Insightful lessons from the life of Mr. Rakesh Jhunjhunwala !

India has several talented world-class personalities who are making significant contributions around the world. However, there are very few who choose to stay with their motherland and make her proud. One of them was Mr. Rakesh Jhunjhunwala, who is celebrated as an ace Indian investor.

The initial amount that he placed in the stock market was barely $62.5. Jhunjhunwala owns assets that are valued at $5.5 billion as on June 2022.

1. Invest in your health

Rakesh Jhunjhunwala claims without fail that he does not live with any regrets. He merely wishes that he had better personal habits and worked out more frequently. Make sure you don’t forget to put money into your health. There are some things that money cannot buy, and one of those things is your physical well-being. It doesn’t matter how much money you have if you’re not in good enough shape to appreciate it if you don’t take care of your health.

It is the most important advice and regret which was shared by Rakesh Jhunjhunwala.

2. Approach market with an open mind

He always advocated to respect the markets and engage with an open mind. Many a time he had mentioned that’ Bhav bhagwan hai‘ , meaning ‘Price is God‘ in share markets.

He always believed and also implemented his theory of respecting the price. He did know what is the future will bring, but he controlled what he could i.e. his exits. He also mentioned that decisions that are made in a hurry almost usually end up costing a lot of money. Take your time and don’t rush into investing in any stock before you do.

3. Take calculated risk

The word “Risk” has four letters in it. It is a form of the adjective. It is interpreted in a variety of ways by those who read it. But keep in mind that we can all try to foresee risk, debt, markets, and the weather, but none of us can actually know what will happen. What it actually is can only be revealed by the future. But there was one thing he was certain of: the element of danger that defines life. You have nothing if you don’t take any risks at all.

He took risks in a very calculated manner. When Covid first began, he quickly unloaded shares worth a total of Rs 400 crore, which he did in just two days. He wanted that amount to be in the bank.

4. Don’t borrow to invest

It’s possible that irrational behavior will persist in markets longer than the investor’s ability maintain financial stability.

He would advice to be aware, that leverage has neither a mother nor a father, nor any friends. The use of leverage is cruel. When you put yourself in harm’s way, you need to be aware of the consequences. In the event that things go against you, you have to be able to take the setback in stride without suffering any emotional toll or suffering any significant financial loss.

5. The virtue of patience

Rakesh Jhunjhunwala is known for having an incredible amount of patience with the stock market, which is one of his many admirable attributes. He had conviction in his stocks and does not care if they are going through a temporary loss phase because he buys the firm itself rather than the stock in it.

He did not sell even a single share of stock so long as the core aspects of the company continue to be sound. Because he had experienced so many cycles of the stock market, he is not frightened by the periodic corrections that the market experiences. He was confident that all of his issues will be resolved when the next bull market begins. Consider, for instance, his investment in the company Titan.

At one point, the shares of Titan dropped by thirty percent from their highest point. What would happen if one of the equities in our portfolio dropped by thirty percent? Wouldn’t we freak out and make some rash choices? On the other hand, he never parted with even a single share of Titan because he had complete faith in the company’s future, and he was rewarded handsomely for his ability to exercise patience.

Jhunjhunwala’s primary source of income and wealth at the present time comes from Titan. Should he have decided on something on the spur of the moment, he might have overlooked it. I believe that we all appreciate the idea of patience; nevertheless, the moment that we see any losses in our portfolio, we start to worry and make decisions that aren’t in our best interests. This is the key distinction between a typical investor and a successful investor like Jhunjhunwala.

Successful investors have established a very high level of tolerance to the changes in the stock market, and they are not readily frightened out of their investments because of these fluctuations. He was one of these successful investors. If you ever find yourself in a situation where you are panicking about your assets, remind yourself to stay sensible and patient rather than acting rashly and impatiently.

6. No emotional attachment with a stock

“Emotional investment is a sure way to make losses in the stock market”. He advised everyone to avoid developing an emotional attachment to any stock and never did so himself. He invested in equities with the intention of selling them. After he discovered that there is a requirement to keep any stock for the long term, he did so.

He would advice to “Prepare for losses. Losses are a part and parcel of a stock market investor’s life.”

7. Wisdom and wealth are not related

Considering a bull market as your own genius is a big mistake. One should be able to recognize mistakes and move away without delay.

When it comes to investing, one of the most widespread misconceptions is that successful investors are the best stock pickers and that they are always right. However, if you examine Jhunjhunwala’s track record, you will see that he has made many mistakes in the past. Examples of his failures include Mandhana retail ventures, Dish TV, Geojit financial services etc. However, in spite of these errors, the fortune is increasing. He would advice that “Never run for companies that are in limelight.”

Do you know the reason why? This is where he reveals his secret. When he is wrong, he is, of course, taking all of these losses, but when he is right, he makes so much money from one stock that all of his losses on lost investments are trivial in comparison. Take Titan as an example; he purchased it when it was trading for five rupees, but now it is worth more than one thousand.

Therefore, the profit he has made from just one share of Titan is greater than the total sum of the money he has lost from dish TV, DHFL, Mandhana Retail, and Geojit Financial Services combined. That is the strength that comes from stumbling onto the ideal opportunity. Therefore, rather than preoccupying ourselves with the possibility that we are mistaken, we ought to concentrate on locating the next major opportunity that carries the possibility of producing enormous amounts of wealth.

8. Wrapping up

Every investor in India looks up to Mr. Rakesh Jhunjhunwala. He always believed in living life to the full. He strongly believed in the India story which can be seen in the numerous interviews he gave.

The void of his untimely demise on 14th August, 2022 can never be fulfilled. He knew that he had less time which led him to execute important projects of building a home and Akasha airline launch in a short time.

He dismissed worries on the ongoing Covid-19 outbreak in an interview to Republic TV and stated that people need to learn to learn to live with it. “Once treatment is available, it is just like any other form of the flu. It is not cancer; rather, it is the flu. Even though people were so depressed about the epidemic, the market is moving up, but the ramifications are not as bad,” he had said.

“Just like any other influenza, we will get used to it and learn to live with it. Every day, we gain a deeper understanding of how to better care for it,” he continued.