In my earlier post I have discussed how to make profits from Rakesh Jhunjhunwala latest portfolio holdings and NSE / BSE bulk deals data. Today I will discuss how to become a crorepati following the big bull Rakesh Jhunjhunwala’s stock picking mantra. But before that I will discuss a brief history of Shri Rakesh Jhunjhunwala.
Rakesh was born on 5th July 1960 in Mumbai. His father was an income tax officer. Rakesh had interest in the stock markets since his childhood. Rakesh used to ask stock market related questions to his father starting from his 10-12 years of age. He was curious on why share prices increase OR decrease. Rakesh completed his graduation from Mumbai’s Sydenham College. After completing CA in 1985 and wanted to build his career in the stock markets. Then his father advised him few things those became Rakesh Jhunjhunwala’s stock picking mantra.
1) Do whatever you enjoy.
2) Dont ask money from the family members.
3) Be fearless.
That time Rakesh had only Rs. 5000. Rakesh’s brother was also a CA and he had a wealthy lady client who was looking for decent returns. Rakesh approached that lady and told her that he will give her 18% returns per annum as compared to bank returns of 10%. The lady gave Rakesh Rs. 2.5 lakhs to invest. Rakesh got some more Rs. 5 lakhs from another source and built his initial capital.
In his initial days Rakesh made some 8 lakhs – 10 lakhs profits out of his capital and slowly he started increasing his capital. In the year 1989 before the budget his net worth was Rs. 2 crores and he invested so wisely that within few months after the budget his net worth increased to around 50 crores.
But What Was Rakesh Jhunjhunwala’s Stock Picking Mantra Then?
1) Identify stocks with business ideas, business opportunities and cash flows and BUY them.
2) HOLD them while the EPS and price of the stock rises.
3) Sell them when the earnings per share (EPS) peaks.
As an example lets see the 5 years chart of Titan Industries (a Rakesh Jhunjhunwala stock) above, see how the stock has appreciated in last 5 years. We can see from Rs. 200 level the stock is now trading at Rs. 500. That is real wealth creation. I will write more in this topic if I get comments from you below this post.