The secret of Rakesh Jhunjhunwalas success

http://www.livemint.com/Money/r06HO0RUtK82ReZnxPzKwL/The-secret-of-Rakesh-Jhunjhunwalas-success.html

The secret of Rakesh Jhunjhunwala’s success

An analysis of Rakesh Jhunjhunwala’s portfolio shows that his average returns have been highest from the stocks he held the longest

Sachin P. Mampatta

At a time when high-frequency trading has allowed market participants to transact in milliseconds, India’s best known stock market investor’s average holding period is still measured in years. And his highest returns are on stocks he has held for at least 10 years.

A 10-year analysis of 84 companies in which Rakesh Jhunjhunwala has an at least 1% stake reveals that he holds his investments for an average of 3.44 years. He has held his stakes in nine companies, including Crisil Ltd, Titan Co. Ltd and Lupin Ltd, for 10 years or more. He has held stakes in 15 others for between five and 10 years. And he has held his stakes in 65 out of 91 investments for at least a year.

In comparison, the average holding period for diversified equity mutual funds has never exceeded two years in the last decade, according to data from fund-tracker Value Research. The minimum was 0.93 years in September 2009, just after the outbreak of the global financial crises. The peak was 1.92 years in March 2015.

There is a caveat to this analysis of Jhunjhunwala’s holdings: Information is only available for companies in which his stake exceeds 1%, and is therefore mandatorily required to be disclosed. The analysis looked at 84 such stocks. There are also companies in which he bought and sold his shares, only to buy again later. These were counted as separate investments, with returns being calculated for each entry and exit. The total number of investments thus comes to 91. The analysis does not consider parts of his portfolio about which information is not publicly available. It can therefore only be considered indicative and not necessarily representative.

Jhunjhunwala declined to comment for this story.

The analysis shows that his average returns have been highest from the stocks he held the longest. His average absolute return on stocks he held for at least 10 years was a staggering 3,271.52%. And his average return on stocks he held for less than a year was 9.23% (chart 1). These returns are a simple average of the returns of stocks in his portfolio irrespective of their weight in the overall portfolio

The 3,271.52% return figure is owing to multibaggers such as Lupin (13,855.7%), Crisil (5,588.6%) and Titan (8,272%) which Jhunjhunwala spotted early on. Not all long-term holdings have been a success though. Share prices of Viceroy Hotels Ltd and Bilcare Ltd are now lower than what they were a decade ago (see chart 2).

“In the long run, stock markets in general have been seen to move in an upward direction. Therefore, the longer you hold on, the probability of superior returns is quite high,” said S.S.S. Kumar, a professor at the Indian Institute of Management, Kozhikode. Indeed, the S&P BSE Sensex has risen from a notional value of 100 in 1979 to a high of 30,024.74 on 4 March 2015.

This tailwind certainly helped Jhunjhunwala’s longer-term holdings. Returns were calculated based on the difference in prices between when Jhunjhunwala’s name first appears as a shareholder in public disclosures to the point at which it is no longer present. Smaller holdings for which disclosures have not been made are excluded.

Jhunjhunwala held his stake in 44 companies for at least two years. This is more than half the companies under consideration. This is an interesting contrast to Warren Buffett, CEO of Berkshire Hathaway Inc. and one of the world’s richest investors, with whom Jhunjhunwala is often compared.

Buffet is known for holding some large bets for many years. However, researchers who examined his periodic disclosures from 1980 to 2006 discovered that he held most of his stocks for approximately a year. He held his stake in only a fifth of the companies for at least two years, according to the study entitled Overconfidence, Under-Reaction, and Warren Buffett’s Investments by John S. Hughes and Jing Liu from the UCLA Anderson School of Management, along with Mingshan Zhang of the Hong Kong University of Science and Technology.

One must keep in mind that the study looked at Buffet’s entire portfolio, while we have access only to Jhunjhunwala’s publicly disclosed bets, which are probably only his large, long-term bets.

Jhunjhunwala’s three biggest publicly disclosed bets are all more than 10 years old. This includes Titan (Rs.2,720 crore), Lupin (Rs.1,270 crore) and Crisil (Rs.789 crore). This accounts for more than half of his declared portfolio of Rs.8,663.33 crore, according to September quarter-end disclosures. His top sectoral bets include pharmaceuticals, information technology and computer-related companies, construction and auto and auto ancillaries in the September quarter.

