Rakesh Jhunjhunwala is a qualified CA and has chosen trading as his profession. He is the Indian version of Warren Buffet. He is also sometimes referred to as ‘The Golden Hand’ of Indian stock market. People believe that everything he touches (invests) turns to gold. So is his popularity that there are people who track his portfolio and invest in the same companies that he invests. So, what’s his secret of success? What are his investment strategies which have made him a billionaire? Let’s see what we can learn from him.
1) Buy for long term
Though he is investing in the stock market, he is not a short term trader. He invests in stocks for the long term. And it has paid off for him. Some of these stocks have multiplied his wealth over the years. Had he sold them the moment they appreciated by 10-20%, we wouldn’t have been talking about him now.
2) Believe in India’s growth story
He is one of those guys who believe in India’s growth story. He says again and again that Indian economy will keep growing. So, be a part of it. The only way you can be a part of growing India is to invest in the market. If you are investing in debt instruments like deposits or bonds, you will not be a part of it by any means.
3) Search for Value
Rakesh Jhunjhunwala believes in value oriented companies. He has his team who help him in finding companies which offer value in the long term. If the stock prices of these companies are higher now, he tends to wait a bit, but finally gets his hands on them. Before buying a stock, he closes studies the management style, growth potential, competitive nature and many more factors.
4) One cannot create wealth through free advice
In an interview given to Mumbai Mirror, he has said that one cannot make wealth through borrowed advice. You need to do your own research before making any investment. Free advice can actually cost you later. If you blindly follow some one’s free advice, you might not be paying them anything now but you would realize later when your investment suffers. That loss can be a lot more than the fees that you pay for an expert advice.
5) Invest only in what you know
He invests only in companies whose business he can understand. He does not opt for complex businesses. ‘Keep it simple’ is his strategy when it comes to investing.
If it’s done once, it could be a lottery. But if it’s done again and again, we call it consistency. This is what Rakesh Jhunjhunwala is known for. He consistently invests in the stock market irrespective of the conditions. The quantum or strategy of investing can differ based on those conditions but he has never left his belief that stock market will always deliver for you if you do everything right.
7) Success comes from failure
It’s not that he has not tasted failure. Some of his investments have also been duds. He believes that success arises out of failures. If you fail, instead of crying over it you should know why you have failed. Did you not read the business well? Were the markets hit by some bad news? These are some questions for which he wants you to search for answers.
These are the 7 things that we have learned from Rakesh Jhunjhunwala’s success story. Follow these principles, believe in fundamentals, have patience and get ready to taste success.