Rakesh Jhunjhunwala`s

TEN COMMANDMENTS FOR INVESTING

1) Be an optimist - The necessary quality for investing success.

2) Expect a realistic return. Balance fear and greed.

3) Invest on broad parameters and the larger picture. Make it an act of wisdom, not intelligence.

4) Caveat emptor. Never forget this four-letter word - R-I-S-K.

5) Be disciplined. Have a game plan.

6) Be flexible. For Investing is always in the realms of possibilities.

7) Contrarian investing. Not a rule, not ruled out.

8) Its important what you buy. It`s more important at what price you buy.

9) Have conviction. Be patient. Your patience may be tested, but your
conviction will be rewarded.

10) Make exit an independent decision, not driven by profit or loss.

The tenth one is really true. Just ponder over it. I never thought of this but inherently its there in my strategy while investing in stocks. With this technique alone i have been able to turn an initial investment of 40k into 7.5 lacs in 11 months period.
A sea change has happened in geo as for last month or so its generating huge volumes and has passed on one of my criteria of being midcap growth stock with good liquidity. Suffered huge loss when bought at 118 just before results with conviction of getting good news however had to exit at 111 and re-entered at 93. My personal conviction is to see geo at 165 in first week of 2010 and should never touch 89 unless market crashes by thousand points.

Dear itycoon, it is really great that you could do so well in the share market in such a short period. I am sure you have some really fine strategies in place. I don`t trade at all and there is hardly any churn in my portfolio, so it is altogether another world for me.

I had been pondering over the 10th point of RJ`s list and to tell you frankly, could not really figure out its significance. Could you explain the same, giving some example, so that we can appreciate it properly. Thanks.

Hi Comatose

Sorry for delayed reply. Firstly let me congratulate you as I feel front-line stocks have been fully valued now or would say slightly overvalued and its now turn of geo like stocks to shine and in fact we have seen this happening for last 3 sessions.

10th point of RJ can be said in other way that one should not fall in love with what he holds. On an opportune as well as unfortunate time one should be willing to part with it if he has clear indications of it going negative after that point. One should continuously evaluate his portfolio and keep a strict stop loss. I just cant digest when one of my friend says that he holds a particular stock at 225 while the cmp is 45 as firstly one should consider how much time it will take to cover up loss and then how much time it will take to generate profits.

Regarding the fortune i have been able to make, its more because of time at which i invested my first rupee in stocks. Yes that`s in January 09 when I got two gems at throw away prices geo and satyam, although i started tracking the market way back in May 08. I would not comment much here on geo board regarding churning as for most of the times it was in other stocks and not in geo until it crossed 120 somewhere in May-June o9 and 150 in September. And not that all calls were successful :-)

Even I try to be an investor as I feel being a trader generates unwanted anxiety and one may not be able to concentrate on his job/profession which generates daily bread butter for him.