Rakesh Ji as a child was always curious about stock movement. He used to ask his father why that stock went up or down. As a child also, he was very curious and used to look at balance sheet of companies.
He wanted to directly jump into stock market after 12. His father advised him to atleast do CA in case he fails into the market, he will have a backup.
1985
Wealth - 5000Rs
After completing CA, Rakesh Ji Came to Bombay with 5000Rs.
Now, at this point, he asked his brother for help to get him some money to trade. At that point in time borrowing used to happen at around 12 percent.
He convinced 1 client who said, they will give him money at 18 percent. They promised him 2.5L with initial money of 1 lakh. As a mortgage, RakeshJi had given them the securities and his convicing words.
Wealth - 12.5L (Borrowed)
With that money, he made some success and he got his completed 2.5L. And another client gave him 10L to trade. With 12.5L, he made 30L within a year by trading. He paid a tax of 4L that year.
Wealth - 30L - (12.5L borrowed + 4 L tax) = 11 L
Then with that money, He bought SESA Goa at rate of 25 which became 65 in 4 months. His money went up to 30L with that trade.
Wealth - 30L
Then he bought Tata power at 150, which went up to 1000. That 30L became around 2-3 Crore with the help of that trade.
Wealth - 2-3 Crore.
VP singh Budget (1986)
Before the budget markets were very down, but he was very bullish. There used to be evening session on budget day 6-9PM. He had 3 Crore worth of stocks at 6 PM which became 30 Crore by 9PM. (Not sure of stock details. May be was trading F&O for this rise)
Wealth - 30 Crore.
1990s -1992 (Harshad Mehta)
His friend bought ACC at 100 and sold at 10100. This stock rights issue was not even fully subscribed 3 years back. It was so crazy.
He made some success investment in Tata tea when it was at a P/E of 90 during Harshad Mehta Scam. But, it was a successful bet for him as it was fundamentally strong stock in his opinion.
He became very bearish on markets in 1992 as markets were very highly valued. He made a lot of money during that time by shorting stocks.
He doubled his wealth in that bearish period.
Wealth - 60 Crore.
Post Scam
Year 1993 - SBI came with Ipo price of 90, got listed at 160. He shorted it a 160, Next day it went up to 240. Eventually it came down and he made money.
He bought United Spirits at 40 which became 24000 in 17 years. Due to split the price is different on exchange.
Over years, he made a successful bet on Titan and many other stocks.
Analysis - He initially borrowed money and traded on that. But, he was sure of his skill as he was looking at companies since he was a child. He was not a beginner and he was a qualified CA. He returned the money as soon as he can. We should not trade with borrowed money on reading his story.
He is both a trader and investor.
His trading style - He trades on the basis of momentum and keeps pyramiding (that is keep buying) when the stock moves in his favour. He never averages while trading and take a hit when the stock against him.
He never fixes a target as we never know till what level stock will go. He only gets out if it looks way overvalued and far stretched. We can trade in any time frame for trading as per his view.
He has made money in trading in certain bullish periods - 89-92, 2003-07, 2009-11.
While investing, he does averaging sometimes with buying stocks in a staggered manner. If only the stock is going down and not the overall market.
If the overall market is looking bearish, he will lighten his position in staggered manner and sit on cash until the direction changes.
