Rakesh Jhunjhunwala’s Trading Mantras And Advice To Young Traders
Rakesh Jhunjhunwala doesn’t subscribe to a particular ‘style’ of investment, rather he likes to keeps it simple when investing his money.
Jhunjhunwala prefers to rely on what he has learnt from his mentor Radhakishan Damani—also a well known investor and founder of D-Mart supermarket chain—and what the markets have taught him. “I have nothing formalised. My risk management is what I have learnt and I do it personally,” he said in a conversation with BloombergQuint’s Niraj Shah at CMT Association’s 2020 India Virtual Summit. "My basic principle is that no creditor should ever ring me up and ask me for his money."
The market veteran is a partner at Rare Enterprises Ltd., a stock trading firm he founded, that mostly manages investments for his wife, Rekha, and himself. Together, their portfolios are valued at close to Rs 12,000 crore and comprise over 28 different stocks, including Titan Co., Lupin Ltd. and Crisil Ltd., according to data on Bloomberg.
At 8:45 in the morning, I don’t know what I’ll do at 9:30. Unless I have to book a loss, I don’t enter the markets with any pre-loaded views.Rakesh Jhunjhunwala, Partner, Rare Enterprises
Jhunjhunwala—one of the nation’s richest investors, second only to Damani on the Forbes 2020 list—bets only on India but monitors markets and events that affect Indian equities. "I’ve got a Bloomberg screen which has 15-20 important commodities and DXY (dollar index). That’s all."
Will 'Never Use' Algorithms
The billionaire investor doesn’t believe in using algorithms or automation either. That can only study the past and that too, without perspective, leading to a situation where "everyone is acting in unison", he said. "So I don't believe in them, I don't use them and I'll never use them."
“Investing and trading is an art, not a science and it will never go to becoming a science,” Jhunjhunwala said.
Three Trading Lessons
Jhunjhunwala has some advice for young investors and traders.
First, ‘don’t trade’.
99.9% of those who trade lose their money in the markets, Jhunjhunwala said.
Instead, he recommends investors entrust their money to professional managers.
Second, for those determined to trade, learn to take a loss.
The first characteristic of a successful trader is respecting the market, he said. “The first loss is the best loss.”
If you consider the market irrational, you will consider yourself supreme and superior and you’ll never learn from your mistakes.Rakesh Jhunjhunwala, Partner, Rare Enterprises
Third, is to not obsess over details.
“Anyone who tries to be too precise about markets, I don’t consider them to be important,” he said.
Watch the full conversation here: