Many people participate in stock market investing and many people make money, but not all of them are well-known, and not everyone can become as notable as Rakesh Jhunjhunwala. Branded the Warren Buffet of India he is undoubtedly the inspiration for many people who invest in the stock market. This is the tale of the legendary Rakesh Jhunjhunwala, from encouraging the middle class to take a chance, to give to charity, and from starting out with just a few thousand rupees to nearly 20,000 crores.
The Beginning
Born in 1960, Rakesh Jhunjhunwala was just a little boy in a middle-class family. His father was an Income-tax Officer and his mother was a housemaker. He got interested in the stock market early in his life when he would hear his father who invested in the stock market, discuss the prices in the stock market with his friends. Little Rakesh would often ask his father questions, and his father would answer them all in great detail.
When he told his father that he wanted to begin investing in the stock market, his father advised him to first pursue an education, gain a solid understanding of the subject, and only then should he begin.
Mr Jhunjhunwala then did his graduation from Sydenham College and then pursued Chartered Accountancy which he completed in 1985. When he was finally ready to start to invest, his father gave him just one piece of advice, to never borrow from anyone including his own father.
His father was a little hesitant at first though, but he knew, if nothing worked out, he could go back to his CA practice.
The Initial Years
Mr Jhunjhunwala moved to Mumbai with his brother, who was also a Chartered Accountant. Since he did not have the option to borrow money from anyone in his family or friends, he was figuring out how to start his journey, when he got lucky and met a lady who willingly lend him Rs. 2.5 Lakh and another man who lent Rs. 5 lacks. He now had a total of Rs. 7.5 Lakh, which would mean almost Rs. 40-45 Lakh today.
He started as a trader. He bought Tata Tea stocks for Rs. 43 per share and sold them at Rs. 143 within a period of 3 months. This was his first big profit.
After struggling for a few years, he saw a great opportunity at Sesa Goa, which is now under the Vedanta Group. He saw that the stock was undervalued and could make up for its value in a few months’ time. He invested in shares worth Rs. 1 Crore when the shares were just Rs. 25 per share. He later sold these stocks at almost 4 times their value. He now had a net worth of Rs. 2 crores.
It takes more than just sound knowledge and instincts to succeed in trading; one also needs the guts to take calculated risks. One such instance occurred when the budget was scheduled to be presented by the VP Singh government and it was widely speculated that it would not be a very market-friendly budget. Mr. Jhunjhunwala was aware that VP Singh, who comes from a similar corporate background, might not propose such a budget in order to defy market expectations. And he made significant market investments after taking this into account. After the budget, he quickly began to make a lot of money, increasing his net worth from Rs. 2 crores to Rs. 50 crores.
The Shift To Investing
In 1992, Mr Jhunjhunwala started Rare Enterprises an Asset Management Firm, which is a combination of the initial letter for Rakesh Jhuhjhunwala and his wife Rekha. This was also the time when Mr Jhunjhunwala started to trade less and invest more. He made big profits in companies like Titan and Crisil.
He had always been a representative of the common man. And like any other investor, he made mistakes too. Losses were made, one of the companies he made losses with was DHFL.
The Man With A Big Heart
Mr. Jhunjhunwala was knowledgeable about more than just making money. He was aware that what he possessed was the dream of many. He used to donate a portion of his salary to cancer patients and the underprivileged. He also provided funding for Ashoka University.
The trader and investor from the outside was also a generous giver. Even though he was having health issues, in June 2021, he founded the R Jhunjhunwala Sankara Eye Hospital in honour of his father.
The Learnings He Gave Us
Rakesh Jhunjhunwala always said that his best learnings came from the mistakes he made when trading and investing. Not all the money invested gains value, and he made sure he understood his mistakes and never make them again.
Here are a few learnings he gave –
- Patience
He always insisted any investor or trader never make a decision in hurry or by just looking at the short-term rises in a stock.
- Diversification
In many of his interviews, he mentioned that diversifying his portfolio is the key to making sure the losses if any are settled.
- Be Aware Before Entry
He also said that one should never enter the market because everyone else is doing it. One should always be aware of the possibility of losses and should be mindful of any volatility in the market.
- Going Long-Term
Rakesh Jhunjhunwala mentioned that one should always look for companies that have the potential for the future and that are undervalued at the present. Such companies are best for long-term investments.
- Research
Before investing, researching by yourself and not going according to what others are doing or investing in is another piece of advice that the legend gave us.
Final Thoughts
On August 14, 2022, the big bull—the Warren Buffet of India—departed for the humble abode. He had a cardiac arrest when he was 62. He reportedly had a net worth of $5.8 billion, according to Forbes. He was a co-founder of Akasa Airlines, which had only started its operations a week before he passed away. The late investor, according to Prime Minister Narendra Modi, “leaves behind an indelible legacy to the financial world.”
This was the story of CA Rakesh Jhunjhunwala, who not only amassed a fortune for himself but also distributed it to those in need. The man who stands behind Dalal Street’s big bull was nurtured in a modest Rajasthani home.
