Devina Mehra: Want to invest like Rakesh Jhunjhunwala? Lessons from his success

If I ask which is the most volatile investment option among fixed deposits, Public Provident Fund, equity and liquid mutual funds, everyone will get the answer right: equity. Of course, there are assets like cryptocurrency that are even more volatile, but we are not going there now.When we look back on index charts for various stock markets globally over the decades, it all looks so simple: the market went down here, then went up, and obviously you would have either remained invested through the ups and downs or bought more at the bottom. Of course.

Nothing could be simpler. And you are smart.Unfortunately, in the here and now, you see only the down leg in the graph without any clarity on if, when and how an upward move will come. It is then that the voice in your head begins to panic and pushes you towards the exit.

Volatility in theory appears fine, and maybe at some level, we all think that it means a 20% return in one year and maybe only 5% the next. The reality can be a decline of 15% or even 25% in the next period. The ‘superpower’ that’s needed for market success is actually quite simple, at least in theory: understand and act on the fact that stock market returns are lumpy, not even.

Everyone in Indian markets seems keen to emulate the late Rakesh Jhunjhunwala, or at least his investment results. There are many theories about his investment methods and philosophies, and why he succeeded and managed to make a fortune investing exclusively in Indian equities.So was his superpower his selection of stocks? As someone who knew him first hand, I would say not. He bought literally hundreds of stocks and was equally passionate about many of them.