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19 Dec 2016

STOCK MARKET-- Rakesh Jhunjhunwala’s 5 Step Program

Many people think that Rakesh Jhunjhunwala has a Midas touch as whatever he touches turns gold. The poster boy of Indian stock trading, he has established his stature somewhat similar to Warren Buffett. Rakesh Jhunjhunwala's holdings, worth 10,000 Cr, and his believe in value investment are the key reasons people draw such parallels between these two star investors.
Certainly he does something different that he always picks the winners. People wonder – whether he has some magic wand which he spins and all his stocks start hitting the roof? But if you look a bit closer you would see that behind his sparkling success there is enormous planning, patience and perseverance.
Let's try to unravel the best kept secrets of Mr. Jhunjhunwala.
1. Critical Thinking 

First and foremost thing is to analyse your prospects very critically. It's important for all walks of life but for stock investment it becomes all the more important. And do investors scrutinise their prospects critically? Absolutely not. Most of the investors look for short-term gains and investing so much time and grey cells for short-term doesn't make sense for them. So they do what everyone else is doing. Which sooner or later results in lose. An instant remedy for this is - Think long term investment.
2. High Quantity, High Returns
This is more of strategy than a quality. Mr. Jhunjhunwala has made it point that whatever he buys he buys in a huge quantity. Pull up Rakesh Jhunjhunwala's portfolio and you would see that when he is convinced about certain stock he goes neck-deep in it. For example - if you buy 500 shares of X company at Rs.50, when the share price goes to 100 you will make 50,000. But if you have 5000 share your profit will be 5,00,000. Always remember - more the quantity more the profit.
3. Eye For Multibagger Potential
This is a quality one can develop only through experience and systemic thinking. But once acquired, one should make optimum use of it. Rakesh Jhunjhunwala has made a career out of identifying multi-bagger stocks. From Titan to Sesa Goa he has many stocks in his portfolio which have multiplied their value more than 500%. Look for undervalued stocks with bright prospects and place your money on it. Sooner or later good stocks catch up to their potential. This is the biggest secret of Rakesh Jhunjhunwala's mammoth wealth.
4. Let The Profit Run, Not Loses
There are many short-term investors who exit a good stock to book 3-4% of profit. Exiting a good stock for petty profits is simply like missing out on massive future profit. On the other hand, there are some investors who hesitate to book losses when they are at the minimum. What investors usual do when they are in loss - they wait for the stock to come back in profit without setting any loss trigger. In the worst cases - stocks keep going down hill and investors keep waiting for it to climb back. Pulling out of the bad stocks and allocating the funds in the promising stocks is always advisable. Exit judgement of Rakesh Jhunjhunwal is exceptionally good. He does book lose, but the overwhelming profits on other stocks totally overshadows the loses.
5. Partial Profit Booking

In the extreme uncertainty of stock market nothing safeguards your interest like partial profit booking. This is another winning quality of Rakesh Jhunjhunwala which has kept him steadily ahead of the league. Sesa Goa was Jhunjhunwala's first major trade triumph. He bought 4,00,000 shares at Rs. 27. He sold the first lot when the share reached 60-65 bracket, and sold another lot when it reached 1400. He still holds some shares of the company. Partial profit booking gives you a foothold to take more risk at the same time it minimises the risk of loses to a great extent.

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