GAUTAM BAID: Many people confuse earning a lot of money in a job with job satisfaction. And people equate having lots of money with being happy. But that’s absolutely wrong. The only definition of success is being able to live life your own way and being able to live a life aligned with your value system.

CHARLES MIZRAHI: My guest today is Gautam Baid. Gautam is a portfolio manager at an investment adviser based in Salt Lake City, Utah. Previously, he served at the Mumbai, London and Hong Kong offices of Citicorp and Deutsche Bank as a senior analyst in their healthcare investment banking teams.

CHARLES MIZRAHI: Gautam’s latest book is The Joys of Compounding: The Passionate Pursuit of Lifelong Learning. This book draws on the work of investing greats like Warren Buffett, Charlie Munger and Ben Graham — as well as philosophers and scholars. Gautam integrates their strategies and wisdom into practical applications in the areas of business, investing and decision-making.

CHARLES MIZRAHI: I recently sat down with Gautam, and we talked about how value investing is not just a system for success in the market but also an intellectual toolkit for achieving a deeper understanding of the world.

CHARLES MIZRAHI: Gautam, thanks for being on the show. I greatly appreciate it. You don’t know this, but I ordered your book — the Kindle version — back in September. I read it and said: “Wow, this is really good stuff.” And I ordered it for my team because it was chock full of great information. So, thanks for being on the show, and it’s a pleasure to meet you.

GAUTAM BAID: Thank you, Charles. It’s a pleasure being here.

CHARLES MIZRAHI: The name of the book, folks, is The Joys of Compounding: The Passionate Pursuit of Lifelong Learning. Now, what I like about the book is it’s not really an investment book, right? And I don’t think you wrote it as much of an investment book, right? Tell me about that.

GAUTAM BAID: Initially, the sole objective of writing the book was to share and write about my life’s biggest learnings and give back to the investing community from which I’ve learned so much over the years. That was my plan. I self-published the first edition of The Joys of Compounding three and a half years ago. Then, I sold it for zero royalty. I didn’t charge any money to cover the costs of production, logistics, marketing or distribution because the only idea was to help people and give back to society.

GAUTAM BAID: What I’ve learned in life is that when you help others unconditionally — without expecting anything in return — the universe works in such a way that you are rewarded multiple times over. In May 2019, I was at Creighton University in Omaha, signing copies of my self-published book for the readers during the Berkshire Hathaway Annual Meeting…

CHARLES MIZRAHI: Hang on a second. So, the book that I have in my hand is more or less the same book that you self-published back … How many years ago would you say? Three and a half years ago?

GAUTAM BAID: It was three and a half years ago.

CHARLES MIZRAHI: OK. So, you decided to put together a book that has everything about value investing, achieving worldly wisdom and building strong character — all the lessons, stories and anecdotes that you learned from Charlie Munger, Ben Graham and Warren Buffett. Were you giving these [books] away, selling them or what? How did it work?

GAUTAM BAID: I was selling it for zero royalty. I was basically selling it at cost price. But before we discuss why I self-published a book, there is a bigger background story about myself — which I feel if I share with your audience, they’ll better appreciate the significance of the book, the content and the reason behind each chapter. If you may allow, I’d like to share the background story.

CHARLES MIZRAHI: Sure, go ahead.

GAUTAM BAID: I was born and brought up in a Marwari family in India. In India, there are two communities — the Marwari and Gujarati — that have good business and entrepreneurship in their genes. So, ever since my childhood years, I was very fascinated by the concept of business and entrepreneurship — especially by the fact that once a solid foundation is established for a business, the owners do not work for money. Rather, their business and money work for them.

GAUTAM BAID: I graduated in commerce with a specialization in accountancy, so pursuing higher studies in the field of finance seemed like a natural extension. I did my MS in finance at ICFAI University, Hyderabad, India. And I did my MBA in finance at Nirma University, Ahmedabad, India. I also went on to obtain my CFA Charter from the CFA Institute.

GAUTAM BAID: After my MBA program was over, I got a campus placement with Citibank. I worked at their Mumbai, India office for three years as an investment banking analyst. After that, I joined Deutsche Bank and worked at their Mumbai, London and Hong Kong offices for almost four years as a senior investment banking analyst.

GAUTAM BAID: But throughout those seven years — even though I was making very good money — I wasn’t really happy because making lots of money does not equate to job satisfaction. And here, I would like to talk about how I entered the stock market…

CHARLES MIZRAHI: Hang on a second. So, you’re living in India. Business is in your genes because of where you’re from in [India]. What does your father do?

GAUTAM BAID: My father has two family businesses. One is in roofing solutions and one is in manufacturing raw materials for the paint industry.

CHARLES MIZRAHI: OK. You saw people around you who were in business. So, it was natural for you to go into business as well. You liked the whole concept of services or products — the whole interaction. I hear you. I was the same way as a kid. Everyone used to say that they were going to be astronauts, baseball players or something like that. I always loved business — taking nothing and turning it into something. You start with an idea. That was always exciting to me.

CHARLES MIZRAHI: So, you go to school in India. You pass all the tests. You graduate with degrees in business, finance and accounting. When did you come over to the U.S. and why did you come over?

GAUTAM BAID: Well, I’ll come to that briefly. Before that, I need to share how I got my start. The reason why I came to the U.S. was my love for the stock market and investing. But how did I develop this interest for the investing field?

