Rule No. 1 – Never be afraid to make mistakes
Rakesh Jhunjhunwala says that if you’ll be afraid to make mistakes then you’ll not be able to make any decisions and if you want to become successful then you have to take some tough decisions in life.
And sometimes we end up making a mistake while taking the decisions.
So, Mr. Rakesh Jhunjhunwala says that one should learn from his/her own mistakes and that learning could take that person somewhere ahead in life.
According to him, experience is one of the ways to learn how to invest in stock market and experience can only be drawn from mistakes.
Rule No. 2 – Analyze Rigorously
Before investing in any company, you should do a proper analysis of that company.
At the time of investing in stock market, you cannot draw reliable conclusions only by looking at just 2-3 fundamentals.
Along with quantitative analysis, one has to do an in-depth qualitative analysis which means the management of the company is also required to be analyzed thoroughly.
Rule No. 3 – Market is Supreme
Mr. Jhunjhunwala says that Market is Supreme. Market is never right or wrong. The only thing which is right or wrong is You.
If you’ll not accept the fact that market is supreme, then you’ll never be able to accept your own mistake and if you’ll not accept the mistake then you’ll not be able to learn from that mistake.
Rule No. 4 – Always maintain a separate Trading and Investment Portfolio
The First and the Foremost thing which has to be kept in the mind while investing in stock market is that if you want to do both trading as well as investing then you must keep your investing and trading portfolio separate.
Rakesh Jhunjhunwala also says that before commencing any trade you should also analyze its worst-case scenario and be prepared for that scenario.
And one should take only that much amount of risk that he/she can afford.
Rule No. 5 – Stock Tips are hazardous
Mr. Jhunjhunwala says that you should always stay away from stock tips and always focus on your own market analysis while investing in the market.
If it is not feasible for you to do the analysis on your own then its better you invest in Mutual funds.
If some of the famous or well-known investor has invested in some of the stocks and you also find that stock profitable after doing your analysis then you can also invest in that.
But you should not invest in some stock only because of the fact that some well-known investor has invested in that. You may never get to know if that investor sell back his stocks the next day itself.
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