We can make our lives sublime.
And, departing, leave behind us
Footsteps on the sand of time.
HW Longfellow
One trait of great human beings is their uniqueness. Rakesh Jhunjhunwala was outrageously unique. He was a rare combination of Warren Buffet and George Soros. Warren Buffet is a quintessential investor; George Soros is a trader; Rakesh Jhunjhunwala was both. And he was a phenomenal success in both.
I had the privilege of meeting Rakesh Jhunjhunwala many years ago when he came for Geojit’s AGM at Kochi. In his inimitable style, constantly chewing betel nuts, he made some caustic comments about the Kerala economy and why Kerala was performing much below her potential. His sharp reactions and blunt talk took me by surprise. But his observations on the Kerala economy were on the spot.
Stock investors are optimists. They invest because they are optimistic about the future. Jhunjhunwala was the personification of optimism. He was, by far, the most optimistic of all investors, about the future of the Indian economy and capital market. He always believed that the best for the Indian economy is yet to be and that the mother of all bull markets is yet to come. That’s why he came to be known as the Big Bull.
Jhunjhunwala was optimistic about the growth in financialization of savings in India. And he predicted a tidal wave of retail investors rushing into the Indian stock market. This is precisely what is happening now. The total number of retail investors who entered the market in March 2020 is more than the number who entered the market in the 20-year period before March 2020.
The important question is: What can retail investors learn from the Big Bull?
Even though he was a trader too, he strongly advised retail investors not to trade. Successful trading is a truly professional job which requires special skill and total commitment with the temperament to book losses. This is a skill set which only a miniscule minority of traders have. That’s why most retail traders lose in trading. Retail investors should heed his advice.
A very important lesson that retail investors can learn from the Big Bull is to ride the winners. Major segment of his phenomenal wealth came from a few stocks like Titan and CRISIL. He held on to Titan for years. He incurred losses too in a few stocks but soon exited from such stocks when he realized the mistake. He was practicing the adage “water your plants and remove the weeds.” Retail investors can learn from this wisdom of ‘riding the winners.’ Winners will create incredible wealth in the long run.
Jhunjhunwala’s optimism about the India Growth Story is playing out. India’s GDP has multiplied 10 times since reforms began in 1991. India stands a good chance to become a $7 to $8 trillion economy by 2030 and a $20 trillion economy by 2040. Such growth will create unprecedented, phenomenal wealth in the years to come. This is a bull case, but doable. Even if we fall short a bit, impressive growth is certainly achievable. Retail investors can take a leaf out of the Big Bull’s optimism.
Also, all of us can learn from his mistakes too. He famously said, “my worst investment has been in my health.” That’s an important lesson to learn.