GAUTAM BAID: As is typical of most investors in the stock market, I was pulled into this field out of sheer greed during the final euphoric phases of a bull market. In my case, it was the 2003 to 2007 bull market in India. I had invested in a mutual fund called Reliance Power Sector Fund in late 2007 and a stock named Ispat Steel in early January 2008. Both of these were from the hot and fancy sectors of power and steel at the time. And both of them had recently appreciated sharply in a short span of time.

GAUTAM BAID: So, I blindly engaged in the extrapolation of the recent price trends without paying any heed to their valuations or business models. And over the next 12 to 18 months, both investments crashed 70% to 80%. I successfully gained admission into the stock market by paying my tuition fees.

CHARLES MIZRAHI: So, you lost money. It’s trend-following. You invested based on price and hype, and you had no idea about the fundamentals of the business.

GAUTAM BAID: It was out of greed — nothing else.

CHARLES MIZRAHI: It seemed that you didn’t know of any other way to invest. So, you might as well have invested like everyone else — which was looking at the last price, taking out your pencil and drawing a line. Well, nobody does that anymore. But that’s what I used to do. I used to look at charts and a whole bunch of other things because that’s what 90% of everyone does, right? So, no one’s going to hold you to that.

CHARLES MIZRAHI: You subsequently follow the same experience that many people have: The party stops when the stock market — and your investment — go down. When it’s going up, you think you’re Warren Buffett. And when it goes down, you’re like: “What the heck is happening?” So, you lost 70% to 80% of your money?

GAUTAM BAID: Yes, over the next 12 to 18 months. So, as you can see, recency and vividness biases are very powerful but highly costly…

CHARLES MIZRAHI: OK, fine. So, how much do you lose? Is it a big amount?

GAUTAM BAID: It was a small sum of capital because I was about to begin working in May 2008, so I hardly had any. It [came] out of my pocket money.

CHARLES MIZRAHI: OK. So, it wasn’t something where you had to sell your house or anything like that. It was more of a pride thing. Here you are, this whiz kid and smart guy. You look around and say: “Hey, I got two degrees. My family is in business. I’m really smart. I know the stock market. I’m going to figure it out more than everyone else.” And boom, you get kicked right in the chest. That about sums it up, right?

GAUTAM BAID: Yes. But despite this bad initial experience, my curiosity and enthusiasm for the stock market never waned. In fact, it remained very high throughout the first seven years of my professional investment banking career.

GAUTAM BAID: And one day, I came to the realization that we have one short life to live our dreams. And I did not want to waste any more time doing something that I was not truly passionate about. I was so keen on a career shift that I relocated to the U.S. in early 2015. One of my relatives is a U.S. citizen. He sponsored my green card.

CHARLES MIZRAHI: Who sponsored your green card?

GAUTAM BAID: One of my close relatives. He lives in Atlanta.

CHARLES MIZRAHI: Hang on a second. You’ve got to go slow for me. Because to you, this story is average. But to me, it’s pretty amazing. You lose money, but you’re saying: “I can beat this market. I’ve got to figure out a way.” So, you get bit by the stock market bug. You say: “I’m coming to the United States.” Why the United States?

GAUTAM BAID: Yes. The reason I came here was that I was a CFA charter holder. And I was under the impression that, being a CFA charter holder, I’d be able to land a stock market job pretty easily.

CHARLES MIZRAHI: For my listeners who don’t know what a CFA is … Is it certified or chartered? I think it’s chartered, right?

GAUTAM BAID: [It stands for] “chartered financial analyst.”

CHARLES MIZRAHI: OK. Folks, it is a fancy test, and the passing rate is very slim. I think you take it over several years. And you will never use 92% of the stuff you learned for the test again. It is not going to help you make a zillion dollars, but it’s a great thing. It’s big on Wall Street to have “CFA” after your name. I don’t. I have not met anyone who has made a lot of money because they have a CFA. I’ve seen a lot of people who have a lot of money and then get the CFA. In fact, my head analyst was looking to get one. I said: “Save your money, buy books.” But he doesn’t listen to me. He knows who he is.

CHARLES MIZRAHI: OK. So now, you get your CFA. You come to the United States, get sponsored by a relative and go to Atlanta, Georgia. And with your fancy degrees and CFA, you’re going to beat Mr. Market. Is that right?

GAUTAM BAID: I was very keen on working in the stock market — on the buy side. But in India, during those seven years, whenever I used to apply for a career shift into the stock market, all of them used to look at my resume and say that I had investment banking work experience. That’s why they did not entertain me or give me a chance.

GAUTAM BAID: I thought: “The U.S. is the land of opportunity. Why not come here and try?” Something I talk about in my book is Jeff Bezos’ regret minimization framework. When you are on your deathbed, in your old age, you don’t want to look back on your life and say to yourself: “I wish I had tried.” When you have the resources or opportunity, why not try? The downside is that you may not succeed, but the upside is that you will get to live your dream.

CHARLES MIZRAHI: I had a friend who lived across the street from me when I was 16. He was two years older than me. His father was a shop teacher at school. And we grew up on a pretty middle-class block. I remember talking him one day, and he said: “Your biggest regrets are not going to be the things you did. They’ll be the things you didn’t do.” And I always thought about that.

CHARLES MIZRAHI: Bezos said the same thing: “It’s not what I did, it’s what opportunities I didn’t take advantage of.” So, at a young age, you saw that you didn’t want to be in that situation. You don’t want to be on the deathbed — hopefully many more years from now — saying: “Gosh, I wish I took the chance,” right?

