DP Money Watch – Investment Advice From The Indian Buffet

Rakesh Jhunjhunwala is one of the smartest investors in India who believes in the benefits of portfolio concentration. His top 5 holdings account for 54.67% of his portfolio and his top 10 holdings account for almost 80.00% of his portfolio. The averagely weighted market cap of his portfolio is a cool Rs. 5276 crores.

It is said that listening to Mr. Jhunjhunwala for one hour is better than reading 25 books on investment. Here are some of his words of wisdom for people who invest in the stock markets.

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. Rakesh advices the following on this point:

• Don’t follow stock picks by big investors.
• Remember: the market is always right
• You can never be taught about the market, you have to learn it.
• You must balance fear and greed.

Jhunjhunwala 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 on 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, opportunistic and Study the market thoroughly
• Invest in a business and not a company.
• Always have an independent opinion and be prepared for risks.
• Be happy with your gains but take losses in your stride.

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 that:

• 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.

Jhunjhunwala 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.