Timeless investment lessons from the 'Big-Bull'

Rakesh Jhunjhunwala ruled the Indian stock market for decades - a qualified CA and son to an Income Tax officer, the legendary investor entered the stock market in 1985 when Sensex was at 150 points with a borrowed capital of just ?5000. The investment journey which began with ?5,000 through his intelligence and disciplined investment style is today valued worth over ?40,000 crores($5.8 billion). He was ranked as the 36th richest person in India at the age of 62 years when he passed away this week on 14th August 2022.

Rakesh Jhunjhunwala is no more with us, but his investment principles were reflected in his strong, candid and blunt style of speaking. Jhunjhunwala left us with the wealth of his wisdom which he strictly followed throughout his life. We pay our tribute to him and reflect upon a few learnings taken from his thoughts -

‘Take the bad with the good’ -

An investor should show a fighting spirit when the market goes into the grip of the bears. Rakesh Jhunjhunwala was often found suggesting investors that one should “Build a fighting spirit -- take the bad with the good." When you are convinced about the quality of your investment portfolio and its sustainability, there is no need to panic from the short term sentiments but to go with your conviction and stick to your investments.

‘Always look into the Future’ -

An investment should be made not looking into the past but evaluating variables for the future. He was often questioned on his optimism about the markets especially during the bad times to which he used to popularly respond “if the market was about the past, historians and librarians would have been the richest people.” An investor should try to look beyond the prevailing bad news as “ good prices and good news seldom coexist”.

'Respect the market' -

Rakesh Jhunjhunwala often used to say that one must "Respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible." Stock market has its own rules and it moves on the basis of these rules. “Like women, volatile and difficult to understand and cannot be taught but have to be learnt.” One can make money only when these rules are respected and learnt.

'Be courageous' -

Rakesh Jhunjhunwala strongly believed that “whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it." So, one should take stock market shopping like any other shopping. As you try to buy goods at cheapest possible rates, you should do the same while buying stocks as well. So, one should have a habit of buying during correction.

Jhunjhunwala recently invested $35 million for an estimated 40 percent stake in the new airline, Akasa Air - "A lot of people question why I've started an airline. Rather than answer them, I say, I'm prepared for failure," the billionaire had said.

'Invest only in what you understand' -

He exemplified this when during the March 2020 crash, he asked his fellow investor Madhu Kela to stay away from the market but changed his view in just 2-3 months as clarity emerged. "When Covid happened, I called him on the day Nifty was at 7,600 during lockdowns and asked him - 'kya lagta hai bhaiya' (what do you think about the market). He asked me to stay away. A few months later when the Nifty hit 9,000, he said 'bangdi bech ke laga de' (buy even if you have to sell bangles) in his typical style," Kela said.

Another nugget from the master was “Always think 20 times before investing and think 50 times before selling.”

Rakesh Jhunjhunwala has always stayed away from the fads, businesses that were unreasonable yet popular or even assets like cryptocurrencies which never attracted him.

'Advice for traders' -

“Firstly, don't forget this is not a racecourse. And all this volume of fluctuation that comes in games cap which would come in America..I think it can be very damaging for traders. They are going to lose money in that. If you get debt 6 percent return, how can your target become 15-24 percent on equity? " He further used to advise investors to not get involved in any type of daily gambling. “Don't involve yourself in all this gambling where stocks go up by 40 and 50 percent everyday. The mature attitude is to invest safely, give your money to experienced people to invest through mutual funds to fund managers and expect a return which is reasonable” he said.

“You know I used to have a drink at Geoffrey's and some pretty girl came and asked me what do you buy and what returns you get. I tell her about the stocks and the returns will double in 3-4 years. The girls replied only," he said. “I give her the address of the Mahalaxmi racecourse."“Everything in life is about maturity and don't go on scaling your bets," he added. Trading is usually a zero-sum game and seldom creates long-term wealth for the investors.

‘Investing is like sipping wine slowly, trading is like downing Tequila shots. You know which is good for health, but also which one is more thrilling!’

'Minimalism' -

Despite the gigantic size of his wealth, he often quoted “ Wealth also has a purpose. I have far lesser wealth than people think, but far more than I need. Wealth allows me to do what I want, and I live life by my terms." He used to explain that the success he had is due to patience and hard work. And he added that "taking defeat with a smile" is also one of the factors of his success.

Apart from his capital ambitions not many know that Jhunjhunwala was a silent yet generous ‘philanthropist’ who would donate a third of his annual income towards education, health, sports and nutrition of the underprivileged. “I have the money, but I do not have the will to spend it. I don’t ask God for more wealth, but to give me the power to give it away,” Jhunjhunwala said at an event while a recent Forbes estimate ascertained that he donated approximately Rs 13.69 lakhs per day towards various noble initiatives.

Indian equity markets will always remember him, for while there may be many successful billionaire investors in the years to come, some even wealthier than him, there will never be another Big-Bull.

R.I.P. Mr. Jhunjhunwala!

Disclaimer -?The views and opinions mentioned above are only for general information and not to be regarded as a ‘recommendation/advice’ towards a course of action. Historical performance indications and financial market scenarios are not reliable indicators of current or future performance. In view of the individual circumstances and risk profile, each investor is advised to consult on their advisors/planners before taking any investment decisions. We’re not advising, suggesting or guaranteeing any returns on any investments made.