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Year 1985, only ₹5000 in the pocket and a dream to conquer Dalal Street in Mumbai. At a time when the common Indian felt safe by keeping his money in bank FDs, a 25-year-old youth dived into the risky ocean of the stock market. When that person died after 37 years, his total assets were around ₹400 crores.
People called him the Big Bull of Dalal Street and some called him the Warren Buffett of India. Hello friends, welcome to Logical India. Today we bring you the complete summary and review of the famous book India's Warren Buffett Rakesh Jhunjhunwala written by Mahesh Dutt Sharma. In today's video, we will not only listen to his success stories but also understand the principles that made an ordinary middle-class boy the biggest investor of India.
Rakesh Jhunjhunwala was born on 5 July 1960 in Mumbai to a Rajasthani family. His father worked in the Income Tax Department and was also interested in the stock market. This is where Rakesh developed an interest in understanding the stock market. There were frequent discussions at home about the stock market and the economy.
When Rakesh ji asked his father why share prices fluctuate? So his father said read the newspaper, understand the news and the performance of the company. The stock market was not just a place for him to make money. It was a matter of curiosity for him. Gradually this curiosity turned into passion. When he talked to his father about making stock market his career, his father put two conditions.
First of all complete your studies and do not do trading by asking money from me or friends. He studied chartered accountancy and then made the stock market the focus of his career. In 1985 he started with ₹5000. His first big success came from Tata Tea shares. He bought 5000 shares of Tata Tea at ₹43.
Within just 3 months, that share became worth ₹143. Jhunjhunwala ji had more than tripled his money. Between 1986 and 1989, he earned a profit of approximately ₹20 to ₹25 lakh. That's the first big lesson of this story: you don't need to be a millionaire to get started in the stock [nasal sound] market.
What is needed is knowledge, discipline and persistence for a long time. But keep in mind that starting with a small amount and investing money without any knowledge are two different things. A major part of Jhunjhunwala's story is based on the principle that first understand and then invest. Many people look at the stock market and say, this is gambling.
Today the price increased so I made money. The price fell yesterday and the money was lost. But Rakesh Jhunjhunwala's thinking was completely different from this. For him, the stock market was not just a game of share prices. The real thing for him was business. That means if you are buying shares of a company then in reality you are buying a stake in the business of that company.
Suppose the share of a company is worth ₹100. Now the question should not be when will this share reach ₹120? Rather, the question should be: what will this company be like in the next 5 or 10 years? How much can his business grow? How much can his earnings increase? Will the demand for its products increase?
Is the management good ? Can the company become a market leader in the future ? This thinking creates the biggest difference between an investor and a trader. The trader often watches the price. But the investor looks at the business. And a major part of Rakesh Jhunjhunwala's success was linked to this business oriented thinking.
It was an important part of Rakesh Jhunjhunwala's investment philosophy. Confidence in India's growth. He did not see India only in terms of the present. He believed that as India's economy grows, people's income will increase, consumption will increase, financial services will expand , insurance penetration will increase, travel and aviation will increase, and the need for housing and infrastructure will increase.
As time goes by, big opportunities will arise for good companies. That is, his focus was not only on which stock is cheap today but also on which direction India can move in the next several years. This thinking gives us a big lesson. If you are a long term investor, then you should not live only on today's news.
You should try to understand the future. But there is a very important point here. The growth of a country's economy and the growth of every company are not the same thing. The GDP of the country may increase. But a weak company can still perform poorly. Therefore, it is important to understand all three – economy, industry and company.
One of the companies whose name comes up most often with the name of Rakesh Jhunjhunwala is Titan. During the year 20023, when Titan was going through its bad times. Rakesh Jhunjhunwala bought crores of Titan shares at an average price of ₹3. Many analysts said they were making the wrong bet. But Jhunjhunwala ji's vision was different.
He understood the company's brand, its management and the consumption power of India's growing middle class. Time proved that they were right. That ₹3 share of Titan crossed ₹00. This investment formed a major part of his total wealth. But the most important thing here isn't just how much money he made at Titan.
