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Rakesh Jhunjhunwala‘s tip on when to sell and AN INVESTMENT
Rakesh Jhunjhunwala enhasizes that not only should you know when to buy but you should also know when to sell. As Rakesh Jhunjhunwala says in one of his commandment, learn to balance greed with fear and have reasonable expectations.
(i) Asset Allocation: It is interesting that Rakesh Jhunjhunwala never tires of emphasizing the need for proper asset allocation. If your asset allocation has gone haywire, don’t hesitate to sell to bring it back on track.
(ii) Review of Critical Factors: when you make an investment, you have hopefully paid attenbtion to the factors that Rakesh Jhunjhunwala emphasized that you should bear in mind. Keep reviewing these factors, emphasizes Rakesh Jhunjhunwala. If any of them changes adversely, sell.
(iii) Relative Opportunity: Again, trust Rakesh Jhunjhunwala to state the obvious but which all of us overlook. Keep your eyes peeled for better investment opportunities cautions Rakesh Jhunjhunwala. Is Gold a better investment opportunity? If you have that conviction, re-balance your asset allocations.
(iv) EPS or EPS Expectation Peaks: If the EPS has reached levels that can’t be matched in the near future, that’s a sign that you should exit says Rakesh Jhunjhunwala.
(v) PE Absurdity: Keep an eye on irrational behavior from other market participants. If you see a bubble building, get out before it bursts says Rakesh Jhunjhunwala.
(vi) Not Driven by Profit/Loss -Independent. This is a profound statement by Rakesh Jhunjhunwala. Don’t behave like an emotional creature and be averse to loss or get excited by profits. Keep a cool head and evaluate all decisons on an independent platform, cautions Rakesh Jhunjhunwala. Don’t refuse to sell because you don’t want to book losses and don’t rush to sell only because you have made profits. Decide independently, on the merits of the investment and whether it has any more steam left or not.