GAUTAM BAID: Right. Many people confuse earning a lot of money in a job with job satisfaction. And people equate having lots of money with being happy. But that’s absolutely wrong. The only definition of success is being able to live life your own way and being able to live a life aligned with your value system. So, that’s why I came to the U.S. and I tried to get into the stock market.

CHARLES MIZRAHI: What did you do? You started sending out your resume? Did you have any contacts or anything?

GAUTAM BAID: I applied to many job openings online. But as you know, life is not a bed of roses for those trying to carve out their own destinies. I got rejected from my first three stock market job interviews in the first six months of living in the U.S. And at the same time, I ran out of what little money I brought with me from India.

GAUTAM BAID: To take care of my living expenses in this country, I did not want to sell even a single share from my portfolio because I did not want to interrupt the power of compounding. So, to sustain myself in the states, I took up a minimum wage job as front desk hotel clerk in San Francisco.

CHARLES MIZRAHI: Front desk hotel clerk? So, I walk into the hotel, and you say: “Good evening, sir. Do you have a license?” I give you that and a credit card, and you say: “Room 608.” That’s what you did. You’re this smart guy with all the degrees and CFA, and you’re working as a clerk.

GAUTAM BAID: I was working as a front desk hotel clerk for minimum wage in California.

CHARLES MIZRAHI: Was it a major hotel chain?

GAUTAM BAID: It was the Four Points by Sheraton — by the San Francisco Bay Bridge.

CHARLES MIZRAHI: Now here’s my question … This has always intrigued me. When you gave the manager your resumé, did he say: “You’re a little bit overqualified to be a hotel desk clerk”?

GAUTAM BAID: Yeah, so before the Four Points by Sheraton, I had applied to two more hotel and restaurant jobs, but I got rejected everywhere for the same reason: I was overqualified. But I was desperate. I needed to put some food on the table, so I had to get something. I was very adamant and firm about not going back to my previous field of work in India — where the presence of perverse incentives always led to incentive-cause bias and did not suit my personal nature.

CHARLES MIZRAHI: So, when you gave your resume to these people, you’ve got to understand why they rejected you, right? You had more education and you could be this guy’s awesome boss. You could be three levels higher than the boss of the guy who’s hiring you. So, here they are hiring you as a clerk. You’re a big threat. You could be the greatest. They look at you and say: “Come on, you’ve got to be an undercover boss.” All right.

CHARLES MIZRAHI: So, you take a job. I’m looking at this from the outside. You lived it, so I can only tell you from my perspective. So, you take a job in a hotel in where? San Francisco?

GAUTAM BAID: Yes.

CHARLES MIZRAHI: And what year is this?

GAUTAM BAID: This is late 2015.

CHARLES MIZRAHI: So, in San Francisco, everyone’s making oodles of money, right? It seems like the stock market is doing well. Tech stocks are doing great. There are a lot of startups. And you’re a hotel clerk making … What was minimum wage back in the day?

GAUTAM BAID: I was earning $13 or $14 an hour.

CHARLES MIZRAHI: You’re not living in Atlanta anymore, so who’s paying your overhead here in San Francisco?

GAUTAM BAID: I was taken up as a paying guest in a small, dingy room on the outskirts of San Francisco. That was all I could afford at the time on minimum wage. That’s how I used to live for those 15 months.

CHARLES MIZRAHI: Well, your parents were probably really happy about that, huh?

GAUTAM BAID: One was happy. But I found that, during those 15 months, many people were very critical. They were criticizing me for my decision. There were so many who were struggling in life. There were many people who said: “See, I told you so.” There are very few people among your close friends and family members who will actually support and motivate you.

GAUTAM BAID: Only people who actually know you will understand how much you were undergoing in your previous job. If you’re not living a life aligned with your value system, then you will suffer internally every day. And only the people who love you and know you well will be able to relate to you. They’ll be the ones to support you during tough times.

CHARLES MIZRAHI: So, the people who knew you and knew what your plan was were pretty cool with what you were doing? They were encouraging you?

GAUTAM BAID: Not everyone, but a select few. And they were the ones I decided to stay with for the rest of my life — after that entire experience was over. During the hard times, you get to know the people who are true to you. During the good times, everyone will be with you. But during the tough times, that’s when you get to separate the wheat from the chaff and understand who the most meaningful people in your life are. And that’s a big life lesson.

CHARLES MIZRAHI: So, now you’re in San Francisco and all alone. Did you know anybody there?

GAUTAM BAID: I was all alone. I didn’t know anyone.

CHARLES MIZRAHI: Why did you pick San Francisco? Did you throw something at a map or what?

GAUTAM BAID: That was where I got the job interview call from, so I went there.

CHARLES MIZRAHI: So, if you could have gotten a job at a front desk in Anchorage, Alaska, you would be there?

GAUTAM BAID: Anywhere.

CHARLES MIZRAHI: Whoever said yes, got you. And by the way, San Francisco is an expensive place to live. So, you picked a pretty expensive place. Well, they were the only ones who said yes. So, they picked you. You didn’t pick them.

GAUTAM BAID: I didn’t really have a choice. I’ll share one thing here: Nothing teaches you the big lessons of life more than an empty wallet and an empty stomach. There were days during those 15 months when I ate smaller portions of food to make my meals last longer throughout the day. That was the situation I was in.

