteric novels to becoming a Foolish analyst. We also discuss what he gained from being broke, his initial thoughts on Amazon, and lessons learned from early tries at entrepreneurship. Also, we’d love to hear about your own investing journey. Send us a note or a voice recording at [email protected]. That’s podcasts with an S @fool.com. To tell us about how you got to be the investor you are today. Asit, I’m glad that I get some time to chat with you about the path that you took to wind up where you are today because you’ve alluded to me many times that it was a long and winding road, but I don’t actually myself know what that road looks like. Let’s zoom out. Tell us about this road. How did you wind up in a role as an investment analyst?
Asit Sharma: Mary, it’s a great question for anyone who’s in this industry because I think there’s nothing in the middle. There are straight paths to being someone who makes investment choices, and then there’s the other type, which is like these long paths that are very circuituous, and go in unexpected direction. I’ll start with a question you’d asked me to think about, which is did I first get started just in the idea of investing, was it like through an early job or as a hobby? I’ll say that when I was a teenager, like a lot of other folks, I started dabbling in stocks. I think I bought my first stock before I had any facial hair. Maybe 12, I’m guessing. At that time, was interested in mutual funds. This is before the ETF explosion. I’m dating myself here. I bought this company’s mutual fund. It was the 20th Century Ultra Fund that’s since been renamed. I think it went into a family called the American set of Funds. I had somehow scraped together a couple hundred bucks, and I think I probably cheated a friend out of some rare comics to do this. But I bought this mutual fund, and it really, just performed so well. I would look at it a few years later. The stock price was going up. I had set it with my local broker, I bought it through actually, I went physically into this dude’s office, plunked down my money, and we had set it to reinvest any dividends that it gave. It really just sparked my interest. I’ll return to what happened to this as we move along, but that’s how I got interested in all of this.
Mary Long: How did you first find this ultra mutual fund? Out of all of them. How did you pick that?
Asit Sharma: It was the old Throw a Dart Exercise. Back in the day, you would go to the public library and they’d have the daily newspaper on racks on these beautiful wooden racks, and you’d pull out the Wall Street Journal and look at the stock prices, and they started having mutual fund prices. I think that’s how I stumbled on it. I wish I could say to you, that Mary, I was just such a genius. At that age, it was so clear to me that this fund was going to outperform. I looked at the holdings, the track record, the management. It was obvious, but it wasn’t. It was just a guess. It I like the name, I think. In those days, Ultra sounded more than Blender, it’s going to do. This is Ultra.
Mary Long: You like the name. You throw dart at the wall, and it turns out that this mutual fund winds up doing really well. Was it seeing those awesome returns that got you hooked and then then set a fire to pursue this as a career, or did that career pursuit come later?
Asit Sharma: Think it planted a seed. I had started with a passbook savings account, and I was fascinated by how interest worked, that you could take your passbook back to the bank. Again, I’m dating myself. But when I was a very small kid, like seven-years-old and you had a summer job. Some of you who are listening today will quite remember this, you would take your cash to the bank and the teller would write the amount in the passbook. Sometimes when you would go back, he or she would credit the amount of interest you had earned. What’s really fascinating to me, and then this also planted a seed. I forgot all about this. I’ve always had a love for literature. I majored in English literature and college. I went to grad school for a master’s degree in English literature in NYU, in the early 90s, and this takes us to where I circled back to investing.
Mary Long: How do you circle back? You graduate grad school, and you’ve got a master’s in literature. You’ve got an undergrad degree in literature, and you set off into the big wide world. What falls into your lap then?
Asit Sharma: That’s basically the story. I actually didn’t quite graduate on time, but that’s another podcast segment we can talk about that after you and I finished taping. But I was about to graduate, and I was broke in New York City. I had a beautiful small apartment. It was a size of a closet on Sullivan Street, downtown, and I was looking at trying to pay my rent for the month. I went to the schools database in the graduate school where they were placing people who had these types of degrees. An investment house called PaineWebber, very old respected investment bank, which had grown to be one of the largest investment bank/brokerages in the country, had an opening for people with editing skills, communication skills to come in and edit their mutual fund newsletters. I applied for that job. I got it. Suddenly, I found myself walking into this amazing building, Midtown Manhattan. This is on Avenue of the Americas, but New Yorkers who are listening will say, there’s no Avenue of the Americas. You’re talking about Sixth Avenue. I walk into this building, a few doors cross the street down from Rockefeller Center, an amazing lobby filled with glorious art. We’ll get to that in a moment. It didn’t look like a brokerage company at all. It looked like a museum. I started working there and I would go around interviewing investment analysts and those who actually managed money, and they would tell me how their funds did that quarter, and I’d write it up. It would go out to subscribers at the investment bank and the retail brokerage products. That’s how I got started in the investment world. That was my first so-called investing job. It actually was on the marketing side of investing.
