Rakesh Jhunjhunwala‘s Legacy—Five Golden Money-Making Mantras

I wish to highlight his practical, street-smart and gutsy ability to make it big in the market where many of the so-called ‘market experts’ could barely make headway.

Many of us woke up last Sunday (14^th August) to the terrible news that the Badshah of stock markets and our hero, Mr Rakesh Jhunjhunwala, had left for heavenly abode. He was an inspiration to one and all. May his soul rest in peace.

I was fortunate to have known Mr. Rakesh Jhunjhunwala closely from his younger days when he used to stay in the Income Tax Colony, Peddar Road, Mumbai. My father too was in the Indian Revenue Service and we lived just a building apart in the same colony. Early memories of him were of a very quiet young man who kept a lot to himself and rarely came down in the evenings when we used to play games, etc. He completed his CA and then stock market caught his fancy. In fact, many people in our colony may not have been even aware of his existence, until he started appearing in the newspapers for his investment prowess post-1991. The rest is history!

There were many veterans in the market who hogged the limelight from time to time, but most of them faded away. Mr. Jhunjhunwala stood firm through all market ups and downs as he had a rock-solid belief and passion for the markets. Of course, he too had his learning curve wherein he experimented with everything, right from short term trading to long term investing. While some of his investment decisions may not have gone well, the important ones hit the bull’s eye and the portfolio value he created in his lifetime—from Rs 5000 to a whopping Rs 48,000 crores—is a  testimony to his ingenuity.

Mr. Jhunjhunwala was one in a million and, in this article, I wish to highlight his practical, street-smart and gutsy ability to make it big in the market where many of the so-called ‘market experts’ could barely make headway.

1. The first quality necessary to succeed as an investor is to be optimistic and this could be seen in each of his interviews. His belief on India’s growth story was unparalleled and, in my opinion, India has never seen a cheerleader like him. A testimony of his undying optimism is the fact that he remained optimistic till the very end.
2. He was also a firm believer in not succumbing to herd mentality of the mob when it came to buying stocks. The fact that a big name is investing in a particular company should not be the only reason an investor should buy that stock. In short, do not fall for a temporary fad and follow the herd.
3. Short term trading cannot be written off as some people do make money. Mr. Jhunjhunwala himself spent his early years doing short term trades and his passion for trading continued till the very last moment as he believed what screen says is more important than the opinion of the people.
4. His big wins have always come from buying stocks that were out of favour, which tells us that it is always better to buy into company’s story when nobody is talking about it. If you believe that the company has a great potential and its future prospects are bright, don’t worry too much about what others think of the stock. You just need to hold the stock with conviction and patience because in the stock markets, your patience is tested and conviction is rewarded. Remember, today’s Large-Cap companies were Small-Caps in the past!
5. One of the key mantras to his success was to invest only what you can afford to lose. Many of the big-wigs in the airline industry taunted him about his investment in Akasa Air as many airlines have gone bust and some are still struggling to become profitable. However, Jhunjhunwala’s response was, “I’m taking a measured and conscious risk, but at the same time I’m also conscious about the potential gains I can make.” So, basically, play this game of risk-reward ratio, but only with what you can afford to lose.

Investing is one of the many tools that help build wealth and achieve financial independence. But it also requires a good level of financial literacy and discipline to master the game.

In the long run, however, careful planning and consistent approach can set you on the path of success.

Stay consistent and keep investing!

And, when in doubt, remember the golden words of Mr. Jhunjhunwala when someone asked him ‘Market kya lagta hai?’ his response was, ‘The mother of all bull markets is coming’.

Contributed by: Rajesh V Padode (Managing Director at DSIJ Pvt Ltd)