GAUTAM BAID: But when you’re so fiercely passionate about something, you can keep going. Even though it was a big challenge for me intellectually, physically, mentally and emotionally, I highly value those days of my life. Because for the first time — since the beginning of my busy professional career — I finally had time to read, learn and invest in my personal development.

CHARLES MIZRAHI: So, during those 15 months, you were not just working at the front desk. You were buying books, reading and taking notes. You became a learning machine — which you talk about in the book — because that was not your final destination. That was just the first step. So, how much time were you spending on reading a week?

GAUTAM BAID: So, the pace of work from late night to early morning at the hotel was pretty slow. I used to work during the graveyard shift. For those who don’t know what the graveyard shift is, it ran from 11:00 p.m. to 7:00 a.m. I made full use of the free time by reading every single blog post published on blogs like “Safal Niveshak,” “Base Hit Investing,” “Microcap Club,” “Fundoo Professor” and “Janav WordPress” — among others. And the passionate pursuit of lifelong learning had begun. Little did I know that I was laying down strong building blocks for compounding in my life.

GAUTAM BAID: During those 15 months, I was able to learn a lot and build a strong intellectual foundation for myself. And I would like to share a very important insight about the power of passion. Every single night, I used to apply to a minimum of three stock market jobs online. So, if you do the math, over those 15 months, I applied to more than 1,300 stock market jobs.

GAUTAM BAID: When we take our time to fill out an application, attach our resume and click on the submit button, there is always so much hope attached. To face rejection more than 1,300 times and keep going is only possible if you’re fiercely passionate and sincerely dedicated to what you want to do in life.

GAUTAM BAID: Luck, chance, serendipity and randomness have always played a big role in various aspects of my life. One night in November 2016, at the hotel, I randomly clicked on the “quick apply” button on a LinkedIn job application during my online job search. And wonder of wonders, I got shortlisted for an interview for a senior role in an investment firm — even though I had zero formal stock market experience.

GAUTAM BAID: This was a phase in my life in which I was about to experience the power of compounding knowledge in action. During those previous 15 months at the hotel, reading all those blog articles and white papers, I built a very strong intellectual foundation in the investing domain. And I was able to excel in all three rounds of my job interview. This was possible because confidence comes from body language, and body language comes from knowledge, right? The more knowledge you have, the more confident your body language will be. I landed the portfolio manager job, and it was like a dream come true.

CHARLES MIZRAHI: So, you clicked on a “quick apply” link for a portfolio manager. Where are they located?

GAUTAM BAID: Salt Lake City, Utah.

CHARLES MIZRAHI: What’s it called?

GAUTAM BAID: Summit Global Investments.

CHARLES MIZRAHI: So, it’s a portfolio manager position. The only thing they know about you is from your resume. Did you go out there, or was it virtual?

GAUTAM BAID: I went to Salt Lake City for a physical interview.

CHARLES MIZRAHI: This was before COVID-19, and you were able to go to a real interview.

CHARLES MIZRAHI: So, you go to the interview. They see this guy coming in — brimming with confidence, like a freight train — and you beat them into submission and they hire you. They think: “I’m going to get a guy at an entry-level price, who has a lot of information.” Is that right? They got a good value here.

GAUTAM BAID: Well, I didn’t exactly get an entry-level price. I was actually hired at a high pay scale because it was a portfolio manager position.

CHARLES MIZRAHI: They were giving you money to manage right from the start?

GAUTAM BAID: They had great confidence in me. And when you’re in the position of a portfolio manager, you are given great responsibility.

CHARLES MIZRAHI: What was the portfolio that you were managing — which sectors of the market?

GAUTAM BAID: So, it was a mutual fund company. We had three mutual funds: U.S. large cap, U.S. small cap and a global fund. It was a great learning experience.

CHARLES MIZRAHI: Which portfolio did you manage?

GAUTAM BAID: Me and three other portfolio managers managed all three mutual funds together.

CHARLES MIZRAHI: Really? Wow. That’s crazy. So, you had to manage global, large cap and what else? Small cap?

GAUTAM BAID: Yes, U.S. large cap, U.S. small cap and a global fund.

GAUTAM BAID: But I would like to quickly share that never in my wildest dreams did I imagine that I’d become a portfolio manager straight away. When I came to this country, I thought I would first become a junior analyst. Then, I’d work my way up to an analyst, senior analyst, assistant portfolio manager and then portfolio manager in 14 or 15 years. And here I got a portfolio manager position in such a short span of time. This is what persistence can do.

CHARLES MIZRAHI: How much were you managing?

GAUTAM BAID: At the beginning, it was $650 million.

CHARLES MIZRAHI: You start your first day as part of a team that’s managing $650 million. And the night before you are getting the towels because I called the front desk, right? Only in America, right?

GAUTAM BAID: Absolutely, [it’s] the land of opportunity.

CHARLES MIZRAHI: You betcha.

GAUTAM BAID: I’d like to add something even more incredible. Around the same time, in November 2016, something even more incredible happened. I joined Twitter, and I started posting my thoughts on what I was reading and learning.

CHARLES MIZRAHI: What did you do on Twitter?

GAUTAM BAID: In November 2016, I joined Twitter — the social media platform — and I started sharing whatever I was reading and learning on various subject matters like philosophy, psychology, investing…

CHARLES MIZRAHI: Hang on a second. I just want to point out … And I think this is a really good lesson for anybody listening. When you were working for 15 months as a clerk at the front desk, you weren’t working as a clerk at the front desk. Your mind was elsewhere. You were learning. You were taking advantage of the opportunity to read, gain knowledge, send job applications and leverage the time you had while you were in San Francisco.

