For Nilesh Shah, investing is more about behaviour, than spreadsheets, stock tips or even market timing. Speaking on NDTV Profit's Moneywise, Kotak AMC's Managing Director used everything from airplane turbulence and the Harshad Mehta Scam to the Mahabharata to explain why investors often know the right thing to do — and still fail to do it.
“Theory tells you to stay invested,” Shah said. “Practice is something else entirely.” To navigate that gap between theory and reality, Shah said he follows four core money principles that have survived multiple market cycles, including the dot-com bust, the global financial crisis and the COVID-era rally.
The Four Golden Rules
The first rule, Shah said, is deceptively simple. “Income minus savings equal to expenses. That should be your motto.” According to him, most people approach money the other way around — saving whatever remains after spending. Shah argues that long-term wealth creation begins with prioritising savings first and adjusting lifestyle expenses later.
The second principle is consistency. “Little drops of water make an ocean, whatever little savings you do, do it regularly and invest.” That idea, he suggested, matters even more during volatile markets when investors are tempted to stop systematic investments or endlessly wait for the “perfect” market entry point.
His third rule focuses on diversification. “Don't put all eggs in one basket. Try to diversify your portfolio across debt, equity, real estate, commodity, global investing.” The point is particularly relevant at a time when Indian retail investors have increasingly concentrated portfolios in high-performing themes such as smallcaps, defence and power stocks.
Finally, Shah stressed patience and being a long term investor. According to him, long-term investing is not merely a strategy for generating returns. It is also a way to manage the two emotions that dominate every market cycle: greed and fear.
“These are four principles which one should follow. This will allow you to balance between your greed and fear.”
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The ‘Duryodhana' Problem in Investing
But the most striking part of Shah's explanation came through a reference to Duryodhana, the antagonist from the Mahabharata. Recalling a conversation between Duryodhana and Lord Krishna before the Kurukshetra war, Shah said the character perfectly captures investor psychology.
“Duryodhana replies To Krishna's teachings with, ‘Oh great Krishna, please don't tell me what is dharma, what is righteous thing to do. I know it, but I can't practice it. And please don't teach me what is wrong, what is adharma. My problem is that I'm not able to leave it.'”
“In all of us, that Duryodhana stays,” Shah said. For him, that explains why investors repeatedly chase momentum, panic during corrections and abandon discipline despite understanding the basics of investing.
“We all know long-term investing is good, regular investing is good, asset allocation is required,” he said. “But then our inner Duryodhana influences us.”
Shah also reflected on mistakes he made early in his career. During the Harshad Mehta bull market of the early 1990s, he admitted he believed stock tips and market conversations were enough to make money. “The greed overtook me. And I lost a lot of money,” he said. Over time, he said, experience taught him that “price is what you pay and value is what you get,” a principle he continues to rely on through every market cycle.
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