Tadit Kundu, Ashwin Ramarathinam and Ravindra Sonavane contributed to this story.

Rakesh Jhunjhunwala interview - Outlook Business Mar 2015

http://www.outlookbusiness.com/article_v3.aspx?artid=293725

Markets / Interviews MAGAZINE | APR 03, 2015

INTERVIEW

"You Can’t Make Money On Borrowed Knowledge"

India's best-known private investor at his candid best.

ASSOCIATION OF INVESTMENT BANKERS OF INDIA

The agenda for the Association of Investment Bankers of India’s recent day-long summit in Mumbai may have been ‘unleashing the potential of domestic investors for the capital market’ but the most interesting session there was the hour-long tête-à-tête with India’s best-known private investor Rakesh Jhunjhunwala. As expected, Rocky J was at his candid best, answering both personal and investing-related questions with trademark élan. Edited excerpts follow:

What is the question that you are asked most frequently?

People often ask me, “So, which company will be the next Titan or Crisil?” I tell them that I’m still looking for such a company. Back when I invested in these stocks, I had never imagined that my investments in both these companies would generate a 100% return. I tell people that tips are hazardous to your financial health and you can’t make money on borrowed knowledge.

We have heard that horses are an area of interest for you. Is that true?

Yes, my father was very fond of racing. As a child, I would go to the Mahalaxmi Race Course at least four days a week. It is the most wonderful place… it is very exciting. I do gamble but just not on the race course.

Are there any similarities between the highs that you experience in the market and the excitement you feel at the race course?

I am not enough of an expert on horses to have a dogmatic opinion about horse racing. But I think in the stock market, the key to my success is dogmatism coupled with an attitude to learn.

What thoughts run through your mind when you look at the trading screen?

The problem is that my mind works all the time and I end up multi-tasking a lot. I might be corresponding over the phone and emailing someone at the same time that I am looking at the screen. But once I am in front of the screen, I know exactly which stock’s price is on which part of the screen. We trade with prices. Remember, prices convey a whole lot.

What advice would you give to non-professional investors?

There are two to three reasons why one should invest in the markets. The one advice I offer to young couples is that they must invest all their savings in a house. After a house, devote 80% of your savings to the market. Here’s why: India is in a growth phase — the index has gone up from 100 to 28,000 over the past 30 years. I don’t see why this situation will not repeat itself over the next decade. This being a stock market, valuations have to grow.

If India grows, earnings have to grow. India saves over $650 billion a year. In four to five years, this figure will go up to a trillion dollars. Even if 10% of that money flows into the equity markets, that adds up to about a hundred billion dollars. Why will this money not come to the equity markets? In 1991, 18% of savings flowed into equities and by 2007, this figure stood at 13%. So, there is going to be an upsurge in earnings and money flowing into the market.

If India achieves GDP growth of 12-14%, corporate profit growth will be 18-20%. At some stage, valuations will expand. Which other nation can provide this kind of growth? The most important question is if debt can give me a return of 7% post-tax or if equity can give me a return of 18% post-tax, which other asset class can give me that kind of return? Guys like me are 101% invested in equity. It’s not as if I have not contemplated investing some part of my assets in a non-equity class. In fact, I’d like to share an anecdote about this. My mother is not concerned about money at all. One day, she pointed out that I put my money only in paper and never buy property. So, I bought a flat in Malabar Hill in 2004 by selling Rs 27 crore worth of Crisil shares. That flat was sold for Rs 48 crore three days ago. Had I not sold those Crisil shares back then, they would have been worth Rs 700 crore plus a Rs 50-crore dividend.

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.

Can you talk a little more about attitude?

I have a practical approach to life. I follow the spirit of the law. I don’t want to be involved with the government in order to make money. I don’t want to do anything in life that needs me to go to the Sachivalaya or South Block or to a government office. The one time I went to the Sachivalaya was when I was setting up an orphanage and wanted to extend the FSI of the building from one to two.

Second, if money comes, that is fine. Either my money will halve or double. Maybe I will buy a corporate jet. There is nothing I really want to spend on. What I have on me everyday is an Rs 800 shirt, a Titan watch, glasses, Metro shoes and a VIP suitcase. So, I don’t have many expenses. The only thing I spend on is horses. The maintenance cost of my horses is more than my household expenditure.

What are the pitfalls of success?