CHARLES MIZRAHI: You were not wallowing like: “Oh gosh, I’m making $13 an hour. I hate this life.” You didn’t do that. You used that as your training ground in order to learn as much as you could. So, when you came up with Twitter, it was just an extension of everything you did to a bigger audience. Is that right?

GAUTAM BAID: Broadly, yes. But I would like to add something. You mentioned that my mind was somewhere else — it’s not that. One thing that I picked up from my parents is the importance of a good work ethic. So, even when I was at my hotel job, I used to give it my best. And in June 2016, I was actually the employee of the month.

CHARLES MIZRAHI: Employee of the month, wow. Tell me what you did. What were your job responsibilities at this hotel?

GAUTAM BAID: Basically, checking guests in and out, carrying the luggage to the room, answering their random requests — like getting toothpaste or toothbrushes — and sometimes washing dishes in the kitchen.

CHARLES MIZRAHI: So, what did you do to be employee of the month? What were you doing that made you stand out from everyone else?

GAUTAM BAID: I think the biggest thing was being a team player and being empathetic with everyone. What I love about America is the dignity of labor here. Everyone — from the bottom to the top — enjoys a great dignity of labor and respects people when they’re working. Here, the work is respected, not the designation or level.

CHARLES MIZRAHI: It takes someone who came to this country with nothing — with only a dream — to fully appreciate the opportunity that’s around them. And it doesn’t matter where you start. You started in a field that wasn’t anywhere close to where you wanted to be. You were washing dishes, getting towels and carrying luggage. You saw this as an opportunity.

CHARLES MIZRAHI: Unfortunately, most people who were born here don’t realize [that opportunity] and feel they should start out in the corner suite. That’s not the way it works. Kudos to you. That’s fantastic.

GAUTAM BAID: There is no alternative to hard work. Nothing in life — business, relationships or investing — will work unless you do. So, just put in the work and have faith that, eventually, the dots will connect. As Steve Jobs said: “You can’t connect the dots looking forward; you can only connect them looking backward.”

GAUTAM BAID: So, everything adds up. That’s how compounding works. In the initial decade or two, it’ll seem as if nothing is happening. But once you get on the exponential part of the curve, that’s when magic starts happening.

CHARLES MIZRAHI: Tell me about that. Because the name of your book is The Joys of Compounding. You talk about how everything you did in those 15 months catapulted you. On a call, you were telling me that if you have $100 and compound that over time, then 60% or more of your compounding will have been in the last five years.

CHARLES MIZRAHI: Go through that slowly because I want my listeners to hear this. I know numbers and everything, but I never heard it presented the way you did. And when I got off the phone with you, I said: “Oh, that’s really good.” So, walk us through that slowly.

GAUTAM BAID: The day I understood how compound interest works, I knew that I was going to become monetarily rich. I just had to get started. Compounding will bestow its magic and benefits upon you only after testing your patience and conviction to the fullest. Because the power of compounding is backloaded.

GAUTAM BAID: Let me explain with an example. Suppose you start with $1. At 20% compounding, your $1 becomes almost 100 times [more] in 35 years. But at the end of year 10, you’ll have six times [more]. At the end of year 20, you will have 38 times [more]. This means that out of 100 eggs, almost two thirds — 62 of the 100 eggs — came in the last five years. So, if you want the pot of gold at the end of the rainbow, you have to go through the entire journey.

GAUTAM BAID: And the stock market is designed in such a way — with its volatility feature — to test your tolerance for pain every year. Because the stock market, on average, declines 10% every year and 20% or 25% every three to four years. Every decade, we have a big bear market of 40% to 50%. Volatility is a feature — not a bug — of the stock market.

CHARLES MIZRAHI: It’s not a what?

GAUTAM BAID: It’s not a bug. It’s a feature. It’s a basic feature. It’s a routine characteristic of the stock market. Once you learn about financial history, these things look routine to you. So, there’s nothing to feel afraid of. You have to focus on time. Because in the compound interest equation, time is the only variable that lies in the exponent. You want to make use of the exponential power of time. If you want to really harness the power of compounding, that’s what you need to focus on.

GAUTAM BAID: How will you be able to take advantage of the exponential power of time? By focusing on survival and endurance. If you’re able to survive and stay in the market for the long term, you can’t help but become rich because that’s how compounding works. You just have to be in the market for a long time with good stocks — at good prices — and then do nothing. Do nothing unless something very bad happens to the company in question. Until that time, just stay put.

CHARLES MIZRAHI: Even if you buy the S&P Index Fund, if you buy and you hold it — I think for over 10 years — there’s a 92% chance you will have more money. And if you hold it for one or two years, the odds go down tremendously. So, if you didn’t know anything and said: “Let me look at these investments and forget about them,” you have a 92% chance of making considerable money in 10 years and only an 8% chance of losing. The only thing you did was give your time.

CHARLES MIZRAHI: You and I could invest in the same index fund. You only gave it two years. I gave it 10. And the only difference? It was the same investment, but once you get that time equation, everything falls to crap. That’s the difference.

GAUTAM BAID: Right. The shorter your time period, the greater the variability of the outcome. But when you look over a very long time period of decades, then these intermittent market corrections and crashes just look like minor blips — nothing else.