Mary Long: Then how did you make the leap from the marketing side of investing to the actual analysis?
Asit Sharma: I found myself broke again. After a year, I really loved that job, but it was paying some ungodly, low amount, I think, like nine or $10 at that time in New York City, was not enough to live. I ended up, I got married around that time. My wife and I worked on a small business idea that was a lot of fun, a small publishing house that the internet was just taking off. We tried to do it online before there was much of an apparatus or market for that. It didn’t work. We went back to my hometown of Raleigh, North Carolina. I started life again. I was now in my late 20s, early 30s, right around 30, and I went back to school. I took some more finance courses. I got certified as a certified public account, and I started working in an old school accounting firm, and that’s where I really got my start in investing because that’s where I learned about financials balance sheets, income statement, statement of cash flows as well. That was a really great experience for me.
Mary Long: I love that we get this look at your pre-investing career and that you studied literature. That is still a love that I know that you have to this day. Do you view that passion as something that’s separate from the investment analysis world of your life, or do you think that the skills that you learned in that degree and in that field set you up for success somehow in your current job?
Asit Sharma: I think they’re all related. I think that the best investors that I’ve come across are those who are multi-disciplinarians, either they’ve got a bent for history or kite surfing or they’re really amazing foodies. There’s some passion that they have that kindles this idea to learn, to continually learn. I think the passion for literature maybe goes hand in hand in this business because you’re anyway always trying to figure out what the narrative is. Management’s got a narrative, you’re trying to suss that out. Does this make sense or is it BS? You’ve got a narrative. I think the company can do X. The market has a narrative. We think the company is worth Y. Some of this loving stories, loving the idea of a story really has gone hand-in-hand with the lessons I learned in analyzing financial statements, working different businesses. I also worked later in my career as a person in a middle market company manufacturer, where we had a lot of colorful narratives. Our white collar portion of the company, the finance team was just adjuting our offices, the warehouse part of this company, where all the floor workers were, and we had a lot of interchange. It was like part of my day was trying to figure out, are we going to be able to make payroll next month? We’re going toward the great recession here. The other part was just listening to the stories of the guys who were running the printing presses in the building. Which takes us to the next part of my career. I found myself broke. The great recession.
Mary Long: Call them theme.
Asit Sharma: It is a theme. I hope I’ll be able to retire some day. Many companies had just such an upheaval in old school manufacturing industries during the great recession. I ended up leaving the company and put out a shingle as a consultant. I started working with small businesses and advising them on finance and strategies. That was another learning experience for me. At the same time, I started writing for fool.com. The Motley Fool had a web service, a web blogging network. I joined that and for 10 years, I wrote thousands of articles on every conceivable topic and paid some dues there. I learned a lot there as well.
Mary Long: Let’s maybe talk about early lessons and mistakes. When you’re starting off in your investment career, you have any stories of stocks that you picked that I’ll take positive stories where the stock turned out really well. We’ve already talked about Ultra, so table that one, but maybe also stories of stocks that did not do so well that you’ve learned some greater lesson from.
Asit Sharma: Well, Mary, I want to talk about a mistake, and this is something that I’ve learned from a lot of other foolish investors. There’s a great thing here at The Motley Fool. If you spend time with any of our analysts. They love to talk about their mistakes. Tom Gardner models this behavior and so many others because if you can get to a point where you can look at your mistakes without all the cringe and learn something from them, it makes you stronger as investor. This is a mistake that I made personally. During the time I was writing for The Motley Fool for those 10 years, I looked at amazon.com time and time again and never bought it. It was such a big mistake. In fact, I wrote articles really panning amazon.com. I’m going to talk about a humiliating story that I wrote. It’s called Ground Control to Amazon: “Seattle. We Have a Problem.” I’m going to read you some of the heading subheads of this article. It’s hard to ignore signs that Amazon stock may soon revisit Earth, Illusive profits from other services. There is no there where Amazon is going at its current valuation. It’s time to value Amazon for what it is today. Final thought, a rational course of action. In this article, Mary, I actually compare the PE ratio of amazon.com, not only to Cisco Systems, which I trump it as a profitable tech company, but I compare it to the Great Pyramids, how high they are. I compare it to the stratospheric stunt that Red Bull pulled when it had Felix Baumgartner jump out of his strato-space capsule. I really tore up this PE ratio. I was just looking back the other day at Amazon’s performance since I wrote that article, and it’s up some 1,200%.
