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Shree – Rakesh JhunJhunwala – India’s high profile Investor.
(Quick Intro: He is a Chartered Accountant by profession. He is a big icon of Indian Market, who turned a 5000 Rs into 2000 Cr)
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At every good & hard time, I used to reminisce his sayings. His words are not so popular, as they are very much limited to equity-market. But, it should well apply in any value based, professional business. I dont have any other solid reasons to justify him or his words, except in one sense, that he is very successful and has created a big story around him, since 1985.
I am curious to explain, expand & negotiate his golden sayings:
As a trader, react to Price. As an investor react to fundamentals.
It fits very well to all of us. Rakesh really wants to differentiate a Trader from an Investor in a big way. Trader is someone, who always has intention of just making money out of all the fortunes, ups & downs of market. Investor is some one who sees the value of the business deployed in a company, and invests in it.
People fear about market when it goes down; sooner they become excited when it flars up. Both attitude are bad, since such a mindset is 'Trader' mindset. It is all about gaining all the time, not about losing at all. Traders minds are short-term & mid-term. An Investor's mindset is towards long term.
I would interrupt this saying, Indian Markets are driven by sentiment at least about 99%. Either be a trader or an Investor, one should react very well to every event, every cycle, every consolidation, every correction, every pullback, every bull rally happening over time. That'll be a painfull but, most successfull strategy, one can ever experience.
Despite all round optimism and unprecendented gains, never forget the 4-letter word, associated with equities - RISK.
Its self explanatory. The best example would be 'DotCom boom'. When every body running with buy, buy, no one gotta time to see the four letter manta- RISK. Later, they paid for it.
Risk is not always about the price or volume decline. It's also influenced by many player, who make the big games & clouds. The most dangerous people, I always worried of are 'Stock Operators'. Never/ ever, enter into it, when there is a sign of these Operators playing the game.
Be greedy, but Long term greedy.
It is not bad to be greedy in market. But, he advises to be a long term greedy, just like he used to be. Since, there is no proper definition for long term, I am always confused about it :-)
Superior investment returns are not gained without pain, time, introspection & doubt.
Thats a great lesson, ever glowing. People make it as a mistake in many cases. When they buy a scrip, they themselves, are not sure of the entry & exit positions. 99% of us make mistakes just in entry & exit levels. Since, we look at many indicators, indexes, charts and it put us in pressure to take an immediate decision of buying/selling. Thats baseless, since these indicators do not have any moderator power over the real business associated with co-. Indicators are for time being.
Despite all round pessimism, never forget the opportunities in Equities
Thats something, always gives courage to re-enter :-)