CHARLES MIZRAHI: So, the problem is having the right mindset so that these downturns don’t tempt you to take your eye off the long term. Is that right?

GAUTAM BAID: Long-term thinking is a superpower.

CHARLES MIZRAHI: OK, so how do you develop that superpower?

GAUTAM BAID: Well, this has come from experience. In my initial years of investing, I was very impatient and didn’t know the importance of delaying gratification. But over the long term, I’ve come to realize and appreciate that there’s only one big truth in the stock market. The quality stocks — always and without exception — bounce back the fastest after a bear market or market correction. This was the Eureka moment for me.

GAUTAM BAID: In my book, I shared a particular table that shows a list of high-quality stocks in India in January 2008. That was the peak of the previous bull market. I showed the price performance from the peak of the previous bull market to the bottom of the subsequent bear market. And what I saw there blew my mind.

GAUTAM BAID: I noticed that, even if you buy high-quality stocks at reasonable prices during the bull market peak, they still end up making you hundreds of percentage points of returns over the long term. Good businesses create wealth across market cycles — irrespective of the news headline — be it negative or positive.

CHARLES MIZRAHI: Say that again.

GAUTAM BAID: Good businesses create wealth over the long term — even in the middle of negative headlines, such as rising interest rates, rising inflation and geopolitical tensions.

CHARLES MIZRAHI: One share of Coca-Cola in 1919 turns into close to $15 million or $20 million today. One share. It’s a great company over time.

GAUTAM BAID: Exactly.

CHARLES MIZRAHI: What I liked about your book — let me cut to this for a second. It’s phenomenal that you’re experiencing this and finding it out by trial and error. So, that’s what you’re finding. But what you did in your book — that you were selling for cost and everything — is you compiled something that I used to have desk drawers full of: newspaper clippings and Xeroxes of pages of other books.

CHARLES MIZRAHI: You took all of this great information and put it in a book format with five sections. And I want to tell you what the sections are for those listening. They are: “Achieving Worldly Wisdom,” “Building Strong Character,” “Common Stock Investing,” “Portfolio Management” and “Decision-Making.” And the last thing is understanding the true essence of compounding.

CHARLES MIZRAHI: So, in this one book, you took a whole bunch of wisdom from other disciplines and people much smarter than yourself — and some successful people — and said: “For $20, here you go.” Now, I understand why, when you self-published it — even if you never sold a copy — you [still] created your own manual.

CHARLES MIZRAHI: When I wrote my book, Getting Started in Value Investing, I did it because my son came to work one day — he was 15 or 16 years old — and said: “What do you do?” And I said: “Here,” opened up one of my drawers and took out a folder that was about two feet thick and full of clippings and articles. “Here’s what I do: value investing.” He goes: “Whoa, this is way too much.” And I said that he was right. There wasn’t anything that I saw, at the time, that could distill it simply and quickly.

CHARLES MIZRAHI: So, I wrote that book more or less for me. And it so happened that Wiley Publishing picked it up. You wrote this, and so many people liked it. How did Columbia Business School find you?

GAUTAM BAID: I’ll go back to what I said a short while ago. In November 2016, within a few months of me joining Twitter, two individuals flew all the way from India to Salt Lake City, Utah to meet me and thank me for what I was sharing. They recommended that I write a book.

CHARLES MIZRAHI: What were you doing on Twitter? I’m not going to go on Twitter right now. But do you still have your Twitter account where you put this stuff?

GAUTAM BAID: Yes.

CHARLES MIZRAHI: OK. What’s the flight time from Mumbai to Salt Lake City? Is it a day and a half or something?

GAUTAM BAID: It must be a total of 20 hours.

CHARLES MIZRAHI: OK. These two guys got on a plane and flew 20 hours for something they saw on Twitter to thank you?

GAUTAM BAID: Yes. And that was a very humbling experience.

CHARLES MIZRAHI: Wow, I’d say. I hope you took them to dinner.

GAUTAM BAID: I did. It was a very humbling experience. When they brought up the idea of me writing a book, I thought: “OK. I have this good habit of documenting everything that I’m learning in a Word document. So, why not organize this into a book format and share it with the public?” So, that was the basic premise behind writing the book. But I never expected the book to become so popular.

CHARLES MIZRAHI: Forget about that for a second. What were they seeing in these tweets that made them take a 20-hour flight to shake your hand? What do you think it was? And what did they tell you it was?

GAUTAM BAID: I think it was the clarity of thought and passion for the subject. I think the beauty of social media platforms is that they can attract a lot of like-minded people to your life. That is basically what happened in my case with Twitter. So, I’m very thankful. Again, I go back to the concept of luck, chance, serendipity and randomness. And that’s why I’ve dedicated an entire chapter to those four topics in the book.

GAUTAM BAID: In the book, the flow is like this. I start on the theory in each chapter. And then, I share a personal life experience or real example from my life based on that theory. So, this book is basically a reflection of my life.

GAUTAM BAID: The reason why I wrote the chapter on passion is because I strongly believed in the power of passion. The reason that I wrote a chapter on luck is because I strongly believe that luck has played a big role in my life. And the reason I wrote the chapter on becoming a learning machine is because that’s how I got ahead in life. So, in every chapter, you’ll see that there’s a personal example.

