Teachers’ Day – Investing lessons from successful investors

On teachers’ day, we often remember the people who have shaped our lives, from school teachers to college professors, mentors, and even parents. But have you ever considered that some of the best traders in India and around the world can also serve as our financial teachers?

In the realm of stock market trading, there are a handful of experts whose life stories, strategies, and resilience offer essential lessons for aspiring investors.

In this special teachers’ day edition, we celebrate the stories of successful traders & investors from India and beyond. Let’s delve into their fascinating journeys to understand how they navigated the stock market.

 Indian stock market gurus

1. Warren Buffett – the oracle of Omaha

Warren Buffett has been an inspiration in the investment world for decades. The first thing you should know about Buffett is that he is an advocate of value investing, a strategy that involves picking stocks that appear to be trading for less than their intrinsic value.

But what lessons can beginners take away from such an illustrious career?

Be fearful and greedy at the right times

Warren Buffett has often been quoted saying, “Be fearful when others are greedy and greedy when others are fearful.” This axiom is an excellent starting point for new investors.

It simply means that when everyone else is buying up stocks, driving prices through the roof, it’s time to be cautious. Conversely, when the market is down, and everyone is selling, that’s the time to buy up valuable assets at a discount.

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Due diligence and research

Buffett never jumps blindly into an investment. He reads, learns, and understands a company from top to bottom before he even considers adding it to his portfolio.

This is a lesson every new investor should engrave in their mind. Skipping research and due diligence is akin to gambling your money away.

Consistency is key

Another interesting point to note from Buffett’s career is his undying commitment to his principles. Whether it’s a bull market or a bear market, you’ll find that his strategies rarely change.

Consistency in your methods, paired with adaptability to market conditions, can offer you a robust investing approach.

2. Rakesh Jhunjhunwala – the Indian Warren Buffett

In India, Late Rakesh Jhunjhunwala was often compared to Warren Buffett, and for good reasons. He was a master of the Indian stock market and had a net worth that served as a testament to his skills.

Long-term vision

Jhunjhunwala was renowned for his long-term investment strategies. He identified stocks with strong fundamentals and future growth potential and stuck with them. His philosophy was simple: Good stocks will yield returns, but it takes time.

Investing in undervalued stocks

Jhunjhunwala often looked for undervalued stocks, meaning stocks priced less than their intrinsic worth. This approach demands a deep understanding of the market and individual stocks.

However, it’s not as complex as it seems. For beginners, it implies focusing on companies with strong fundamentals but are currently out of favour in the market.

Resilience amid volatility

One of the admirable traits of Jhunjhunwala was his ability to remain calm during market volatility. When most people were busy selling their holdings in panic, he either held onto his investments or even increased them if the fundamentals were strong. For beginners, it is a lesson in emotional resilience and logical decision-making.

Also Read: Investor’s guide to India VIX (volatility index)

3. Radhakishan Damani – the art of patience

Radhakishan Damani may not be a household name, but in the stock market circles, he’s a legend. He emphasizes the importance of patience in building a successful investment portfolio.

Waiting for the right opportunity

Damani is not the type of investor who rides every wave that comes along. He sits back, assesses the opportunities and waits for the right one. In a market where trends change every week, his patience serves as a strong foundation for his investment choices.

Long-term over short-term

Patience also extends to how long you hold onto your investments. Damani often chooses stocks that he believes will perform well over several years. He doesn’t let short-term fluctuations deter him from his long-term objectives. For beginners, this is a crucial lesson. Stocks are a long-term game, and patience is a virtue that can lead you to success.

Discipline

Apart from patience, Damani is known for his disciplined approach. He sets guidelines for his investments and sticks to them rigorously. This discipline prevents him from making impulsive decisions, which is a trap many beginners fall into.

4. Raamdeo Agrawal – the power of compounding

Raamdeo Agrawal is not just any trader; he’s a guru in the world of investing. He is the co-founder of Motilal Oswal, a company that has become a household name in India for financial services and brokerage.

Agrawal’s rise to prominence isn’t a story of overnight success; rather, it’s a tale that involves wise decisions, a keen eye for opportunities, and, yes, the power of compounding.

The lesson of compounding

The concept of compounding is simple but immensely powerful. Imagine planting a small seed. Given the right nutrients and care, this seed will grow into a tree. Now, imagine the tree bearing fruits, each containing seeds.

If these seeds are planted, you get even more trees, leading to an exponential increase in the number of fruits and seeds over time. The same principle works with your investments.

What do beginners learn from it?

For those who are just stepping into the realm of stock market trading, the lure of quick profits can be overwhelming. However, Agrawal teaches us that even a modest investment can become a mountain of wealth if it is given enough time to grow.

