- Many people consider Rakesh Jhunjhunwala to be the most successful stock investor of Indian equities at all time. He started with small sum of money to invest in early 90's. Today his investments are said to be worth 6000 Crores
- His success is due to a very disciplined approach to buying the right stocks and holding on to them for long periods of time. This is the primary mistake all new guys who come to stock market do,they think its a gambling table, if you thing its gambling then you will lose fast. Dont come with hurried approach.Come with Peaceful mindset.
- He is very patient in his approach, both in terms of waiting until the right opportunity comes along before making a stock purchase and then owning shares of stock in a company for a long period of time to allow his investment grow.
- He buys and stick to investments where he can understand the business the company is in well enough to make thoughtful and independent decisions.This is also one key mistakes all of us do, try to buy stocks in the industry you work on so that you understand what will happen to the stock as you have experience in industry.
So the basics are above, now the core factors he looks into the stocks are,
Stock wih durable and competitive advantage:
- He wants a company that is relatively difficult to compete against; hence it will likely be able to sustain a high profit margin over time. Companies which have strong brand-name products (e.g., Coca Cola, Proctor & Gamble), or have patent protections on their products (pharmaceutical companies), or have very strong customer loyalty and high customer retention rates tend to have a "durable competitive advantage" over their competitors.
Strong and honest management:
- He only interested in investing in companies for which he respects and trusts the key managers of that company. An incompetent, and especially a dishonest, management team at a company can spell big problems.
Buy at "reasonable" price :
- He never overpay for a company's stock. While he may love the company, if the price is not right, he will not like the stock and seek out alternative investment opportunities or wait until the stock price becomes more attractively priced.
Follow these principles and you will be Successful investor in your life.