I have learnt an important lesson in life — success produces its own problems. People will always be envious and talk about you behind your back. Earlier, this would make me angry but now I accept it as a part of life. When I was young, my father was in the income tax department. We always had very rich friends, so there were a lot of things that we couldn’t afford but my friends could. I would go to college by bus but return in a friend’s car. My father taught me an important lesson — he always said, “Rakesh, always aspire but never envy.”

That being said, I have not faced anything much except for some harassment from the press. Between 2003 and 2005, it was assumed that because I had made money, I was a thief. I have not made money in the market by being a thief. My friends warned me that if I attended public events, the authorities would trap me. I always tell the people who threaten me that I am not scared of their threats but am concerned about my deeds. Don’t forget that India is a democracy. The other pitfall is that you can’t go to a bar with a girlfriend because everybody recognises you.

You advised young couples to buy a house first. But, at least in Mumbai, how will they manage to save so much money?

Nothing in life is easy. Today, I have got wealth and success and you might think it is easy for me to buy a house. Back then, I didn’t have an office, only a bag. In 1985, I was a Marwari chartered accountant entering the stock market. To achieve anything in life you have to fight for it and you have to believe in it. You need a little bit of luck and conviction. Saying that I don’t have the money to buy a flat won’t help.

My wife comes from a rich family. She had a car from the time she was 18 and an air-conditioner since she was born. After our marriage in 1987, we travelled by bus and I bought an air-conditioner only the next year. So, you have to adjust to the circumstances and not pity yourself. I don’t think salaries are on the lower side in India today for most middle-class families. I run a BPO where a 21-year-old starts with a monthly salary of Rs 15,000 and, if he’s good, can touch Rs 45,000-50,000 by the time he is 25. At 25, I was earning Rs 60 as a chartered accountant.

What is the next thing you aspire to possess?

The first thing I pray to God for is to get away with certain habits and to remain healthy. As for material things, I want a lovely plot to build a house and a private jet. On July 5, 2020, I will turn 60. I want to convince my wife to donate Rs 5,000 crore of our personal wealth in 2020 and again in 2025 and in 2030. I contribute 20-25% of my wealth to charity even today but I have bigger aspirations in this field. I am confident that my wealth will go up, thought not as much as I want. I am going to eat the same food, smoke the same cigarettes, drink the same whiskey and drive the same car nonetheless. If I do very well, then I may have a 16-seater corporate jet and if I don’t do as well, then I may buy an 8-seater. That is the only difference.

You have dabbled in cinema as well. How did that happen?

I love making movies — I find cinema very interesting. People tell me that I make movies so that I can meet the actresses but that is not true. I do not mix business with pleasure. I have produced Sridevi-starrer English Vinglish in 2012 and Shamitabh featuring Amitabh Bachchan and Dhanush in 2015. Both the movies have made money. I am going to partner with a huge star and we plan to make TV serials and six to seven films together. This sector is profitable and we are making money. Of course, I am not afraid of making mistakes because I don’t invest more than 2-3% of my wealth at a time. None of my investments have cost me more than Rs 2 million-3 million. The two investments where I misjudged the quality and character of the entrepreneur were A2Z Maintenance and Engineering Services and Bilcare. I had blind faith in both the companies but I have learned from my mistakes. And, as I always say, the best is yet to come.

What would be your criteria while hiring an investment banker?

One of my partners happens to be an investment banker. We are disinvesting partly in an Ahmedabad-based company. He does everything and helps me find companies where I can find the right valuation. I prefer honest bankers. My merchant banker told me the A2Z issue would never be subscribed and I said that was impossible. The IPO was priced at Rs 400 and there was a shortfall... I put in an additional Rs 70 crore. Later, I sold all the shares at Rs 10-11 apiece.

How do you balance your investments with trading?

I had no money when I started. Trading started for me as a compulsion; I have invested only what I want in it. I love trading more than investing because in the latter you put both your capital and your brain at stake. In the former, you only put your brain at stake. I invest all my stocks in my wife’s and my own name. I have a partnership firm called Rare Enterprises, whose only work is trading. I think this year we will pay about Rs 150 crore in taxes.

There is nothing wrong with trading — it is all about momentum and leverage. You have to trade with an attitude, you have to be humble. Trading is like a T20 match, you give and take quickly. Investing is like a test match. You have to compartmentalise your investments. I never trade my investments. If Titan is at Rs 350 and I sell 50 lakh shares, I know that the price will go down to Rs 300. So, I only trade liquid scrips. You should have a girlfriend and a wife and keep them both happy. Then you will know how to do both trading and investing.

