Those days will always be etched in my mind. With this capital, in a short period of one year I earned nearly Rs1mn and invested the gains in 5,000 shares of Tata Power. My brother, a practicing chartered accountant, had many rich clients and helped me raise about Rs1.5mn from his clients. One obviously cannot be a trader or investor in capital markets without capital. With this capital, my skills and dreams, along with the blessings and guidance of my elders, Rakesh Jhunjhunwala arrived in 1985 on the streets of the Bombay Stock Exchange with the firm conviction and belief "Hum honge kaamyab!" They have been my greatest source of succor and support in times good and bad. Despite our differences of opinion, I have always lived with myparents, as I do today. I do not think I could be anywhere near what I am today without the guidance and blessings of my parents. My father, the person from whom I have learnt the most in life, may not have backed me financially, but he always blessed me and my endeavors, whatever they be, from the bottom of his heart. He also wanted me to never forget that, "My word is my bond", and to not attempt any shortcuts.
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At the same time he offered the security of a house in Bombay, where I could always live, and impressed upon me the fact that I was a qualified professional and that I could always make a living even if I failed in my endeavors in the markets. He stressed upon me the fact that he would not support me financially in this endeavor. But, having a democratic father was a big help. This was most unorthodox and unacceptable to most people, including my family. This led me to embark upon a career in the capital markets. The childhood fascination with stocks was compounded with the realization that capitalism is going to prevail in the world, and that the temples of capitalism, the capital markets, are going to be the new temples. After graduating from Sydenham College, I completed my chartered accountancy in 1984. I read newspaper columns on stock prices with absolute fascination, and decided early on in life that stocks and shares were going to be my calling in life. On quizzing my dad, he advised me to link the fluctuation in prices to the news flow. I would listen to conversations about a one obviously cannot be a trader or investor in capital markets without capital stocks among my father's friends and the fluctuations in stock prices fascinated me. As a child, I was introduced to the world of stocks due to my father's hobby of investing and trading in shares. Just like most children, I first wanted to be a pilot, and In fact, I love trading and investing, and even if I had to pay for doing it, I would have surely done so. In the market you have to be like a chameleon, always changing your colors. I used to be a bear during Harshad Mehta's time, I'm very bullish now. I can be a bull and a bear, and sometimes both at the same time. The ability to adapt and change and mitigate prejudice is critical to success for someone who wants to earn a livelihood from the markets. It is a rule of human nature that it is very difficult to change ourselves. You can't teach trading, trading has to be learnt, but to some extent, I think traders are born. Good judgment comes from experience, experience comes from bad judgment. We are programmed to learn, and we learn to avoid pain.
Yet when one takes a big loss, why do we continue to trade?
It is a combination of empirical evidence, gut feeling, other people's opinions, or sometimes it's just because he or she is feeling bullish that day. Even traders who use the latest technology to help them take decisions, or use sophisticated proprietary models developed by big investment institutions such don't really know why they have bought or sold a particular stock. In both trading and investing, it's important what you buy, but it's more important at what price you buy. There is lack of focus on the magnitude of gains and losses, which is why I maintain that good trading requires you to go against the basic tenets of human nature. Human nature operates on the chance of a gain rather maximizing gains. The ability to strike the right balance between fear and greed is the most vital determinant of profitable risk-taking. Trading is against human nature conditions, viz the greed for profits and the fear of losses. Here he explains his investment approach, and the influences which have shaped it. One of the world's greatest super traders operating in one of the world's toughest stock markets, Rakesh Jhunjhunwala is as bullish on India today as he has been since 1985.
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