Right Attitude Is Key To Being A Good Investor: Rakesh Jhunjhunwala

What are the attributes that are very important for an investor?

You have to be dogmatic. Between 2006 and 2008, the market doubled and Lupin’s share price was at Rs 600. Over the next six years, the share price jumped to Rs 7,500. I was the second-largest investor and my conviction paid off. I have purchased 20 million shares of Rallis India, which means I own 10% of the company. In this whole rally, the stock has not gone up. I am holding on to it because I believe in it. I review each of my investments and if the original thought process based on which I bought the share makes sense, then I hold on to it. If you think you are always right and the market is wrong, you will not learn anything. Only humility and a desire to learn will ensure progress.

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Is there a right time to enter and exit a market?

It is very difficult to predict the right time. If you invest at all stages and under all circumstances with confidence, then you will be a fine investor. The most important thing is having the right attitude. I find that in India most people think that the stock market is a race course. People hope to double their money without realising that they could lose it too.

The two most infamous adjectives in the English language are valuable, when referring to a stock, and beautiful, when referring to a girl — they are both so relative and personal. So, when to buy and when to exit depends a lot upon the circumstances. I will sell a stock when it is highly leveraged and if I want to reduce my leverage or if I have a better opportunity or if I see a permanent impairment of value. Titan’s share price was Rs 30 in October 2001. In 2006, the price was Rs 61 and later shot up to Rs 600. I felt that there was no permanent impairment of value. Theoretically, when the P/E ratio is at its highest and earnings have peaked, that is the time to sell. When and what to buy cannot be answered without a real-life example.

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