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.

If not an investor, what would you have been?

Well, I always wanted to be a journalist. If you are a good journalist, you can bring about profound change. I even contemplated becoming a counsellor. But at the age of 16, I decided that my future lies in the stock market. My parents agreed and my father advised me to do a chartered accountancy course or else nobody would marry me or give me a job. Today, I don’t manage anybody’s money and am not answerable to anybody. I have only one client and that is my wife.

If the government invites you to join it in an advisory capacity, what role do you see for yourself?

Disinvestment is an area where I think I can contribute. The Indian government’s disinvestment is done in a haphazard manner — they don’t know how to choose companies to sell. China raised $15 billion-20 billion in 2003-2004 via disinvestment. Why should we not sell 25% of our good undertakings and raise $25 billion-30 billion? I think the worst corporate governance employed by an organisation in the country is that by the government. I am a shareholder of HPCL. What right do they have to give my wealth for their subsidy? You can’t use these PSUs to achieve social objectives. It may restrict the number of scrips that I can trade or invest in but I think I can help with planned disinvestment.

Rakesh Jhunjhunwala talks about his purchase of Dewan Housing and Lupin shares

http://www.moneycontrol.com/news/market-outlook/dhfl-lupin-buys-equal-meeting-aishwarya-rai-jhunjhunwala_1325914.html

Mar 11, 2015, 02.59 PM IST

Sometimes a stock’s story is too overwhelming to ignore; you just go and pick it up. Later one can sit and investigate the merits, says ace investor Rakesh Jhunjhunwala.

He cites buying Lupin   and  Dewan Housing  with such mindset ---he calls it invest now, investigate later mindset, and likens it to dating Aishwariya Rai, silver screen’s most compelling face. 

Below is an interesting peice of conversation between three market masters--Junjhunwala, Ramesh Damani and N Jayakumar discussing the importance of education as well as investment strategies. 

Jayakumar: It is kind of appropriate in today’s forum that we talk about education. You have had to an extent what you would consider education enough to make you sort of take on the world, a street fighter. People have run out of adjectives but do you have any regrets that you could have studied a lot more and become a lot less successful as a corollary? 

Jhunjhunwala: I have no regrets in life about anything except my habits. So I don’t regret and I don’t think that education is what makes you -- street fighters are born, they are not made because it comes from determination and guts. I don’t think the determination and guts come with education. Education gives me the ability to understand, education gives me the ability to be civil and I think -- I did chartered accountancy and I think it is one of the best education anybody could have. It is not a very glamorous education but it is a brass-tacks education and it made me understand financial matters, it also gives me the understanding of law, which is very necessary. To interpreting the Budget, you need to understand the law; what the Finance Bill means? So I think I had that education which gave me the right cutting edge in terms of understanding and of course I am a street fighter.  

I do not know whether it came with my education. Research shows that formalized education takes away entrepreneurship because you reason and you analyze. 

Damani:  One of the things that you are famous for on the street, you have many colorful sayings, is ‘invest before you investigate’. The fact is that if you find something, go buy it and then do all the research. Is that still a driving force of how you look at markets? 

Jhunjhunwala: Sometimes market gives such compelling opportunity like Dewan Housing. It had Rs 230 book value, 6 percent yield, 4 times earnings, growing at 20 percent for the last ten years, available at Rs 105 - I gave an order for 5 million shares, we will think about it later -- such ridiculous valuations!!! I bought Lupin because I knew one thing that Ranbaxy had earned Rs 250 crore in a single product. Lupin had only injectable Cephalospor in approved FDA plant in Asia. They were the single filer for a product having a size of USD 360 million and the marektcap was Rs 200 crore. What is there to think? So those kind of situations are like invest now, investigate later. 

Damani: Does the market then tell you also to back up the truck in these situations. 

Jhunjhunwala: Yes and then you research later. I bought my first five million shares of DHFL and after I bought the next whatever shares I bought, I did a lot of further research. Today it is like meeting Aishwarya Rai, what are you thinking!! You date her without thinking.

