Common sense position sizing for investors

Good traders worry all the time about blowing up. So they cap their exposure to any single position. Most active investors have the opposite problem. They tend to be under-allocated to their best investments. How much to allocate to active positions deserves some attention. This post looks at a few common-sense rules about position sizing for investors.

Read more

Where is India’s Amazon?

This article was first published on capitalmind.in In 2019, Amazon made $281 Bn in revenue. Up 20% from 2018. That is the combined revenue of the top-5 revenue-earning Indian companies: Reliance, IOCL, ONGC, BPCL and SBI. A year later, in 2020, Amazon clocked $386 Bn, growing 37%. Put another way, Amazon added 1.4 times the total annual revenue of Reliance Industries as incremental revenue in 2020. Chart shows Amazon’s meteoric revenue growth since 1997: Yes, some of that growth in 2020 was aided by the pandemic but is not an aberration. Since going public 24 years ago, its annualized revenue growth rate is 41%.

Read more

The Observer Effect and how it messes with investment returns

There is a formal theory called ‘The Observer Effect‘ in science that is to do with how the presence of an observer determines the outcome of a phenomenon. This article is only loosely related, not as deep, and probably more fun. Think about a time when, on a lazy Sunday mid-morning, a distant out-of-town relative called out of the blue and said they happen to be visiting their son in your city, will be passing close to where you live, and would like to come over, today, in an hour! Please don’t go to any trouble. Or imagine, at work,

Read more

HSBC Focused Equity Fund: Should you invest?

[This post was first published on capitalmind.in] HSBC has launched an NFO (New Fund Offering) for a Multi-Cap Equity Mutual Fund. The NFO is open from 1st to 15th July 2020. We took a look to see if it makes sense for investors. Short Answer: Unlike Large Cap funds that produce similar returns and underperform low-cost ETFs, Multicap funds see significant performance dispersion. So it matters which fund you pick. Unless you have reason to believe the fund managers of this new fund bring a unique advantage to the table, you are better off with funds with a track record.

Read more

Time the Market. Sleep Better.

This post was first published on capitalmind.in As of 9th May 2020: Gold (+48%) has outperformed Nifty (-19%) by 67%. In one year. You can not time the market. But wait… Imagine if you had known this chart back in May 2019. Heck, back in Feb 2020 would’ve worked too. But you can not. Because timing the market is impossible. Which is why you should buy (or SIP) and hold. End of story? Not quite. To start with, let’s keep it simple and not pretend that we could have predicted Gold’s performance. But could we have gotten out of the

Read more

Motilal Oswal’s S&P500 Index Fund: Should you Invest?

This post was first published on capitalmind.in Motilal Oswal has launched an NFO (New Fund Offering) for its S&P500 Index Fund. The NFO is open from 15th to 23rd April 2020. We took a look to see if it make sense for Indian investors. Short Answer: The launch of a fund tracking a major US Index is a step in the right direction. But it’s not necessarily the best way for Indian investors to invest in the US. Let’s make sure we’re clear on the reasons. The S&P500 has outperformed the NIFTY more times than not over the last decade.

Read more

Fundamental Analysis Tools for Investors in India

In the course of finding the most time-efficient way of analyzing companies shortlisted for investment, I’ve come across various tools available to Indian investors. This post compiles a list of some of the tools that I’ve tried either briefly or extensively along with some of their key strengths and weaknesses. Note that this list is far from comprehensive and also that digested analysis from any source is typically only a starting point and not a substitute for diving into past annual reports to gain context of the fundamentals. Overall note of caution on using any tool that aggregates data is to assume

Read more

The complete list of 2020 stock recommendations

This has become an interesting annual exercise where I track stocks recommended at the end of the year by the various research houses from big investment banks to brokerages. After all, there are the folks with high-powered research teams equipped with bloomberg terminals. You would expect them to outperform the simplest way you could invest, i.e. buying the index. Recap of how the professionals did in 2019 Here’s how the professionals did. The 13 research teams I tracked recommended a total of 98 stocks (with overlaps). If you had invested equal amounts of money in their stock picks, you would

Read more