What do Buffett and Jhunjhunwala have in common?

"Marching Behind" is a very common phenomenon in global markets, especially when the person leading the lot is a generally accepted expert in investing or has been tagged as a "Guru" for investments. The two best examples of such market drivers are Warren Bufett in the US and Rakesh Jhunjhunwala in India.

I am not at all trying to question the fact that these two are experts in their own environment. I very well acknowledge that they think unlike common investors and that's what sets them apart. Both of them have a lot of things in common. Amongst these are their knack of picking up value buys and having a contrarian approach to investing. Both value stocks based on operational cash flows and do not take net profits into account superficially.

Best of all, they both invest with an assumption that the stock markets might close tomorrow and not open for ten years. Rakesh Jhunjhunwala for instance, floats no more than 5% of his net worth for active trading at any given point of time.

There is so much these two have been teaching the world and so much more to come in days ahead...

Rakesh Jhunjhunwala says: Indian Bull Market is Alive

Whats in store for the Sensex now?

With crude prices expected to go down further, the current pullback for Sensex is expected to last till 15,500 levels. In the short run, the Indian markets are expected to outperform other emerging markets due to the current post correctionary trend. Metals still seem overvalued and are expected to correct further. The Construction and Auto sectors will face margin pressures in the coming weeks and one is advised not to take any fresh positions in them.

The Sensex is very unlikely to actually outperform for the entire remainder of the year. It is expected that this year, Fixed Income Funds will give better returns than equities. Keeping this in mind, equity investments and mutual funds are expected to take a hit in terms of new entrants. This might also affect trade volumes during the year.

Mr Rakesh Jhunjhunwala feels that the Sensex will hit 25000 by 2012 but would fail to do much in 2007.He also said that the markets have seen a bull-run since April 2003 and one cannot have a bull market without corrections. The corrections would be testing the investors’ patience and their sheer belief in the markets, he said.

”All the corrections we have had in the last four years have had been deep but they have not been deep time-wise. I think the real patience and the real belief in the equity and in the market comes when the market tests you time-wise. So I think this is going to be one of the deepest and the longest corrections that we are going to have, in what I believe is going to be a very long bull market,” Jhunjhunwala said.