Market Correction Mainly Due To International Factors: Rakesh Jhunjhunwala - Bloomberg TV 7/Jan/2015

http://www.btvin.com/videos/watch/10444/market-correction-mainly-due-to-international-factors:-rakesh-jhunjhunwala

•  RJ iterates that fall in oil is a god's gift to India
•  Bull mkt corrections are deep and quick. Investors need to ride them
•  Markets are not over valued
•  We are underestimating the change and consequences in India
•  Feels post budget mkts will do well if the expectations of the budget are low and vice    versa
•  Thinks global stimuls will not stop fund flows
•  Investments are full time work and people are better choosing good fund managers  than stocks / sectors
•  Investment cannot be thought it has to be learned and that too with experience
•  Remains bullish on Housing Finance companies
•  Does not try to predict profits of companies beyond a point and is not into analysis  paralysis
•  Financial sectors will do well
•  Exchanges are having monopoly. It is a play on India's economic growth
•  PSUs have bad corporate governance
•  Bullish on Escorts where internal restructuring are taking place
•  When Indices goes down it is easy to get value picks but there are oppurtunities even  Indices go up. RJ invested in Praj when the Index was up by 40%. Praj was a 40X.
•  Regarding Infra companies, he rather invest in less leveraged companies
•  Cautiously optimistic in near term, very bullish on long term
•  Equity was / is the best asset class for RJ. Equity investing is easy in execution and  from tax perspective

Big Bull On 2015: In Conversation With Rakesh Jhunjhunwala

https://www.youtube.com/watch?v=qToUz4BXPTU

• Feels India is not a crowded trade yet
• Thinks Russia will not default
• US bounce will have a good impact on India IT
• Sensex / NIFTY will be 3X by 2020 if the earnings grow
• Pharma margins can grow. IT margins stretched but can grow
• Valuations not cheap as Aug 2013 but stil oppurtunities exist
• The scope for EPS increase is in Old Economy stocks (Engineering / Construction / Machinery / Non IT and Non Pharma)
• Most happy is that the govt is not making any bombastic statements
• Unhappy that people do not want to contribute but want Mr.Modi to do everything
• IT can grow at 15-20%. Bigger companies are getting more efficently
• Bullish on defence manufacturing. India can export in this sector in a decade
• Lupin is a well managed business and will do well
• MCX is a proxy to India's financial sector.Unique company. leadership in the commodity market cannot be taken away. Free CF. Capex not needed
• Very bullish on housing finances. Best place in the financial sector.
• Very bullish on e-commerce companies but no evolved business model. Valuations are too high. Bullish on the business but will not invest
• Confident on rebounding in rallis and escorts
• Big call. Be confident. Don't try to be condident.Invest in SIPs.

Here's what Atul Suri learnt from Rakesh Jhunjhunwala

Atul Suri is the ace trader who works at RARE Enterprises

https://www.youtube.com/watch?v=gc3M8WX6DcE

https://www.youtube.com/watch?v=ScYOpcyfVoo

He says the most important thing he learnt from RJ is that to keep the worlds of trading and investing apart. He says most of the people buy a stock as a trade and when it starts to fall, they start digging up the fundamentals of the company and make it part of the investments. They then pray that the stock recovers. This looks too dumb for somebody to commit right? Shit , very recently two of my trading stocks became investments like he mentioned.

Atul Suri describes himself as a trader who follows the trend.

Rakesh Jhunjhunwala interview with HT on 24-Dec-2014

‘India will achieve double digit growth in 3-4 years’

Arnab Mitra and Ramsurya Mamidenna, Hindustan Times  Mumbai, December 24, 2014

First Published: 21:12 IST(24/12/2014) | Last Updated: 08:12 IST(25/12/2014)

http://www.hindustantimes.com/business-news/india-will-achieve-double-digit-growth-in-3-4-years/article1-1300074.aspx

One thing that strikes about Rakesh Jhunjhunwala’s office in south Mumbai is the number of books it holds; on tables, in shelves, on lofts. They seem misplaced.

For a man who epitomises capitalism and the principle of making money, the last image people would have is of him poring over books. But Rakesh Jhunjhunwala revels in surprising. Like his strong views against investment in e-commerce at the current valuations.

In an exclusive interview to Arnab Mitra and Ramsurya Mamidenna in his office, Jhunjhunwala opens up about his reading habits, on how India’s growth could touch double digits and why people should be confident about investing and not afraid to make mistakes.

A section of Indian industry is getting impatient with the pace of economic decision making by the Narendra Modi government.  What do you think?

