On a December afternoon in 2010, Rakesh Jhunjhunwala surprised the investor community with his views on commodity investments. Those closely following this "Warren Buffett of India" had a direct and clear message from their icon. "I don't invest in commodities."
"Investments in commodities are more for speculation than investing. They are not good investment options," Jhunjhunwala had said, responding to a question at a media briefing in Ahmedabad during the launch of the initial public offer (IPO) of A2Z Maintenance & Engineering Services Ltd (now known as A2Z Infra Engineering Ltd). Jhunjhunwala was one of the directors of the company offloading stake through the IPO.
‘Not good investment options’
Jhunjhunwala's stock picking expertise is well-known, but very few would know that the 'Big Bull' gave a miss to the other financial asset, i.e. commodities. "Commodities and currencies are more of place places for speculation than investing," believed Jhunjhunwala terming them as "not good investment options".
The billionaire stock trader passed away on Sunday morning, leaving behind a wealth of $5.5 billion (approximately ₹45,000 crore) built mostly from the value-picking in the equities. Jhunjhunwala had been critical of commodities investments, but not entirely the commodities space.
He consciously maintained a "safe distance" from direct exposure to commodities such as base metals, bullion, agro-commodities, natural gas, or energy products. Still on multiple occasions, he was seen going "extremely bullish" on commodity stocks such as metal companies.
In Jhunjhunwala's philosophy, as he had explained during that rare media briefing in Ahmedabad, "commodities are not a lucrative place for investors as it would be impossible to hold them for long years."
On the other hand, he believed, equities would give better opportunities for investors who prefer long holding. "I think commodity or currency currencies investments are satta (speculation). I do not think they are a good option for long-term investors as they cannot be held for a longer period."