CHARLES MIZRAHI: You know what I also liked about the book? When I start a book, I always look in the back. I always look at the endnotes and bibliography. I love your bibliography. I love bibliographies that are dense and read like research papers. You have tons of outstanding books and articles that you mentioned. It ranges from all over the place.

CHARLES MIZRAHI: What I like about it is that, at the end of each chapter, you have your endnotes. I’ll tell you: I bought your book in September and started underlining different websites to go to and PDF papers to download. It’s a shortcut. You created a one-step guide for all this stuff. So, that’s really great.

GAUTAM BAID: The Joys of Compounding is a celebration. It’s a celebration of the value investing discipline. And my life epitomizes Isaac Newton’s saying: “If I have seen further, it is by standing on the shoulders of giants.” The Joys of Compounding is my heartfelt tribute to all my teachers who helped me achieve financial independence, become a better and wiser person and embark on the path to a fulfilling and meaningful life. Our goodwill compounds when we share with others, and we should act as funnels of knowledge.

CHARLES MIZRAHI: That’s beautiful.

GAUTAM BAID: The best thing a human being can do is to help another human being know more. In life, the winners occasionally lose. But those who help others win can never lose. So, always help others rise. This is how goodwill compounds over time.

CHARLES MIZRAHI: OK, well said. I can’t add anything to that. That was nicely said. This book has been selling like hotcakes. Columbia Business School came and presented you with a publishing contract, right?

GAUTAM BAID: Yeah. In May 2019, during the Berkshire Hathaway annual meeting, Miles Thompson — from Columbia Business School Publishing — flew all the way down from New York to meet me and offer a publishing contract with them. And the rest, as they say, is history. Today, The Joys of Compounding is an international bestseller in five countries: Singapore, Canada, India, Brazil and the United Arab Emirates.

GAUTAM BAID: The success of the book has gotten me on the radar of many Silicon Valley tech startups. So, over the last 12 months, many of them approached me to join their platforms and collaborate with them. But I decided to go with Chapter. So, I quit my job at Summit Global Investments a few months ago — at the end of July 2021 — and started an initiative on Chapter.

CHARLES MIZRAHI: You started an initiative on what? What’s Chapter?

GAUTAM BAID: Chapter is a curation-based learning platform. And the founders of Chapter — Gael and Steve — are on a mission to make highly-specialized education accessible and affordable to everyone in the world. I really believed in what they were trying to do, so I joined their platform. I teach the discipline of investing on the Chapter platform. It’s a three-chapter series.

CHARLES MIZRAHI: What’s the website? Give me the website.

GAUTAM BAID: It’s called getchapter.app.

CHARLES MIZRAHI: So, it’s getchapter.app.

CHARLES MIZRAHI: OK, I’m looking here. It says [it’s] “the easiest way to learn from top experts.” Is there a course for this or not?

GAUTAM BAID: There is a four-week course, yeah. I teach two separate four-week courses, and the third course will be released in March 2022.

CHARLES MIZRAHI: And it costs money?

GAUTAM BAID: Yes, it’s $40 for four weeks. The idea behind Chapter is to offer highly-specialized education that’s 99% cheaper than other premium online courses. The idea is to make learning very accessible and affordable in a cohort format. So, it’s just like a college seminar. You’ll be learning each course with a group of like-minded peers in an accelerated learning program format over a period of four weeks.

GAUTAM BAID: The idea behind Chapter is to bring you the greatest and best content on any subject available on the internet by subject matter experts. I’ve got two chapters right now. And what I’ve done is curated the best and greatest content available on the internet in the form of podcasts, YouTube videos, byte papers, newsletters, memos and reports and compiled them into a learning format for four weeks. I also share my personal insights and learnings from each of those pieces of content. Cohort members can also directly ask me questions in the member forum — if they have any questions. So, it’s more of a social learning experience. The idea is to make learning fun, accessible and affordable.

CHARLES MIZRAHI: Nice. I’ve never heard of this. It’s a pretty big platform?

GAUTAM BAID: It’s taking off pretty well. A lot of people with big followings on Twitter are joining the platform now.

CHARLES MIZRAHI: I’m looking here, and they have six people so far — including you.

GAUTAM BAID: They have 20 people. I think they’re only highlighting six on their website right now.

CHARLES MIZRAHI: I see. You and the top. OK. Got it. “How to publish your first novel.” For $40, I can learn how to do that from Dahlia Adler. “Understanding the Supreme Court.” Neal Katyal. Got it. OK. And what makes this site unique is that it’s only $40. And how many hours? Its four sessions?

GAUTAM BAID: So, the entire course is spread over four weeks, and you get three to four hours of content delivered to your email inbox every week. Once you are through with that content, you can ask me questions on any query that you may have.

CHARLES MIZRAHI: So, it doesn’t take much time for you. It’s kind of set up. You do it once and keep going.

GAUTAM BAID: Yes. I would like to add something. In today’s digital world, how do you succeed in a big way? You want to leverage the power of the internet to reach a global mass audience at scale. How do you do that? You build something great once, and then you earn forever. That is the mantle of success in today’s world. You build something great once and offer the consumer more than 100 times the value of the price that they’re paying.

GAUTAM BAID: And then, you want a great amount of goodwill, credibility and reputation. And then, you earn all of that forever — or for the rest of your life.

GAUTAM BAID: You have to play the win-win game. You don’t want to just extract a lot of consumer surplus upfront. You want to leave lots of consumer surplus on the table. You want to provide a tremendous amount of value by creating and providing something great once.

