You might be wondering if is it really possible !! Can a mediocre person dream of becoming a investor tycoon like Rakesh Jhunjhunwala. For me it seems feasible as RJ himself says "You can achieve what you can dream !!" But how to proceed to become a RJ ?
He started investing with only INR 5000 in hand and today he is sitting on 13500 Crore networth with 56th most affluent person in the world. He is also said as Warren Buffet of India. 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. Everyone of you might be knowing that his father was a income tax officer and used to talk about markets with his friends in the evening at drinks. One day RJ curiously asked his father as if what makes stock prices fluctuate. His father asked him to see the news of check if there is a news item on Gwalior Rayon in the newspaper, and if there was Gwalio Rayon's price would fluctuate the next day.So it became his first lesson.Little RJ found it very interesting and got fascinated by stocks, He self-taught him-self. His father asked him to do whatever he wanted in life but at least get professionally qualified. So he became a CA. Damn Good !!
So, what’s the secret of his success? What are his investment strategies which have made him a billionaire? How he reached 13500Cr from just 5000 only and most importantly, can we also become like RJ? If so what are the ways?
I have studied a lot about him and finally come out of some conclusive do's which can really make you head towards RJ !!
1. Money : Although you know in 1985, he started with 5000 only, but in today's time you should be having some 4-5 lakh to start with. It is said also that you need money for making money. So first thing is you arrange some money may be by earning from your job or something you better know, i need not to tell you. But keep in mind that it should not be borrowed money or your emergency fund.
2. Time & Knowledge : These two things are extremely important and also correlated. If you give time to what you wish to learn, you will gradually develop interest in that thing. Without knowledge and experience one cannot get good job or even cannot establish good business. In stock market, you need a lot of knowledge to play with. You should be knowing the market terminology like "Buyback", "Open Offer", 'Preferential Allotment of shares', 'Debentures Issued by Company' etc. Only after knowing these terminology, you will be able to understand what is going on in a studied company. You can find these terms easily on moneycontrol or any business website.
You should do lot of research, a lot of data gathering and a lot of knowledge accumulation before making investment in stock market.
3. Right Decision at right time :
For every investment you make time of investment matters, especially in stock market, you have to be selective
and have to pick right stock at right time. Rakesh Jhunjhunwala is master of that, he pick correct stock at correct time.
He made his first big profit of half million in 1986 when he sold 5,000 shares of Tata Tea at a price of Rs 143 which he had purchased for Rs 43 a share just 3 months prior. Between 1986 and 1989 he earned Rs 20-25 lakhs. His first major successful bet was iron mining company Sesa Goa. He bought 4 lakh shares of Sesa Goa in forward trading, worth Rs 1 crore and sold about 2-2.5 lakh shares at Rs 60-65 and another 1 lakh at Rs 150-175. The price rose to Rs 2200 and he sold some shares.
So right from beginning he has quality to select right stock and to click correct deal at correct time. This is important quality to become successful in stock market.
Controlling your emotions and keeping patience is extremely necessary in stock market. Stock market moves upward as well as downwards. During down trend or during market crash one should maintain patience. In other word one should have faith in investment made in stocks. Jhunjhunwala’s portfolio fell by up to 30% in December 2011. But he has quality to keep
patience and that patience pays its fruit. He recovered his losses in February 2012. Next year his portfolio gave around 35% returns. So you should learn how to control your urge at unfavorable times. You can leave terminal or go away, enjoy with someone to keep you busy at these times.
5. Invest only in what you know :
RJ 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. Although your understanding may differ RJ here. Always invest in value oriented companies. RJ 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.
You can also form a team if possible with 5 different persons (your choice), one may be a CA (for understanding balance sheets), one may be a MBA professional (for understanding the business of the studied company), one may be technically sound (for understanding the correct entering and exit point) and one for fundamental analysis and the most importantly one eminent person for managing and collaborating the sustainability of this team (extremely necessary for making team a valuable team).
Hope you find this article worth !! Comment if you like it. Questions are always welcome !