Rags to riches a success story of Rakesh Jhunjhunwala is truly inspirational. Big Bull Rakesh Jhunjhunwala Indian Warren buffet and king of Dalal Street has made a fortune of $6 Billion from small investment capital of Rs.5000. (5k to $6 Billion) Rakesh Jhunjhunwala is a common man with uncommon intelligence.
Making money from the stock market is like child’s play for Jhunjhunwala. Rakesh Jhunjhunwala is a qualified charted accountant and stock market Investor. He manages his stock portfolio as a partner in the asset management firm, Rare Enterprise.
You must be wondering how Rakesh Jhunjhunwala has done it. Well here is a success story of investment guru big bull, Rakesh Jhunjhunwala.
Rakesh Jhunjhunwala Story from 5K to $6 Billion
Rakesh Jhunjhunwala was born in Mumbai on 5th July 1960. He was born in a middle-class family. His father was an Income tax officer and stock market investor.
From childhood days Rakesh Jhunjhunwala had thought to become a pilot and later stage he wanted to become a journalist. However, from the beginning, he was introduced to the world of the stock market by his father. He used to listen to a lot of stock market jargon from his father. His intuition about learning stock market was increasing day by day. Once he asked his father, what is the reason for fluctuations in the stock price? He got a simple answer that price fluctuation is linked to news flow. This was his first learning about the stock market. He started reading a stock market column in the newspaper with fascination. During the initial stage of his life, he decided to make a career in the stock market.
Before entering the stock market, he completed his graduation in commerce from Sydenham College. After commerce graduation, he enrolled himself in ICA and became a Chartered accountant in 1984. After completing CA, he expressed his wish to become a stock market investor to his father. This type of move was unorthodox and unacceptable to most people, but his father was democratic, he reacted differently by telling him that he can start a career in the stock market, however, he would not support him financially in this endeavor. He further advises him never to take any shortcuts and never forget that “Your word is your bonding”.
Rakesh Jhunjhunwala started stock market investment in the year 1985. He started his career with a small capital of 5000 Rs/- At that time BSE Sensex was at level 150. He was knowing that such small capital will not help him in the stock market. To get capital, Rakesh Junjhunwala approached his brother and was able to raise capital of 1.5 million. With this capital, in a short span of 1 year, he earned nearly 1 million and invested this profit in 5,000 shares of Tata Power.
He realized that trading is the only option for him to earn big money from the stock market. He started trading in stocks. He purchased Sesa Goa and Telco Stock. These stocks had generated a good return for him. He was doing trading extensively and trading gave him all the money required to invest. His every small move was making him wealthy.
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Rakesh Jhunjhunwala on Trading
The first and last principle of trading as per Rakesh Jhunjhunwala is “Trading is price based trend and not opinion-based”.
This means that if you buy the stock at Rs 100, and then the price falls to Rs 95 you can take your loss and square off your trade. This is one common quality of successful traders.
In trading you should remember Churchill’s words –
‘You have to lose many a battle to win the War’.
Along with that, one should also remember a word of George Soros –
“It’s not important whether you are right or wrong, it is more important how much you lose when you are wrong and how much money you make when you are right”.
This requires you to square unfavorable trade, and pyramid your profitable ones. In trading, everything else is illusion and hope, the sole reality being a price.
Good Trader qualities as per Rakesh Jhunjhunwala
- Knowing what and how much to risk
- Knowing when and how to take a loss
- Independence of thought
- A lot of discipline
- Control over emotion
Ten Commandments for Trading
- Be realistic. Make trading price dependent, no opinion dependent
- Trading is a full-time profession, not a part-time job. It cannot be half-hearted
- Know the rules and verify them for they may not do what you assume
- Never aspire to be the market’s master. It’s best to be its slave.
- Leverage your skills, not your capital
- Have a broad idea of direction. Remember, the trend is your friend
- Don’t be afraid to make a mistake. Only ensure you make one that you can afford so that you may love to make another
- Play Seen’, not Blind’ for the market offers many opportunities even after the cards are open
- Know what and how much to risk. Assess risk
- Good judgment comes from experience. Experience comes from bad judgment. Trading can only be learned, it can’t be taught
Rakesh Jhunjhunwala on Investments
As per Rakesh Jhunjhunwala to be successful in investing, many elements have to fall into place. But four things are critical.
- Attractive, addressable, external opportunity
- Sustainable competitive advantage
- Scalability and operating leverage
- Management should be of high quality and integrity.
Ten Commandments for Investment
- Be an optimist: the necessary quality for investing success
- Expect a realistic return. Balance fear and greed
- Invest in broad parameters and the larger picture. Make it an act of wisdom, not intelligence
- Caveat emptor. Never forget this four-letter word: R-l-S-K
- Be disciplined. Have a game plan
- Being flexible in investing is always in the realm of possibilities
- Contrarian investing: not a rule, not ruled out
- It’s important what you buy, it’s more important at what price you buy
- Have conviction, be patient. Your patience may be tested but your conviction will be rewarded
- Exit an independent decision, not driven by profit or loss
I hope the inspiritional success story of Rakesh Jhunjhunwala will help to get succeeded in the stock market.
Do share your views on the success story of Rakesh Jhunjhunwala!