The government is doing a fine job. You can’t be impatient. He (Modi) has brought about a qualitative change in the bureaucracy. The way he has communicated his intentions is excellent. Things progress at their pace. Even when he was the CM of Gujarat, all his initiatives started showing results after 2 years. So, we have to be patient and allow the government's initiatives time to play out.

When do you see growth picking up?

India will achieve double digit growth in 3-4 years. We are capable of that and have all the things needed for such a growth.

What steps are needed for doing the right things?

We are taking the right steps. But I think we should have a long-term approach to disinvestment, not an ad hoc approach that all governments have followed.

Why is growth sputtering?

I don’t understand this. Why are we all negative? We look for things that are not working properly and miss those that are doing fine. Measures are being taken in the right pace. All these things take time.

What are your views on e-commerce?

I am very bullish about e-commerce but at current valuations, most (Indian) companies are over-priced. I am not convinced about all these billion dollar valuations. What is their business model? How will they make money? They are taking somebody else’s products and selling them cheaper to attract customers. And they are doing this by spending investors’ money. How long can that last?

But how come large investors are investing in e-commerce?

As I said, I may be wrong. Probably they see something that I don’t. I don’t think Indian e-commerce companies have an evolved business model. The downside risks are more than the potential gains. But if others feel differently, best of luck to them.

You are known as the man with the Midas touch. Lots of people follow your investments. What do you have to say to them?

That’s an illusion. You can’t make money on borrowed knowledge. If following Rakesh Jhunjhunwala was all it took to make money, a lot more people would be rich. It requires patience and you learn from mistakes. I made many mistakes but my triumphs have received far greater publicity than my failures.

I am not afraid of making mistakes. But my mistakes were those that I could afford. That's very important: mistakes will happen but you must ensure that you keep them within limits you can afford.

How did you start?

I always had the ambition to enter the stock markets. My father was a regular middle class man. He told me I could continue to live in his house and pursue my ambition. I was a CA already and knew that if I didn’t make it, I could go and find a job somewhere. My brother was a practicing CA. He introduced me to some clients. I borrowed money from them and started. My goal was to earn Rs. 20,000 a month. In 1986, I did my first big transaction: I bought Tata Tea shares for Rs. 2 lakh and in three to four months sold them for Rs. 7 lakh. I made Rs. 5 lakh.

You are known as the Warren Buffet of India…

I don’t want to be a Warren Buffet. I am happy being Rakesh Jhunjhunwala. I have great respect for Mr Buffet and had the honour of once having lunch with him. I learnt a lot from that meeting.

I don’t do something with the intention to make money. I do what I like. I have a small team that collects data (on companies, sectors and the economy) but I do the analysis myself.

Is the market currently fairly valued?

I think there is still scope for growth but there could be a correction anytime.

Why do you think the markets are volatile?

I don’t think the markets are volatile. They reflect the current state of the economy.

When is the next breakout?

I don’t know when there would be the next breakout or when there would be a correction. It is very difficult to predict the way the market would move. I sit at my desk and look at the screens all day trying to figure out which way the market would move.

What sectors are you interested in?

If you are asking me which sectors or companies I'll invest in... I won't tell you. I'm bullish on all sectors. But I think most sectors will do well.

Do you think consumer spending will prevail with inflation coming down?

I think inflation will average 4% over the next year. Oil prices are down (to about $60 per barrel). I think it will fall further. The benefit will percolate slowly to the entire economy.

Price of food has been low compared to last year. I think the focus on kharif crop is wrong. Kharif has come and gone. How will it impact food prices? I think India is full of doubting Thomases.

The international markets are unstable. Japan is in trouble. What does that mean for India?

If Japan is in trouble, all the more reason for them to come to India, where there is growth. Money will come to India. But we have to create the right conditions to facilitate investment to come to India.

Do you think that the right signals are being sent as far as insurance is concerned?

They are going to do it (pass the insurance Bill). They can do a joint session and get it passed. The current government is moving fast. Foreign investors are smart enough to know that Modi means business.

What is your opinion about the RBI cutting rates?

I think the rate cut will happen before the Budget.

You have made a couple of contrarian investment calls recently. You put money in Spice Jet and MCX. What did you see that others didn't?

My investment in Spice Jet was very small. I sold that long before. What’s wrong with investing in MCX? Why should it be contrarian? I had invested after FT (the parent company) was separated from MCX. MCX is a great business with very big entry barrier.

