Rakesh Jhunjhunwala says 'Markets are like Women - Always Volatile"
Words of wisdom from Rakesh JhunjhunwalaOne of India's savviest stock market players, Rakesh Jhunjhunwala has been called the 'pin-up boy of the current bull run.'It's an epithet that sits lightly on his shoulders. A chartered accountant with a penchant for dabbling in stocks with an uncanny eye for success, Jhunjhunwala started as a trader and investor in 1983. He now runs his Rare Enterprises company from offices in Mumbai's Nariman Point business area. What earned Jhunjhunwala fame is his skill to pick under-valued stocks, thus earning him the sobriquet: India's Warren Buffett.Talking about his company RARE (derived from the first two letters of his name and that of his wife Rekha) Enterprises, Jhunjhunwala says, "My company has only one client -- my wife -- so that I don't need to handle others' money."'Enter the market when no one else does'Jhunjhunwala takes the cue from Warren Buffett when he says: "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."Don't follow stock picks by big investors Remember: the market is always right You can never be taught about market, you have to learn it You must balance fear and greedJhunjhunwala says he is 'well invested' in key growth areas like banking, retailing and infrastructure, all of which are based on India's domestic performance.His private equity interests offer more detail -- education (private schools in Mumbai), hospitals and health care, a security company, pharmaceuticals, and dredging.'Markets are like women -- always volatile'"Markets are like women -- always commanding, mysterious, unpredictable and volatile," 'Big Bull' Rakesh Jhunjhunwala had told a gathering in Mumbai a few months back.For Jhunjhunwala, trading by the hunches is the best thing to do. "If in doubt, listen to your heart," is what he tells young investors. Given below are some investment gems from him:Be optimistic Be opportunistic Study the market thoroughly Maximise profits and minimise losses Invest in a business not a company Have an independent opinion, always Be happy with your gains but take losses in your stride Be prepared for risks Despite sharp corrections, early this year Jhunjhunwala predicted that the Indian markets will reach its peak by 2010'Markets plunging? Don't sell in panic'Jhunjhunwala states that there is nothing to fear despite a sharp plunge in the Sensex this year. He assures investors thus:Nothing has changed as the Indian market is 'deep-rooted' Corrections, however sharp, are indispensable Panic selling during a sharp fall is the worst thing to do Stay invested and calm when the markets nosedive The country is poised to soon achieve a double-digit economic growth along with an impressive corporate profit growth This is bound to drive the bourses It does not take rocket science to understand that India's economic growth will be in double digitsTips for beginnersAnd for beginners in the stock market, this is what he has to say:Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it Do something you loveThe means are as important as the endAspire, but never envyBe paranoid of success -- never take it for granted. Realise success can be temporary and transientBuild a fighting spirit -- take the bad with the goodWhen you see a horizon, it seems so distant. When you reach that horizon, you will realize how many more horizons are within reachJhunjhunwala said enormous wealth was created over the last five years because opportunities in India have grown manifold.Admitting that gains were going to be moderate in future unlike the manifold rise over the last few years, he advised investors to be realistic in their expectations.
Thursday, March 6, 2008
Article for Investors - Capital Markts
Folks,'Investing' is a Scientific Art and Guru Warren Buffet is a living example of the same. Many invest in Capital Markets but only few become legends as we have Rakesh Jhunjhunwala in our domestic backyard.I thought of sharing an article on legendary investor which is inspiration for many & it may inspire you too in your life ahead. Enjoy Reading.Buffett's philosophy on business investing is a modification of the value investing approach of his mentor Benjamin Graham. Graham bought companies because they were cheap compared to their intrinsic value. He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in. In addition he believed that the business has to have solid economics behind it. Buffett's investment style is also heavily influenced by Phil Fisher.The following are some questions to determine what business to buy, based on the book Buffettology by Mary Buffett:Is the company in an industry with good economics, i.e., not an industry competing on price. Does the company have a consumer monopoly or brand name that commands loyalty? Can any company with an abundance of resources compete successfully with the company?Are the Owner Earnings on an upward trend with good and consistent margins?Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt even in years when earnings are lower than average?Does the company have high and consistent Returns on Invested Capital?Does the company retain earnings for growth?The business should not have high maintenance cost of operations, high capital expenditure or investment cash outflow. This is not the same as investing to expand capacity.Does the company reinvest earnings in good business opportunities? Does management have a good track record of profiting from these investments?Is the company free to adjust prices for inflation?Buffett also concentrates when to buy. He does not want to invest in businesses with indiscernible value. He will wait for market corrections or downturns to buy solid businesses at reasonable prices, since stock market downturns present buying opportunities.He is known for being conservative when speculation is rampant in the market and being aggressive when others are fearing for their capital. This contrarian strategy is what led Buffett's company through the Internet boom and bust without significant damage, although critics have also noted that it may have led Berkshire to miss out on potential opportunities during the same period.He also asks at what price is the business a bargain, and his answer typically is when it provides a higher rate of compounded return relative to other available investment opportunities.Warren Buffett's letters to shareholders are a valuable source in understanding his investment style and outlook.
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