Ace investor Rakesh Jhunjhunwala, who left for his heavenly abode this morning, was an optimist who always believed that “the best (in the market) is yet to come”. He became the Big Bull of the stock market by trusting the Indian market and its investment strategies.
“Rajesh Jhunjhunwala was a big Indian bull. He has always been extremely optimistic about India’s future prospects. Many of his stock picks were based on choosing which companies would benefit 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 overwhelming market sentiment, especially during downturns. This has resulted in phenomenal gains on several occasions. He used those windfall profits to buy or add long-term fundamental picks in which his conviction was high. He was thus able to multiply his wealth through a unique combination of short-term trading and long-term investing,” says Ashish Kapur, CEO of Invest Shoppe India Ltd.
Starting with a small capital base in the 80s, he built a massive portfolio of thousands of crores by betting big on his high-conviction stock ideas, staying positive on India’s growth prospects and taking big, bold, calculated trade calls. Market players will always miss his charisma, his optimism and his audacity.
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Here we take a look at Rakesh Jhunjhunwala’s five investment strategies that made him super rich and what he was:
1. Buy well, hold on
Jhunjhunwala has always believed in “buying well and keeping calm”. That is, do your own research, buy the right stock, and keep sitting on it until the time is right. Have confidence in the business of the company. Don’t let panic guide your investment decisions.
2. Never Get Emotional About Your Stock Ideas
When Rakesh Jhunjhunwala turned 50, a reporter asked him if, as an ace investor, he was (sometimes) moved by any of his stock ideas? And Jhunjhunwala replied that if he had feelings then they were for his children and his wife, and maybe for his girlfriend, but he was surely not that emotional about his actions. “I wouldn’t say there isn’t emotion when you’ve invested for so long, but it’s not such emotions that don’t separate,” he 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, never get emotional about your stock ideas and get out in time, if necessary.
3. Patience is the key to success
According to Groww, Jhunjhunwala did not become a money magnet overnight. It took years of research, diligence, and getting his skin in the game to get where he was. Jhunjhunwala’s portfolio corrected 25-30% on several occasions, but he always used this correction as a buying opportunity.
4. Buy when others are selling and sell when others are buying
Jhunjhunwala has always believed in going against the grain. He used to say, “Buy when others are selling and sell when others are buying.” He was therefore against the herd mentality and wanted market investors to use their own brains while investing.
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5. Never invest at unreasonable valuations
“Never invest at unreasonable valuations. Never run for businesses that are in the limelight’ – so said Jhunjhunwala. So whenever you see a stock trading at unreasonable valuations, avoid going there. Or, you could end up losing your hard earned money.