The real lesson is that he understood the long-term potential of a consumer business. Now think, income is increasing in India. People's lifestyle is changing. The middle class is growing. Organized retail is expanding. The demand for branded jewellery is increasing. In such a situation, the opportunity for a strong brand can be huge.
This is business thinking. If an investor only sees whether the share is worth ₹50 or ₹500 today, then he is only looking at the price. But what if the investor asks how big the company's business can grow in the next 10 years ? So he's looking at the value. The story of Titan teaches us a very important lesson.
Giving time to a good company is also a part of the investment strategy. Many people buy good stocks, but only a few are able to hold them for a sufficient period of time. Why? Because as soon as the stock goes up 20 or 30%, they sell. But the real power in wealth creation often comes from long-term compounding.
It is generally believed in the financial world that a person can either be an investor or a trader. But Rakesh Jhunjhunwala was a rare combination of both. [nasal sound] Jhunjhunwala ji himself used to say that trading is my mother and investing is my wife. Trading generates cash flow and investing generates wealth.
They used to generate cash flow from short term trading and futures and they used to invest that earned cash in companies like Titan, Lupin, Chrysler for long term. It is not that Rakesh ji never suffered any loss. He also incurred losses many times like in Arvindo Pharma or some other trades. But his biggest strength was admitting his mistake and immediately applying stop loss.
There is no place for emotions in trading. Rakesh Jhunjhunwala has five key principles that every retail investor should learn. First, unwavering faith in India's future. He was the biggest bull in India. He believed that the 21st century belongs to India and it is wisest to bet on India's economic progress.
The second market is supreme. You cannot be bigger than the market. If the market is going against your research, then leave your ego and accept your mistake. Third, do your own research. Those who invest money on others' tips can never survive in the stock market for long. It is very important to look at the fundamentals, cash flow and management of the company.
Fourth, sleep away from the crowd. Look for opportunities when everyone is panicking and selling. Be alert when everyone is getting greedy. Fifth, humility in success and patience in failure. The stock market can bring you down at any time. So always be humble in your successes. What to think before buying shares?
Now let us come to the question that every investor wants to ask. What did Rakesh Jhunjhunwala look for before investing in a stock ? It is difficult to distill the strategy of any great investor into a single formula. But his publicly discussed philosophy and available book material reveal some important principles.
Understand the business. You should understand the business of the company you are investing in. How does the company make money? Who are his customers? Who is his competition? What is his biggest strength? And most importantly, can his business grow in the coming years? Second, look at the management.
Even a great business can become a bad investment due to poor management. Therefore, management's honesty, capital allocation and execution are very important. Third, do n't ignore valuation. A good company is not always a good investment. If a great company is bought at an overpriced valuation, future returns may be weak.
Therefore, good company and reasonable price is a very important combination. Fourth, patience. It takes time for a company to grow. If a seed is sown today, it will not become a tree tomorrow. Similarly, in investment also time has to be given to business growth. Agasa Air Final Days and His Legacy.
His enthusiasm did not diminish even in the last phase of his life. In 2021-22, when the aviation sector was going through a very difficult phase, he started his own airline, Akasa Air. People said that this is a risky decision. But Jhunjhunwala ji had full confidence in the future of India's aviation sector.
On August 14, 2022, at the age of 62, this great investor said goodbye to the world. Mahesh Dutt Sharma writes in the last chapters of his book that Rakesh Jhunjhunwala was not just a money-making machine. He was a lively person who gave generously and lived his life with utmost grandeur. He proved that if there is right understanding, discipline and faith in the country's economy, then the stock market is not a speculation but the biggest medium to create wealth.
Friends, this book teaches us that achieving financial freedom does not require shortcuts but discipline, a desire to continuously learn, and patience. If you are also starting your investing journey then always remember this lesson of Rakesh ji. The respect in the market is always for the company's value and your patience.
Not your ego. So friends, if you learned something from this book summary then do tell us in the comment box and if you liked the video then do not forget to like, share and subscribe to the channel. See you in the next video with a new topic. Jai Hind.
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