GAUTAM BAID: And it has to be scalable. The ticket price is very low — $40 — but because the internet allows you to reach a global mass audience at scale, you can make up for the lower ticket price through high volume. So, it’s OK. Everyone wins, right?

CHARLES MIZRAHI: The incremental cost to expand this is virtually nothing, right?

GAUTAM BAID: Right. You basically build the course once, and then you earn forever.

CHARLES MIZRAHI: All right. Beautiful. This is great. The name of the book is The Joys of Compounding: The Passionate Pursuit of Lifelong Learning. It’s a lot of pages. I didn’t know it was that much. It’s about a 400-page book with a whole bunch of footnotes and everything. It’s very easy. You can read it in chunks. You can read one chapter or section at a time.

CHARLES MIZRAHI: I was a fan before I even met Gautam. This did me such a great service. And I didn’t have to fly from Mumbai to Salt Lake City to tell you that [this book] compiled all the information and stuff that I like to look at in one place. So, you it really did a great job on that. And look, it got you on the show. There you go. There’s compounding.

GAUTAM BAID: Thank you, Charles.

CHARLES MIZRAHI: And that’s it. What is the check-out time at your hotel? Is it 10:00 a.m. or 11:00 a.m.?

GAUTAM BAID: The check-out time was noon. And the check-in time was 3 p.m.

CHARLES MIZRAHI: So, if people came a little early did you let them check in? If they came at 2:30 p.m. would you let them check in?

GAUTAM BAID: Yes. Subject to availability, of course.

CHARLES MIZRAHI: That’s why you’re employee of the month. Most people will say: “Sorry, no. You have to wait.” And I have to stand there with my luggage. That’s so great.

GAUTAM BAID: I just know that if you keep playing the long-term game and try to help other people — as long as you’re directionally correct in life, time and compounding will take care of the rest. Just try to be directionally consistent.

CHARLES MIZRAHI: You’re an example. You start off … and everything keeps falling into place. But it’s really not falling to the place. You set it in motion when you leave India and take a minimum-wage job.

GAUTAM BAID: I pursued my dream, and I’m still pursuing my dream. I’m extremely passionate about the Indian stock market and the power of Indian equities. I believe the next few decades belong to India. Today, India is at the position that China was at 20 years ago. And India is on the cusp of great economic growth — powered by the reforms of the Indian government.

GAUTAM BAID: Earlier this year, I set up an investment firm in India called Stellar Wealth Partners. We got the license from the stock market regulator to start operating our business there. So, I launched my stock market advisory business in India a few weeks ago on December 6, 2021. And it has gotten a great response from people.

GAUTAM BAID: As an extension of my belief and conviction in India, I am now about to bring Indian opportunity to investors in America. I’ll be setting up an India fund. It’ll probably get operational in the next six months. It will be modeled after the original Buffett partnership — [with] zero management fees. And over the last 10 to 12 months, I have been working in the background on how to make this fund client-friendly and have the entire structure as client-centric as possible.

GAUTAM BAID: I have learned the power of playing the long-term game. What I understand is that even if you are not getting a lot of recognition within the first 10 years, once you have an audited, 10-year track record of very good returns, that is when the big money will start coming in.

GAUTAM BAID: Very few people are willing to play the long-term game. Everyone is just trying to get as many assets under management in as few years as possible and then retire. But I think very differently. I like to take the long-term view of whatever I do because the long-term game is the best game, Charles.

CHARLES MIZRAHI: I hear you. I’m a long-term investor. You’re preaching to the choir, Gautam.

CHARLES MIZRAHI: Gautam, thank you so much for coming on the show. I really enjoyed your book. I highly recommend it, folks. You can get it on Amazon. I think I saw it for $10 or something on Kindle. Is that right?

GAUTAM BAID: I believe it’s $12 to $13.

CHARLES MIZRAHI: Yeah. You know, it’s just amazing. You can buy someone’s lifetime full of work for $12. Isn’t that amazing?

GAUTAM BAID: True.

CHARLES MIZRAHI: It’s on sale today. That’s great. Yeah, it’s $12. The book is $20. So, for $20, you can get a whole bunch of wisdom that took [Gautam] years to accumulate and put into a coherent order. So, it’s a great value for your money, folks.

CHARLES MIZRAHI: That’s it. Gautam, I wish you the best of luck. Thanks for coming on the show. Maybe we could have you on a year or so from now — when you’re managing whatever you want to be managing. I don’t want to say billions because you’re not going to be happy with that. You want to make that over time. But if it does come quicker, you’re not going to be upset, are you?

GAUTAM BAID: I just want to deliver the best long-term returns with the lowest amount of risk and help build generational wealth for my partners. I know that, in the long term, the power of compounding is so powerful. If I simply focus on endurance and longevity, everyone will do very well.

CHARLES MIZRAHI: It’s a marathon, not a sprint. Gautam, thanks so much for coming on the show. I greatly appreciate it.

GAUTAM BAID: Thank you, Charles. This was a pleasure.

CHARLES MIZRAHI: Thanks for listening to this episode of The Charles Mizrahi Show. If you’re a new listener, welcome! If you’ve been listening for a while, we’re glad to have you back. Either way, we’d love to know what you think of the show. Please leave a review if you listen on Apple Podcasts. Reviews make it easier for others to find the show. You can also see the video of the interview on The Charles Mizrahi Show channel on YouTube.