How Value Investors Would have Managed their Portfolios during 2008 Market Crash?

Actual Question:

How did Mr.Jhunjhunwala and Mr Damani manage their portfolios during 2008 market crash?

Answer:

Dear Friend!

I do not know how Mr.Rakesh Jhunjhunwala and Mr.Damani managed their portfolios during the post Lehman Brothers market crash but I know what I did and I presume they too would have done the same - bought more shares! Surprised?

Believe me that is what I exactly did. I used buy and next day the market would have fallen 10–15%. I would buy again. Again crash. Again bought. In this fashion my portfolio nearly halved in size. That meant I had lost 50% of my cash investment!

I was not at all afraid to put more money in - of course I was very nervous. But I kept my nerve and continued buying.

Why?

Because I was a value investor then as I am today. All the shares I owned were of excellent companies.

I think the BSE Sensex plunged from 20827 to below 8000 - a crash of over 60%!

After the complete collapse, I began feeling scared - I was scared out of my trousers - for it was not just about the stock markets but it appeared that the whole world was falling apart - especially the financial world.

Gripped by fear, when the markets started rebounding, after global, concerted action, including India, by way stimulus packages, I made the biggest mistake in my life!

When the Sensex regained 14000–15000 levels by about March 2009, out of sheer panic, I liquidated my portfolio completely with about 250% returns. It was a serious mistake because the market not only regained 21000 by November 2010, I was completely shut out of the market for many years.

In conclusion, I believe Mr.Rakesh Jhunjhunwala and Mr.Damani would have certainly bought during the crisis and would have retained their investments unlike what I did.

Thank you,

Anand