Mary Long: Nice.
Asit Sharma: Let me say no. Let me take that back. One more thing. Hubris is like the bouncer at the nightclub of elite investing. If you want to join that club, you can’t have an ego. You can’t have this like self satisfied arrogant air. You got to check that at the door and learn to be humble because this business is going to teach you every single day that you don’t have it figured out.
Mary Long: You’ve moved around in your career. You’ve collected different degrees. You’ve worked in different industries. What advice do you have for people who are on one career path now and are hoping to break into investing as a career? Or maybe investing is not even on their radar, but they’re just looking to make a career pivot. Any advice for someone who’s looking for a career change and how to navigate that?
Asit Sharma: Absolutely. The first thing I just want to set the table stakes here, it’s not that hard. If I can do it with my background as someone who used to write poetry and read esoteric novels, you can do it, if you want to be an investor. The second is I’ve already said this, but to pursue a passion outside of investing. Start learning about how things work in the stock market. There’s lots of great books that you can read. We often talk about books like One Up on Wall Street by Peter Lynch. That’s a great starter book. Read Warren Buffett’s annual shareholder letters. That’s another great source to learn. Go to the web and start figuring it out. It’s not rocket science. Don’t have a fear of financial statements is a second one. Anyone can actually leave through a set of financial statements and start to understand what they’re communicating. Don’t let that scare you. Spend some time with those. Embrace what’s difficult because it’s actually not that difficult. I think listen to podcast, there’s this amazing podcast called Motley Fool Money, which I highly recommend. If you listen to that daily, you will increase your knowledge exponentially. I’d also say if you’re looking to get into this business, is just try to be a synthesist and not a reductionist. What by that is take different learnings from your life and apply them to the narratives you hear about a company and start looking at what might be an outcome of business performance. It takes some time. It takes three years to get a feedback loop on how good you are, according to my good friend and colleague, Brian Stoffel. Don’t feel that you have to rush it either. That’s probably a last thing. All of this can be done. It doesn’t have to be such a huge thing in our minds, because I know for so many people, I was the same way, investing seems like a really hard nut to crack, and it seems like an industry that maybe is impossible to get through. But I don’t think that looking at the difficulties of something is the best way to go about it. If you want to break into it, just do it. Just leave your inhibitions, check them at the door and dive in.
Mary Long: I’ve got one more question for you. You’ve mentioned that you and your wife dabbled with a small business idea, starting this publishing house and that it didn’t work out. What did you learn from that experience of trying to get something, your own thing off the ground and then having it not pan out?
Asit Sharma: I learned so many things, Mary. One of the lessons I learned was something my dad had said, like, if you want to do something, why don’t you get trained in at first? He didn’t understand why someone with no background in finance, would want to jump into an entrepreneurial business, even though he had always told me, entrepreneurialism is good if you can do it, but you should get trained first. I don’t necessarily think you have to get trained in something new if you’re an entrepreneur, but you do have to pay your dues, do the research, learn if there’s a market for what you’re going to do, figure out the parts and pieces. You don’t have to go to school, but there’s a basic amount of data that you’ve got to collect. Then second is, I don’t think I reached out to as many people as I could have. If you’re going to do something ambitious, look, there’s tons of people around who may want to help you, mentors, friends, people off the street. I think, third, I was at that age, a little more introverted than I am now. I didn’t pick the brains of folks as much as I should have. Another thing that I learned though in retrospect is that failure can be so beautiful. I failed so many times in my life. Each time it felt tragic. I felt like nothing’s ever going to get better. How the hell did I land in this situation. But, time shaves off the burn, and it gives you a chance to be introspective, to be retrospective and realize that it wasn’t that bad. I’m still standing. I’ll learn some things from that. Let me take those lessons and plop them down here in this thing that I’m doing now. There is so much of that. I’m getting some gray on me, so I don’t know if I want to jump into something like that and feel so to such a magnitude. But I think that as you ask now, thinking out loud, that was the biggest lesson that. It’s OK, you’re going to survive. Whatever happens to you in life. It’s all right. Don’t take it so hard on yourself.
Mary Long: I mentioned at the top of the show that Asit is a senior advisor for our flagship investing service, stock advisor. When Asit’s not coming on to Motley Fool Money to talk stocks or his life background with us, he’s scouring the world for quality companies capable of beating the market for long term investors. If you’re interested in more analysis from Asit and access to stock advisors full scorecard of stocks, generating market beating returns, visit www.fool.com/asit. There’s also a link in the show notes. As always, people on the program may have interest in the stocks we talk about, and The Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. I’m Mary Long. Thanks for listening. We’ll see you tomorrow.