Rakesh Jhunjhunwala’s key mantras for smart investing

Invest like Jhunjhunwala: Rakesh Jhunjhunwala, often hailed as India's Warren Buffett, transformed the investment scene in India through his remarkable journey from trader to influential investor. With a portfolio valued at nearly Rs 32,000 crore, he popularised equity investment and inspired countless retail investors to embrace the stock market. Here are some of his powerful investment mantras that continue to guide investors today.

Learning the markets

“Markets can't be taught; they must be learnt. Curiosity fuels the quest for knowledge. For instance, Titan delivered a 100% return over three years. If it continues to yield 15-18% in the following years, why sell? Finding another stock that offers similar returns is a challenge.”

Investing wisely

“Investing in mutual funds requires expertise. Unless you’re a full-time investor, seeking professional guidance is essential, and mutual funds provide that at a low cost.”

Setting realistic expectations

“Don’t expect returns exceeding 12-18% from equity markets. This isn’t a gambling venue. Through a systematic investment plan (SIP), I am confident of solid returns over 8, 10, or even 15 years. Avoid overestimating your abilities; SIPs should be integral to everyone’s savings strategy.”

Embracing mistakes

"Don’t fear making mistakes; just ensure they are manageable. Being overly cautious can paralyse decision-making. Take ownership of your choices, learn, and move forward."

Avoiding tips

“Tips are harmful. In this ever-changing market, it’s crucial to regularly assess your investments.”

Leveraging smartly

“Leverage isn’t inherently bad, provided it's used wisely. I initially lacked capital and leveraged to grow my wealth. Use leverage judiciously, free from emotions. If situations turn unfavourable, act to minimise your exposure rather than hoping for a turnaround.”

Understanding trading

“Trading is fast-paced and should be approached short-term. Maintain a clear direction, understand your risks, and know when to cut losses. In investing, patience and conviction will pay off.”

Evaluating business models

“We often project two years of profits into the next 20 without evaluating the underlying business models. It’s crucial to consider whether a mid-cap company possesses a sustainable model and ongoing product demand.”

Respecting market dynamics

“Markets are inherently correct. Believing you’re always right can lead you astray.”

Passion for investing

"The stock market is akin to a love market. Passion is essential, along with a solid grasp of financial statements. Prioritise wisdom over mere intelligence. The future is unpredictable; your investment decisions today will shape your outcomes tomorrow."