Rakesh Jhunjhunwala’s prominence in the Indian Stock Market didn’t develop in a single day. It is his determination to learn, patience to observe and passion for trading which helped him to reach new heights. His association with another ace investor Radhakisan Damani further refined Jhunjhunwala’s investing skills. Damani is often credited for Rakesh Jhunjhunwala’s success in the Dalal Street. As per the 2015’s list of 100 richest Indians compiled by Forbes, Rakesh Jhunjhunwala and Radhakisan Damani were placed at the 51st position and 98th position respectively. The most important quality which both of these investors have in them is the appropriateness of entering and exiting a stock. Over the years, they held many stocks in their portfolio which has grown significantly with time.
So, understanding a company’s business is necessary before making an investment.
Both Radhakisan Damani and Rakesh Jhunjhunwala prefer to stay away from companies whose business they cannot understand.
Rakesh Jhunjhunwala’s existing portfolio is worth about Rs. 6,290 Crore. And, he started with only Rs. 5,000 in the year 1985. The portfolio growth is phenomenal, and it happened because of his well-marked strategies.
There are many factors which made Rakesh Jhunjhunwala a billionaire investor. The factors in most of the cases are interrelated. We are listing down a few of them.
Long Term Investments
Rakesh Jhunjhunwala believes in investing in a company for long terms. And, it has brought him huge fortunes. Keeping patience is very much when dealing with long-term investments. One should have faith in the investments made in stocks and should also maintain calm during the downward trends of the market. In 2011, Jhunjhunwala’s stocks went down by more than 30%. However, he held the stocks and didn’t get carried over by market sentiments. In a few months time, he managed to recover the losses.
There were many such instances in his career. Had he sold the stocks in those times, we would not have been talking about him now.
One need to make investments in the right stock at the right time. He/she should also be aware to exit from that stock at the right time. Rakesh Jhunjhunwala is a master in that. During the start of his trading career in 1985, Jhunjhunwala bought 5,000 shares of Tata Tea at a price of Rs. 43. After holding it for few months, he sold all them when the price touched Rs. 143. He made Rs. 5 lakhs from that deal and that was huge money during those days. It was the first big success of Rakesh Jhunjhunwala. Many people tend to follow the portfolios of the ace investors. Well, that is no harm since they can be good lessons. However, one shouldn’t blindly invest based on those portfolios’ present stock holdings. The investments might have been made at a much earlier time when the prices of the shares were much low. Thus, picking up a stock at the right time is much crucial.
Understanding the business before investing in it
Rakesh Jhunjhunwala is a person who never invests in a company without having a good knowledge of each and every aspect of its business. From time to time, he invested in companies which were not grand then. Many of such companies are present-day MNCs. His potential to assess the future of a stock right from the day it is launched is something which sets him apart from other investors of the country. Rakesh Jhunjhunwala believes in investing in value-driven companies which can be a real asset in longer runs.
Also Read: How Top Investors Make Money in Stock Market
All big moves start with small moves
Since Rakesh Jhunjhunwala invests in stocks for long terms, it also helps him in assessing the future potential of the stocks from time to time. He is a person who picks up shares of a company at different prices. When he feels optimistic about the capability of a stock, he purchases them in bulk amount.
Learning from failures
Many investors of the country think that Rakesh Jhunjhunwala is blessed with “The Golden Hand” of the Indian Stock Market. They feel whichever stocks Jhunjhunwala picks up results in an appreciation of their prices. Although it is true in many cases, it is also equally true that he has failed many times. Jhunjhunwala feels to take lessons from the failures is important for every investor of stock markets. And, a good investor never repeats the same mistakes again.
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