After customary messages of condolence and remembrance flooded the internet, the market was flooded with Jhunjhunwala quotes. These were fun to read and very educative too.
But then the Internet went a step further…
I am sure you have read or at least seen the article about Rakesh Jhunjhunwala’s portfolio and his fame and success. he was actually one of them India’s top investment gurus,
And that’s fine. But after reading these articles, I got the impression that we are missing the forest for the trees.
It seems that everyone is aware of the exact details of his investments… when he bought a certain stock, when he sold it, how much money he invested, etc.
These details are important but they pale in comparison to the bigger picture. Jhunjhunwala deservedly 460 billion when he died.
So the real question to ask is… How can I make money for myself like Rakesh Jhunjhunwala?,
Instead of worrying about buying specific stocks, it is more important that we understand wealth creation in the stock market.
- circle of competence
The first thing to understand here is that you need to follow your path in the market. No one ever got rich in a stock by copying someone else.
Warren Buffett calls this your ‘circle of potential’.
This means that you should only invest in businesses that you understand.
For example, Jhunjhunwala understood the gaming business. This is the reason why he invested in Nazra Tech.
But many people may not understand this business model… and that’s okay.
The key to long-term wealth creation is buying great quality businesses and maintaining them for years, even decades. Jhunjhunwala held Titan shares for 20 years.
You can do this only if you have a lot of faith in the business and management. And this is not possible if you are investing outside the scope of your capability.
- think long term
Trading can make you a lot of money if done properly. Jhunjhunwala himself used to do a lot of business. But most of his wealth lay in his long-term winners.
This is important when trying to build a Jhunjhunwala portfolio. You can trade whatever you want. You can make short term investments.
And they can give good profits.
But if you really want to be rich long term investment is the way to go.
Not everyone can do this. You need patience and conviction. But if you have chosen your stock correctly and bought the stock at the right price, then most of your work is done.
- management matters
‘Tata’s house is God’s blessing’,
The Tata Group is renowned for its high ethical standards in business. You can say that they have set the benchmark for other businesses in India.
Jhunjhunwala appreciated it. He made a lot of money in the Tata group stocks over the decades – Titan, Tata Motors, Tata Power, Indian Hotels, and more.
- Bet Big When the Right Opportunity Comes
When the global financial crisis hit, Tata Motors’ stock crashed. It seemed like a poor decision to purchase JLR.
Tata Steel’s investment in Corus was already low and investors felt a similar fate would befall Tata Motors.
The stock had crashed and was trading below book value at the end of 2008.
it was golden opportunity to buy shares To a large extent… and so did Jhunjhunwala.
The rest, as they say, is history.
- believe in india
One of the reasons why he was called the Warren Buffett of India was because he shared boundless optimism about his country.
Buffett is a permanent bull on America.
Jhunjhunwala was a permanent bull on India.
He was convinced that the next (and biggest) bull market was on the way. He was sure that India would do well despite the challenges. He is famous for saying that India’s economy will overtake China in 25 years.
Not many people believed or agreed with him. But in the last few years the number of such people has come down significantly.
10-15 years ago, it was common to find lots of people mocking his unbridled enthusiasm for India and the Indian stock market.
Now almost no one makes fun of this kind of attitude. India is poised to become a developed nation by 2047.
If we achieve this, our economy can actually overtake China by then. Just imagine how much wealth will be created in our market.
These are the real secrets behind Jhunjhunwala’s wealth.
People are focusing on his stock picks today… and that’s understandable.
But if you want to make a huge fortune for yourself in the stock market, then do an in-depth look at how Rakesh Jhunjhunwala got there. Finding the right stock is only part of the whole picture.
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from equitymaster.com
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