Transcript from the discussion Nithin Kamath had with Mihir Dalal on 1st May 2020 during BHIVE Buzzfest event
● At Zerodha we started work from home 10 days before the lockdown. We have been okay except for very few things that need a presence in the office. Like for example for those who want to open a new account using physical paper, we are not able to open accounts for them.
● Market changes have been sharper and faster now compared to 2008. What happened in the entire year 2008 just happened in March 2020.
● Volatility in the market has been a challenge. Market movement in a day is much more than what it used to be in a month. Challenge is in terms of risk management.
● Trading volume has gone over the roof. Making sure everything works okay has been a big challenge.
● The actual damage to the financial markets will surface by the third quarter as the extent of the crisis is yet unknown. Markets may severely fall if the economy does not rebound before the end of the year.
● Highest money that day traders make is when the markets fall. The market goes up slowly, but the fall is always faster and gives good opportunities for traders to make money.
● People who “short” made a lot of money in 2008. In fact, a lot of capital that went into forming Zerodha came from the money I made in 2008.
● This time it is not a financial crisis. It is a full-blown economic crisis.
● Markets factor in the news really really fast. Usually, the next two quarters are already factored into the price.
● India has done a better job than most other countries in terms of controlling COVID19.
● Actual economic damage we will get to know in the next quarter. Personally I am not very bullish. I keep interacting with a lot of founders and I sense that they are all in big trouble. I hope that we get back to economic activity sooner. If the lockdown goes for another quarter I think many companies might reach a point where they cannot recover.
● Our business is online and is not much affected right now due to lockdown. But I know so many other businesses are badly affected. Government needs to take out all their firepower now and do something for these businesses.
● Throw away your credit cards right now. People should start conserving cash and live a life of austerity to ensure survival in this crisis. The world is going to get tougher in the next few months. Everyone has to get into survival mode.
● We have been very lucky and last month has been very big for us. The highest number of Demat accounts have been opened in the last month as people are working from home. People who have been on the fence have been jumping in and opening accounts.
● Many people who were on the sidelines with minimal investment have started investing in a staggered manner with more time at home. This has resulted in the opening of more trading accounts than ever and everything is coming at a discount.
● We are a 1200 member team. Productivity has actually gone up for us. We have gone after every process and made them more efficient.
● This is a good time for people who have been sitting on the side to start investing. People can start off with SIPs as you might get a really low price for one to two years now.
● The market is not going to go up anytime soon. It will be bouncing to fall again.
● The market does the opposite of what people say. When everybody is saying that the market will go down, and there is a consensus, the market does opposite of what the consensus is!
● There is a lot of liquidity out there. If you look into the data of money in savings accounts and fixed deposits there is money and this money can come to the market. Depression
kind of situation won’t happen as this liquidity exists and the “mother of all markets” USA can print money and inject it into the system.
● I do not do any trading now. I take care of business and my younger brother continues trading. He also manages a hedge fund that we have started.
● Productivity has gone up with work from home. People are now held more accountable. Previously when someone came to office you would assume they are working, now one is forced to measure their performance. A lot of inefficiencies that should have been fixed earlier have got fixed now because work from home has forced us to look into these things. Reports that are monitoring employees are much stronger now and we know exactly what every employee is doing.
● The way we are all going to work is going to change drastically post Corona. Many people are enjoying working from home, and are able to spend more time with family. We are wondering if we need to force everyone to go through 2 hours of traffic every day. Many people can now work from smaller cities helping the local economy there. We were previously looking to expand to a new bigger office, which we are not considering anymore.
● Post Corona we will give a choice to every employee whether they want to work from home or come back to the office. If 95% of people chose to work from home, I don’t have a problem letting them do that. There is less carbon footprint when someone works from home and there is one less person on the road in traffic.
● For startup founders: Funding is going to be difficult. Conserve and work on survival for the tough period which could be one to two years. And many founders have to forget ego and start thinking if what they are doing is going to be relevant, you should know one to pull the plug, like for a trader stop-loss is a very important action. There are many new opportunities that the world is going to throw up in the next 3 to 6 months