Ace investor Rakesh Jhunjhunwala, who left for his heavenly abode this morning, was an optimist who always believed that ‘the best (of the market) is yet to come’. He became the Big Bull of the stock market by having faith in the Indian market and his investment strategies.
“Rajesh Jhunjhunwala was a big India Bull. He was always extremely optimistic about India’s future prospects. Many of his stock picks were based on choosing the companies which would gain from India’s rapid transformation and growth. He was also a rare combination of a trader and an investor. He had the courage to trade against the overwhelming market sentiment especially in bearish times. This resulted in phenomenal gains on several occasions. He used these windfall profits to buy or add in fundamental long-term picks in which his conviction was high. He was, thus, able to multiply his wealth by a unique combination of short-term trading and long-term investing,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.
Starting with a small capital base in the eighties, he built a massive portfolio running into thousands of crores by betting big on his high conviction stock ideas, remaining positive on India’s growth prospects and taking big, bold and calculated trading calls. Market participants will always miss his charisma, optimism and boldness.
Here we take a look at the five investment strategies of Rakesh Jhunjhunwala which made him super rich and what he was:
1. Buy right, sit tight
Jhunjhunwala, often referred to as India’s Warren Buffett, always believed in ‘buying right and sitting tight’. That is, do your own research, buy the right stock and then keep sitting on it till an opportune time. Have faith in the company’s business. Don’t let panic drive your investment decisions.
2. Never get emotional about your stock ideas
When Rakesh Jhunjhunwala turned 50, he was asked by a reporter whether as an ace investor, he (sometimes) gets emotional about any of his stock ideas? And Jhunjhunwala had replied that if he had any emotions, then they were for his children and his wife, and may be for his girlfriend, but surely he was not so much emotional about any of his stocks. “I would not say there is no emotion when you have invested for such a long periods of time, but they are not such emotions that will not part ways,” he had said.
This sums up Jhunjhunwala’s investment philosophy. Invest in the stock market (usually for the long term), but if you want to get rich, then never get emotional about your stock ideas and exit on time, if needed.
3. Patience is the key to success
According to Groww, Jhunjhunwala didn’t become a money magnet in a day. It took years of research, diligence, and having his skin in the game to reach where he was. Jhunjhunwala’s portfolio corrected as much as 25-30% multiple times, but he always used this correction as an opportunity to buy in.
4. Buy when others are selling and sell when others are buying
Jhunjhunwala always believed in going against the tide. He used to say – “Buy when others are selling and sell when others are buying.” He was, thus, against the herd mentality and wanted the market investors to use their own brain while investing.
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5. Never invest at unreasonable valuations
‘Never invest at unreasonable valuations. Never run for companies which are in limelight’ – this is what Jhunjhunwala used to say. Thus, whenever you see a stock trading at unreasonable valuations, avoid going for that. Or, you may end up losing your hard-earned money.