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The Psychology Behind Buying Price: A Lesson from Rakesh Jhunjhunwala

I often listen to interviews with people I admire while working out, walking, or whenever I have some free time. I may not always listen to an entire interview, but I usually learn at least one valuable idea from it. Some interviews are so insightful that I listen to them repeatedly.

Recently, while listening to an interview with the legendary investor Rakesh Jhunjhunwala, one thought particularly caught my attention: the buying price is extremely important in investing.

This idea is not merely about buying at a lower price; it is also about psychology. When I purchase a fundamentally strong business at a sensible valuation, I feel more comfortable during market declines. That comfort helps me think rationally instead of reacting emotionally to every price movement.

I experienced this myself. I bought shares of a company at an average price of approximately ₹150. I am not disclosing its name because this article is not a stock recommendation. The price later rose to nearly ₹670 and then fell to around ₹246. Despite the sharp decline, my low purchase price gave me the confidence to remain patient. Even at ₹246, I was still showing an approximate gain of 64%.

The important lesson for me is not about this particular investment. It is about how the buying price influences my state of mind. Because I bought at a sensible valuation, I was able to remain calmer during the correction and focus more on the business than on its short-term price movement.

Investing is not only about studying companies, profits, and balance sheets; it is also about understanding human behaviour. A sensible buying price can reduce my fear and regret, helping me think more clearly and remain patient.

However, a low buying price does not guarantee success. The business must remain fundamentally sound, and I must continue to review my original investment thesis.

My main takeaway is simple: when I buy at a sensible price, I give myself greater psychological comfort and a better chance of thinking long term.

Happy investing!

Disclaimer: This blog expresses my personal learning and experience. It is not investment advice or a recommendation to buy or sell any security.

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