In the investment world, some individuals create a magical aura around them, leaving others in awe of their stock-picking skills. Clearly, the late ace Indian investor Rakesh Jhunjhunwala belonged to that rare breed. But if you are a novice investor, you might be wondering who is Rakesh Jhunjhunwala. Successful investors are also known for their fabulous riches. Rakesh Jhunjhunwala’s net worth was $5.8 billion, a testament to his uncanny ability to spot investment opportunities.
No two minds can be alike. Yet, novice and wannabe investors would be curious to know how did Rakesh Jhunjhunwala become a billionaire. This blog post attempts to deconstruct the man, discuss his formative influences, and track his investment journey to become a billionaire.
Early life and education
Rakesh Jhunjhunwala was born on 5th July 1960 in Mumbai in a middle-class family. His father was an income-tax officer. Thus, Jhunjhunwala got to learn so much about financial matters from a very young age.
Rakesh completed his basic education in Mumbai, graduating with a degree in commerce. He developed a keen interest in the stock market during his college years, spending countless hours analyzing different companies.
Entering the stock market
Rakesh Jhunjhunwala tried his hand at investing at a very young age. In the early 1980s, Jhunjhunwala entered the stock market, making small investments in a few stocks. However, within a few months, he developed a deep interest in financial matters and stock market investments. He began observing market trends, analyzing the performance of different companies listed in stock exchanges.
Between 1986-89, Jhunjhunwala made significant capital investments in blue chip companies including Tata Power Ltd. The stock price later rose to Rs. 1,200 apiece, leading his investment to double. The rise in price helped Jhunjhunwala turn his Rs. 2 million assets surge to Rs. 5.5 million with a small investment. Rakesh’s early investments in Metro Brands and Star Health and Allied Insurance also paid off when the firms went public in 2021. Of course, the crown jewel in his portfolio was his investment in watch and jewelry maker Titan (Tata group), made at Rs. 40 in 2003. In the course of the next 20 years or so, the stock rose a whopping 83,250%.
Another early investment by Jhunjhunwala was Vedanta Ltd., formerly known as Sesa Goa, buying about 40,000 shares. At that time, the company stocks were battered due to a flat fall in iron ore price. Jhunjhunwala also invested in Praj Industries Ltd, an ethanol plant sector stock, making handsome gains.
Latest stock portfolio of Rakesh Jhunjhunwala (Until March 2022)
Are you still wondering how did Rakesh Jhunjhunwala become a billionaire? We think a quick glance at his stock market portfolio would be of help. Below, we will discuss his stock market investment portfolio as of 2022. Jhunjhunwala passed away on August 14, 2022 at the age of 62.
Source: Groww
*Stock price as of July 31, 2024
Learnings from Rakesh Jhunjhunwala
According to Jhunjhunwala, the secret to success lies in making mistakes and learning from those mistakes.
Jhunjhunwala was a strong believer in India’s growth story. He also believed that the bullish trend in the Indian stock market is going to persist for a long time. According to him, if $1 trillion is saved by Indians every year and if a small portion of that savings (say $100 billion) flows into the equity market, it will be hugely beneficial for the market. His other advice to investors is to judge a stock by its long-term performance rather than its one negative quarter or a one-day correction.
Key learnings
Rakesh Jhunjhunwala is considered the Indian stock market’s “Big Bull” for his successful trading strategy. Indian investors can learn a thing or two from his trading philosophy. If you are also curious to learn how did Rakesh Jhunjhunwala become a billionaire, we have listed below some key learnings from Jhunjhunwala’s trading approach:
Long-term perspective
One of the primary lessons from Jhunjhunwala’s trading philosophy is to think long term. He always emphasized the need to look at the long-term potential of a stock rather than being influenced by short-term volatility and fluctuations in the stock market.
Analysis and research
Another important aspect to learn from Jhunjhunwala’s trading strategy is extensive research and analysis. He was known for conducting thorough research and analysis about a company before buying the stock. Jhunjhunwala could also spot undervalued companies with solid fundamentals for long-term growth.
Patience
Patience is a key factor in Jhunjhunwala’s successful trading approach. Easily losing patience can be a downer for traders. Keep an eye on the long-term potential of a stock and avoid impulsive and emotional decision-making based on short-term movements in the stock market.
Believe in yourself
Confidence is crucial for traders. According to Rakesh Jhunjhunwala, it is crucial for traders to do their homework (research) and have faith in the findings of their own analysis and research. He also advises them not to fall prey to herd mentality.
Diversification
Portfolio diversification is another factor a trader can learn from Jhunjhunwala. He believes that diversifying one’s portfolio by allocating stocks across various industries and companies reduces risk. It also increases risk tolerance by spreading it across different stocks.
Be ready for volatility
Stock market is inherently volatile and every trader should be able to face market volatility. You can build strong risk management systems and deal with market corrections. A trader should not get emotional or panicky when facing market or price volatility.
Conclusion
Clearly, Rakesh Jhunjhunwala left his indelible legacy in the Indian investment world. We have chronicled his rise from being a novice trader buying stocks randomly to a storied stock market investor who built a portfolio of high-conviction stocks. Hope we have answered the question who is Rakesh Jhunjhunwala and how did Rakesh Jhunjhunwala become a billionaire.
