Rakesh Jhunjhunwala the man needs no introduction; he is often known as Warrent Buffet of India. He started his journey using borrowed money as trader and then went on to become badshah of Dalal street. Let’s visit Rakesh Jhunjhunwala biography and understand incredible success story of a common man.
Rakesh Jhunjhunwala Biography : his success story
Let’s get to know Rakesh Jhunjhunwala background, early life, trading experience, investing philosophy and many little known facts in this post about Rakesh Jhunjhunwala biography.
A quick introduction:
Rakesh Jhunjhunwala, age 57 is an Indian Investor and Trader. He is a Chartered Accountant and manages his own portfolio as a partner in his asset management firm, Rare Enterprises. He is the richest stock investor in India with a net worth of 3.4 Billion dollar(21.6 Thousands Crores rupees). Rakesh Jhunjhunwala is often referred as Warren Buffet of India.
Surprise fact is he started his stock market journey without having any capital. He borrowed few lakhs to start his trading. Initially to gain some capital he started trading and afterwards started investing for long term.
Rakesh Jhunjhunwala also adopted fundamental of Warren Buffet. He believes in simple living. In his interview with Forbes he shared that “You should value about what you are spending – Today, I can shop for Rs 50 crore of stocks, but if I have to buy Rs 5 lakh watch, I will think 50 times”.
Family background and early life:
Rakesh Jhunjhunwala was born on 5th July 1960. His father was an Income tax officer and was interested in stocks. Often he used to discuss about stock market with his friends. Rakesh was a inquisitive child, he would listen and ask a lot of questions. Once he asked his father why the price fluctuate. His father told him to check the news, it makes the price to fluctuates. He got fascinated by stocks and found it interesting from a very young age of 12-13 years.
RJ graduated from Sydenham College and thereafter enrolled at the Institute of Chartered Accountants of India. He was always a reasonably good student so he took up chartered accountancy and completed his CA in January 1985.
Then he told his father he wants to go to the stock market. His father reacted by telling him not to ask him or any of his friends for money. He, however, told Rakesh that he could live in the house in Mumbai with his family together. If he did not do well in the market he could always earn his livelihood as chartered accountant and can look after himself. So he told Rakesh to be fearless and morally encouraged him.
“This sense of security really drove me in life” Rakesh Jhunjhunwala proudly says.
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Stock Trading: How it all started:
He became a CA by profession in 1985 but had only 500 rupees in his account mainly out of his savings and some contribution from his father.
He was then introduced to a client; the lady had a lot of money. During their discussion, Rakesh told her “why you want to go for bank deposit which will only give 10% interest rate (during the year 1985), give me money and I will give you 18% interest rate”.
Since RJ was immature in stock market and suggesting risky and bold move, lady asked for security. But Rakesh didn’t have any money with him that time.
So he asked her to give a cheque of 1 lakh and he would give her a security after 15 days. Again he asked her to give him another cheque of 1.5 Lakh and agian he will give security after 15 days. After some persuasion the lady agreed.
Later he got another 5 Lakhs from a christian gentleman. Rakesh gave the gentleman a security but he returned it saying “Rakesh I trust you”.
With that 7.5 Lakhs of money he started trading.
He made his first big profit of Rs 5 Lakhs 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. He did trading in other stocks and earned about 8-10 Lakhs during 1985-86.
Then it’s a bear market: a boon in disguise:
After 1986, the market went into a big depression for two to three years and he had no money in his pocket.
He says proudly “There is great advantage in living in a joint family”. Rakesh didn’t really worry about a roof on his head and food on the table because his father was looking after his house and kitchen.
He invested heavily in Tata Power stock and it went to became about 1100-1200.
Between 1986 and 1989 he earned about Rs 20-25 lakhs.
Credit: You tube.
Here is an amazing interview of Rakesh Jhunjhunwala with Ramesh Damini.
Rakesh Jhunjhunwala Biography part 1.
Rakesh Jhunjhunwala Biography part 2.
Sesa Goa share: A break through bet:
After doing some trading in other companies he made a good profit. Now he was worth Rs 50-55 lakhs.
During that time he had a friend Mr Bajaj who was very bullish on Sesa Goa.
He decided to buy 4 lakh shares of Sesa Goa in forward trading, worth Rs 1 crore. He sold about 2-2.5 lakh shares at Rs 60-65 and another 1 lakh at Rs 150-175. The prices then went up to Rs 2200 and sold some shares. He also did some other trading too.
Now he had net worth of about Rs 2 – 2.5 crore.
King stocks in King’s portfolio:
Jhunjhunwala bought 6 crore shares of Titan in 2002-03 at an average price of around Rs 3. The stock is currently trading at 900 Rs level.
In 2006 he bought Lupin around 150 Rs which went to trade at Rs 2000 and now it is trading at 900 Rs range.
He bought Crisil around 200-300 levels which is now at 1900.
RJ still holds all these stocks today.
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Current influence of Badshaha of Dalal Street:
Jhunjhunwala is the chairman of Aptech Limited and Hungama Digital Media Entertainment Pvt. Ltd. and sits on the board of directors of various Indian companies.