The real trick lies in resisting the temptation to cash out your small gains in the short term. Instead, reinvest your profits to purchase additional shares and let compounding do its magic. 

In a world where people are looking for quick returns, Raamdeo Agrawal stresses the importance of patience and long-term vision, especially for newcomers.

5. Ashish Kacholia – the love for hidden gems

When we think about stock markets, names like Apple, Amazon, or Reliance often pop up. But Ashish Kacholia, a trader who has consistently made waves in the Indian markets, rarely goes for the obvious picks. Instead, he has made a career by identifying what he calls “hidden gems.”

The concept of hidden gems

Hidden gems are companies that are often overlooked by mainstream investors. These companies might not be making headlines yet, but they have solid fundamentals, strong business models, and the potential for massive growth. Kacholia’s expertise lies in uncovering these gems before the wider market catches on.

Also Read: Risk management in stock market

Taking calculated risks

Ashish Kacholia encourages investors to move beyond their comfort zones. While it might seem safer to go with established names, sometimes the biggest rewards come from the most unexpected places. 

However, Kacholia does not endorse reckless gambling. His strategy involves rigorous research, understanding the business model, and analyzing market trends before making an investment. He stresses the importance of taking calculated risks, especially when venturing into unknown territories.

6. Ramesh Damani and market timing

Ramesh Damani is a well-respected member of the Bombay Stock Exchange (BSE) and one of the most successful traders in India. While many traders focus on stock picking, Damani’s forte is timing the market, an art he has mastered over the years.

The essence of market timing

Timing, in Damani’s strategy, is not just about buying low and selling high. It’s also about knowing when to hold onto your stocks and when to exit. In a volatile market, this ability to time your entry and exit can make a massive difference in your returns.

A conservative approach

Ramesh Damani is not someone who thrives on risks. His conservative strategy might not give you quick, spectacular returns, but it is a method that has worked for him for decades.

He often waits for the market to dip to purchase stocks at a bargain and sells them when he feels they are overvalued. His approach is less about frequent trading and more about thoughtful investing, which reduces risks and yields consistent returns over time.

By mastering the art of market timing, Damani teaches us that patience, coupled with keen observation, can also be a route to stock market success. And while this approach may not be for everyone, it serves as a lesson in how varied stock market strategies can be.

7. Ashish Dhawan and the importance of diversification

Ashish Dhawan, founder of ChrysCapital, stands out in the investment realm due to his keen focus on diversification. His vast portfolio, spanning across sectors like technology, healthcare, and consumer goods, provides insight into how diversification is not just a strategy, but a safety net in volatile markets.

The essence of diversification

Diversification, in investment parlance, means not putting all your funds into one avenue. Think of it as not placing all your bets on one outcome. This approach reduces risk because if one sector underperforms, another might compensate for the loss.

Dhawan’s method

What sets Dhawan apart isn’t merely his diverse investments. It’s his research-driven approach before diversifying. Each investment is not a random choice but a well-calculated decision. This teaches us that diversification is not about random choices but about purposeful and informed decisions.

A tip for newcomers

Dhawan’s diversification principle is invaluable for beginners in stock market trading. In the unpredictable world of stocks, diversifying your investments can be a buffer against unforeseen market downturns, providing stability to your portfolio.

8. Vijay Kedia and the power of research

When we talk about stock market legends in India, the name Vijay Kedia certainly rings a bell. He’s not just another trader or investor; he’s a man with a vision who has carved out his own path in the confusing world of stocks and securities.

Known for his detailed research and in-depth analysis, Kedia’s investment strategy is a textbook example of how meticulous planning coupled with keen intuition can spell success.

Why research matters?

For Kedia, research is everything. He doesn’t just skim the surface; he dives deep. This involves more than just staring at numbers. He looks at the business model, the team behind the company, and even its future prospects.

It’s this thorough research that has made him one of the best stock traders in India.

From mistakes to wisdom

Kedia didn’t start as a wise, calculating investor. He began his journey making quick, impulsive trades. It was a school of hard knocks, but he learned. He evolved his strategy from speculation to informed, long-term investment.

Today, he’s known for his researched choices and his incredible knack for picking companies that soar in value over time.

A balanced view

Kedia doesn’t just study businesses; he also studies the people running them. He believes a good team can make or break a company. His balanced approach allows him to see opportunities that others often overlook.

Wrapping up

This teachers’ day, we took a different path by learning from some of the best traders in India and across the globe. These stock market mentors teach us a range of strategies, from the power of compounding to the art of patience.

They underline the importance of being diligent, wise, and even a bit daring at times. 

As we celebrate teachers’ day, let’s not forget to pay tribute to these financial wizards who, through their life stories and strategies, have become some of the most enlightening teachers in the realm of investment. Happy teachers’ day to all!