scorecardresearch‘Don’t fear the bear market’: Here are ace investor RK Damani’s 7 key investing lessons

‘Don’t fear the bear market’: Here are ace investor RK Damani’s 7 key investing lessons

Updated: 16 Oct 2022, 09:22 AM IST
TL;DR.
Radhakishan Damani is a name that you cannot afford to miss, especially, when you are trying to learn from lessons shared by successful stock market investors. Success does not come easily unless you are willing to work hard for it. Enthusiasm is incomplete without perseverance. Successes and disappointments are recurring; you just need to focus on the larger picture.
Take care of your investments now for a secure financial future.

Take care of your investments now for a secure financial future.

Ask any experienced stock market investor, and he or she will tell you that Radhakishan Damani is not just a name. This billionaire investor also called the retail king did not earn his millions in a day or two. It took him years of experience coupled with the resilience to bounce back from the recurring losses that propelled him to the ranks of some of the greatest Indian stock investors like Rakesh Jhunjhunwala, Vijay Kedia, Ashish Kacholia and more.

Details of the latest corporate shareholdings filed revealed Damani’s portfolio consisting of 14 stocks with a net worth of over Rs. 2,760 crores USD. He has a very diverse portfolio consisting of stocks of tobacco, cement, healthcare, financial services, distilleries and more.

His gradual growth to becoming the 98th richest person in the world as on August 19, 2021, highlights his “wait and watch” attitude. His penchant for quality stocks shows his understanding of various businesses, their financial details and growth potential.

Damani who took to the stock market as a fish takes to water did not take long enough to understand how this market works. The famous adage “Fortune favours the brave” took centre ground as this business rose to prominence as a long-term investor.

His key investing lessons include: 

A long-term vision is essential

A primary investing principle that Damani swears by is “Value Investment”. Value investing entails recognizing fundamentally strong stocks when they are at their lowest and then waiting for them to earn you high returns in the long run. He also embedded the same investing style in his business, which is why he never took any land on lease for his business. Instead, he bought it to gain value from it over the period.

Damani always maintained the need to have the necessary analytical abilities so that they can gauge which stock would perform in sync with the market or will have a higher propensity to rise with time and changing macro trends. Successful traders do not mind taking risks and experiencing losses. They learn from their losses as much as they earn from their winnings. Apart, they do not rush to trade stocks based on tips; rather they take time to learn and imbibe the learnings from the stock markets before investing their time in them.

Attempt small to make it big

The yearning to grow into a millionaire overnight is nothing short of a far-fetched dream. Damani realized the need to focus on growing his business by keeping only a small profit margin. He used this trick to make it big in the stock market too. Evaluate good stocks and keep buying them. Then, sell the stocks once they have reached their potential.

Have patience

Being passionate about something pays only when you have the much-needed patience to stay in the game. Without the patience to be able to witness growth with time, only enthusiasm will help you achieve nothing, especially, when the markets are not in your favour. It helps to focus on profitability than rapid growth.

Stick to your plan

Ignore the ongoing sentiments in the market. Instead, concentrate on your plans. You will do a lot better if you ignore the herd instinct and play by your rules. Today’s financial tools give you a lot of information. This can make investing a bit tedious. Study stock details and park your money in stocks with the potential for good profits in the long term.

Let your action make noise

What you do matters more than what you say. Damani swears by the proverb “Let your work speak for you”. Unlike most professionals yearning to get some space on electronic, digital and print media, Damani comparatively maintains a low profile. He uses his time to pay attention to his work. This also explains his elevation to a full-time big investor even when the economy is down.

Keep it simple

Be it his retail business or investing in stocks, Damani prefers a simple and straightforward strategy. He does not care about what the market says. He goes by his own strategy and waits for the results to unfold.

The best part is that he adheres to the “Principle of Compounding” to ensure an effective growth of his portfolio. The key principle to his compounding story is “Start early and invest wisely”.He says, “The market teaches us something new every day, but the one lesson that stands out is the ‘importance of compounding’ in a young investor’s portfolio. The most important lesson learned over the course of thirty years is the significance of comprehending compounding; if you do, then you’ve won a significant portion of the fight for financial freedom.”

Take any successful investor, and you will realize that the key to growth is constant compounding. However, not all are able to comprehend the efficiency of their portfolios owing to a lack of understanding of how the stock market works coupled with extreme impatience to see stocks grow and yield in a short period.

Don’t fear the bear market

A bear market is when you are able to invest in stocks of your choice at lower prices. Instead of fearing frequent market slowdowns, use the opportunity to strengthen your portfolio. When asked about his biggest takeaway from the bear market, he says, “The first lesson is that someone is sitting in the shade now because someone planted a tree many years ago.”

Damani is a name to reckon with in today’s world of investing. You cannot simply ignore his views while listing some of the most successful investors operating in the stock markets. His ascent to success from a small-time trader to a big-time investor and a successful entrepreneur is a fairy tale riddled with failures and experiences that turned him into what he is today.

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First Published: 16 Oct 2022, 09:22 AM IST