RJ’s stocks fell by up to 30% in December 2011. He recovered his losses in February 2012. These ups and downs forced him to reduce his vulnerability by trimming his portfolio to one-third. His attempts to divest his Aptech stake had no takers. In May 2012 he increased his stake in Aptech by 2.24% now holds 12.7%
Jhunjhunwala invested Rs 26 Crores in A2Z Maintenance increasing his stake in the company by 3.57%, taking his stake in the company to 23.2 per cent.
Other side of Rakesh Jhunjhunwala:
He enjoys reading, enjoys watching food shows.
His favorite food is street food. he loves the Chinese food on the streets, also he loves the dosa.
“I do not get the taste in the paav bhaji anywhere so I tell my wife and then we make it at home”.
He basically like relaxing, does not do much physical activity.
He is also credited as a producer of bollywood movie Ki & Ka, Samitabh and English Vinglish.
Philanthropist Rakesh Jhunjhunwala:
In 2011, legendary investor Rakesh Jhunjhunwala pledged to donate to donate Rs 5,000 crore or 25 percent (whichever was lower) of his portfolio on July 5, 2020 – the day he turns 60.
Q. When and why did you first start giving?
“My giving was driven by two things: the first was the fact that my father always said that more important than how much I earned was how much I gave away.
Secondly, once I crossed age 50, I started wondering what all this wealth meant to me. Around this time, I was reading about John Rockefeller’s life and it was a combination of these things— my father’s influence, my own perception of the role of wealth, and my feeling that the giver of all this wealth is god, not me—that’s why I started giving.”
Q. How do you see yourself, Rakesh Jhunjhunwala, the family man, the investor or the businessman?
“See, the only truth of life is death and that when I am going to die I would say boss, just leave me for three hours, I would buy one stock, I will do some trading, I will spend some time with my children, my wife, I will have two drinks and then you can burn me. So it has to be combination of everything.” RJ said.
His daily routine:
He wakes up at 7.30 and does some exercise. At 9 am he watches TV get update about the market opening. At 10 he gets ready for work after having breakfast. Around 11.30 he reaches his office talks to his people, checks emails, reads articles and watch the trading screen. 4 PM onwards he meets the people at the end of the trading hours. At 7.30 he leaves for home, after reaching home he plays with his children and looks into his daughter’s homework. At 9.30 he takes dinner and after 10 goes to bed.
His Investment Philosophy:
Rakesh Jhunjhunwala believes in the power of mistakes. He says it’s the mistakes that made him learn and become a better investor. he says. “If you don’t believe the markets are supreme, you will never admit that it was your mistake. If you don’t admit that it is your mistake, you will never learn. To succeed in the stock market, not only is the ability to learn from one’s mistakes vital, he says, but also to blame only oneself for it.
Trend is your friend:
Rakesh Jhunjhunwala stock picking strategy is influenced by George Soros trading strategies and Marc Faber’s analysis of economic history. He endorses the rule, “the trend is your friend.”
Buy right and hold tight:
His investment philosophy says “Buy right and hold tight”.
Investors should be like chameleons:
He admits to having been a bear in the Harshad Mehta days and believes that investors should be like chameleons. RJ has said that the markets are temples of capitalism and believes that they are the ultimate arbiters.
Management and business model:
He claims to base his trades, in part, on the business model of a company, its growth potential, and its potential for longevity. He factors in heavily the competitive ability, scalability and management quality of the enterprise.
“Success is the good fortune that comes from aspiration, desperation, perspiration and inspiration.”
Tips by Rakesh Jhunjhunwala:
Golden rule in the stock market is there is no rule.
Don’t Look for Profits; Look For Sources Of Profits.
Forget ‘Large Cap, Small Cap’ Nonsense – Look For Scalability of Operations.
Give it Time, Be Patient.
Don’t get carried away by short-term aberrations.
Invest in a business that you can understand.
Don’t Look For Multibaggers.
Don’t worry about the macro stuff like fiscal deficit, inflation etc which are unknowable. Focus on what is knowable.
Don’t Try To Time The Market.
If it’s cheap, buy it- Don’t pass up something cheap today in the hope that it will get cheaper tomorrow.
Don’t buy stocks that have a fixed return.
Concentrate, concentrate & concentrate!!
Market is like women, you need understand and adjust with them.
Why we fail as investors:
(i) Invest in stocks the way you invest in property or gold: Long term.
(ii) Our expectation from stocks is unrealistic: Make it realistic and be practical.
(iii) Understand the difference between “investment” and “speculation”: we imagine ourselves to be ‘investors’ when we are at heart ‘punters’ looking for quick-fire gains.
He explained that we buy a stock without adequate research or conviction in the hope that a short-term event will send it spurting up. When that doesn’t happen, we lug the stock around and pretend it is an ‘investment’.
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When to sell a stock:
It is not an easy question to answer. But here is what Mr Jhunjhunwala has to say.
Sell when better opportunities are available.
When EPS is peaked and PE is unsustainable, sell.
Sell when you see madness in market to buy.
Here comes the end part of the incredible investor Rakesh Jhunjhunwala biography.
Now Rakesh Jhunjhunwala’s major source of income is investing but he still actively trades in stock market. He likes to enjoy the thrill of being right sometimes going against the crowd.
To disbelief of many he has a gambling instinct as described by his friend Vijay Kedia.
So to say Rakesh Jhunjhunwala is a rare personality who is best in investing, trading and in gambling.
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