What do you look for in a company when you make an investment?

I look for opportunity, scalability, governance and after everything else, the valuation. Let me tell you, I am not afraid of making mistakes.

Can you name some companies where your investments have been good?

In Praj Industries, I have done very well. Some of the other companies include Tata Tea, Tata Power, ACC, Tata Motors, Sesa Goa. We can't predict what is going to happen or how the markets will behave. But there has to be what I call reasoned decision. I also call my approach informed ignorance.

How do you relax? How do you keep the stress under control?

I have no stress. If I lose money -- even if my wealth halves -- what difference will it make? Will it take away my house my car, or will my children stop going to school? I relax by reading, watching English and Hindi movies. I also enjoy playing with my kids.

There are political movements that are impacting the economic environment. The Opposition has been raising the conversion issue to stop Parliament from conducting its business.

The PM is not supporting conversions. Has he said that anywhere? Modi is in control. About 80% of the control is with him. There is a lot of social divide in UP and Jharkhand. But this is nothing new. There is social divide even in the US. The shooting down of two police officers in the US…isn’t that social divide? Such things will not impact investments.

I agree we should abolish Article 370. I am all for a Uniform Civil Code. I am not afraid of saying these things. I told a TV channel sometime back that I would commit suicide if Rahul Gandhi came to power.

I think we are on the right track. I will give you an example. We had the telecom revolution which changed things dramatically. I for one would get uneasy if I don’t talk to my kids for 48 hours. I have a house help, Ramu, who also has two kids back in his village.

Earlier he could not speak to his family. Now he can speak to his mother, wife and kids also. The marginal utility of benefits for lower segment of society will be extremely high.

What are your views about aviation as a sector?

If oil prices remain the way they are, the negative views about this sector will change.

Any new sectors that you can talk about?

Most sectors will create wealth. I think pharma is one area that is evolving.

What about defence?

Defence is a very important area. We are capable of mastering this field. If we can develop an aircraft, why can’t we export these aircraft? We are launching satellites for others. We are good in manufacturing. We will do well in skilled manufacturing.

Let’s not look at the past. We are evolving. It will take time. What people are forgetting is that US and Europe took 300 years to reach this stage. We started in 1947, it’s been only 60 years. We will evolve. Even Sony started by assembling transistors. People are underestimating the consequences. We are evolving as a society also. People ensured that those who were involved in scams, lost in the elections.

What is your advice to small investors who typically come in when the market has run its course, and lose?

I would say invest in SIPs. Don’t time the market. Have confidence and have faith in your ability to make money.

There are a lot of books in your office. Do you get the time to read?

All the books have been gifted to me. I haven’t bought a single book. I like reading but don’t get much time. I get about 30 mins in the morning and at the end of the day. I read on a variety of subjects… psychology, markets, commodities. I like reading magazines like the Economist and India Today.

Interview with Rakesh Jhunjhunwala - CNBC TV18 turns 15 Investor Summit

https://www.youtube.com/watch?v=GiYmI80k3kk

This is a must watch video for all market enthusiasts

1 - 40 mins 

Discussion with RJ

RJ talks about the next 10-15 years outlook. The big bull is bullish than ever. He feels due to the crude price crash, inflation will come down drastically

41 - 90 mins

The FII Panel

Ridham Desai (Morgan Stanley India)

Abhay Laijawala (‎Deutsche Asset Management)

Neelkanth Mishra (Credit Suisse)

Ratnesh Kumar  (Standard Chartered)

The gentlemen Ridam, Abhay and Ratnesh are bullish on the earnings. Neelkanth feels earnings will not spurt but the PE rerating will happen. Most of the views were bullish with corrections on the way

91 - 130 mins

Vallabh Bhansali

He emphasized the man / woman behind the enterprise and that it mattered the most. He said most of the major changes are bought about by startups (RIL, Infy, Sun Pharma, Bharathi, Kishore Biyani in their earlier avatars). He spoke about the importance of 2% CSR.

131 - 190 mins

Market Masters with Ramdeo Agarwal, Manish Chokhani, Madhu Kela and Ramesh Damani. 

The gentlemen spoke about their investments being the best, worst and ugliest. Watching this video will be a great learning experience

191 - 200 mins

Interview with Raghuram Rajan RBI Governor