Rakesh Jhunjhunwala, known as India's "Big Bull," picked stocks using a blend of fundamental analysis and long-term, high-conviction value investing. He focused on companies with strong management, sustainable competitive advantages (moats), scalable business models, and low debt, often buying them at reasonable valuations relative to their growth potential.
He looked for businesses with sustainable competitive advantages, strong balance sheets, and the potential for multi-year earnings growth. Price mattered, but value mattered more. Despite his reputation as a risk-taker, Jhunjhunwala was actually meticulous about risk management.
The 3-5-7 rule in trading is a risk management guideline: risk no more than 3% of capital on one trade, keep total risk across all trades under 5%, and aim for winning trades to be at least 7% larger than losing trades (or a 7:1 ratio) to ensure profits outweigh losses and protect capital. It promotes discipline, reduces emotional trading, and balances potential high rewards with controlled risk, making it great for beginners.
Investors need to focus on solid fundamentals, understand market dynamics, and, most importantly, prioritise risk management to secure their investments. If you're thinking long-term, go for companies with a good track record and steady growth.
Patience was a major part of the Rakesh Jhunjhunwala trading strategy. He held his investments long enough for compounding to work. He stayed calm instead of acting on emotions, and he understood how the market behaved. A clear understanding of the share market helps you separate short-term noise from long-term trends.
Spotlight on Vijay Kedia. India's stock market has been shaped by legendary investors such as Rakesh Jhunjhunwala and Radhakishan Damani, who earned the title of “Big Bull” for their unmatched vision and wealth creation. Today, as the hunt for the next market icon intensifies, all eyes are on Vijay Kedia.
The "Rule of 90" in stocks most commonly refers to Warren Buffett's advice for his wife's inheritance: 90% in a low-cost S&P 500 index fund for growth and 10% in short-term government bonds for stability, designed for long-term investors. However, a more pessimistic "Rule of 90-90-90" suggests 90% of new traders lose 90% of their capital within 90 days, highlighting the high failure rate due to lack of education, emotional trading, and poor risk management.
The 7-3-2 rule is a financial strategy for wealth building, suggesting it takes 7 years to save your first major financial goal (like a crore), then accelerating to achieve the next goal in 3 years, and the third goal in just 2 years, leveraging compounding and disciplined, increased investments (like a 10% annual SIP hike). It highlights how returns compound faster over time, drastically reducing the time needed for subsequent wealth targets, emphasizing patience and consistent, growing contributions.
Buffett focuses on company fundamentals like return on equity, debt levels, and profit margins rather than stock price movements. He looks for businesses with lasting competitive advantages that protect market share and profitability from rivals.
The basis of his stock-picking framework is summed up in the SMILE investing framework:
Jhunjhunwala today manages the privately owned asset management firm “RARE Enterprises”. The name RARE is derived from the initials of his name and his wife's name.
Panic-selling, hiding out in cash and forgetting to rebalance your portfolio are common investing mistakes in volatile markets. Other bad behaviors include overestimating your ability to judge when a stock is a great deal or selling a stock too early for fear it will drop.
Warren Buffett's Investment Tenets
With $900,000 saved, and factoring in an average annual rate of return between 10–12%, you'll have between $90,000 and $108,000 to live off of each year, not including your Social Security benefits.
Long-term mindset
So, what was the golden rule of investing that I think Lewis just highlighted? It was this: “Only invest what you won't need for at least five years, after clearing expensive debts and building an emergency fund.” This is crucial because shares can swing wildly from one year to the next.
In the early 2000s, he purchased Titan Company shares at Rs 30-Rs 40 apiece and the investment eventually delivered returns of over Rs 15,000 crore #BusinessNews #rakeshjhunjhunwala.