The Dividend Pirate

Below are excerpts from an article written on rediff.com about Rakesh Jhunjhunwala(considered by some as the Warren Buffet of India),

“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.” He recommends the following,

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

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. Below are some investment gems from him:

• Be optimistic
• Be opportunistic
• Study the market thoroughly
• Maximise profits and minimise losses
• Invest in a business not a company
• Have an independent opinion, always
• Be happy with your gains but take losses in your stride
• Be prepared for risks
• Be paranoid of success — never take it for granted. Realise success can be temporary and transient”

I would like to highlight some of the points that he mentioned,
“You can never be taught about market, you have to learn it”. If you are an investor with no experience, the best way to learn is by researching a few stocks and investing a small amount in them. Once you do that, believe me you will be checking the stock regularly and in the process learn a lot. Another good way to learn about stock trading is by investing virtual cash in simulated games offered by websites such as Investopedia.com These sites give you 100,000 dollars in virtual cash and you can test your investing strategies. Another good way to learn is to form a group of people to compete in such investing simulation games, discuss and learn together.

“Be happy with your gains but take losses in your stride”. I feel that unless you can take losses in your stride, the stock market is not for you. If you have even slightly followed the current stock market swings, you might have realized that the stock market is not for the faint of the heart. If you are going to react emotionally to your losses you will end up making mistakes like selling at the wrong time or even worse, deciding never to invest again. This lesson applies not only to stocks but generally to all aspects in your life. You have to learn from your losses. “Failure is success if we learn from it.” - Malcolm Forbes

“The time to get interested is when no one else is. You can’t buy what is popular and do well”. If he and Warren Buffet were right, the current market condition would be a great time to invest in stocks that are fundamentally strong that are undervalued. If you take time out to research stocks, the current market offers many good stocks that can make you a lot of money. One of the most common concerns is “but what if the market falls further”. It may, it may not. You can never ever time the market. The best thing to do if you find a stock that you really like is to buy small quantities of the stock at regular intervals to give you the benefit of “Dollar Cost Averaging”. I will be blogging about it in my next article.

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You might also be interested in reading the following articles,

• 10 golden rules to become rich!
• Phil Town on Investing
• Reason for Stock Market Swings
• Turbulent times
• Are we in a recession?

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