Learning from the latest market decline

Long periods of boredom punctuated by moments of terror This phrase is attributed to many different people said to be describing many different professions. From driving big-rig trucks, flying aircraft to modern warfare. And of course, it has since been co-opted by the investment profession and by the best investors, as a metaphor for the vagaries of the market. Personally, I think it’s a bit dramatic comparing warfare with the buying and selling of stocks. True to form, financial media in the US announced 5th Feb 2018 was “the worst point decline in history“. Phrased like that you can’t help

Read more

Read this before deciding your 2018 investment strategy

What a week for the markets! Drama from the Gujarat elections injected volatility, but overall stocks rose dramatically through the week. 82% of stocks listed on the NSE rose during the week. To put it another way, for every stock that declined, nearly five rose during the week. The markets are up nearly 30% in the last year and some stocks have outperformed indices by several orders of magnitude. No wonder that the investment industry is India’s true sunshine sector currently. As if on cue, more than a handful of experts can’t stop but wonder aloud about the sheer brilliance of

Read more

NIFTY versus the Sectors

Market correction: “When” not “If”? We’ve all been bracing for it for a while now. At Price-Earnings of 25+, NIFTY PE is now two full standard deviations above its median value of 19, that suggests or rather shouts “correction coming!”. Simply put, we’re paying ₹25 for each ₹ of Earnings from the 50 companies in the NIFTY. Put it another way, if earnings of NIFTY companies stay at the current level, and if they pay out 100% of their earnings to shareholders, it will take 25 years to recover your investment. You’re thinking that makes no sense. Even the median value implies 19

Read more

Can buying cheap NIFTY stocks beat the index?

Legendary value investors, past and present, and the best value investing blogs offer this as the one consistent message. Focus on buying stocks trading at relatively lower valuations to the market and the returns will take care of themselves. Ironically, the most-quoted “value investor” in the world, Warren Buffett deviated from this simplistic strategy a long time ago when he started buying “wonderful businesses” (brand, pricing power, future ability to generate cash with minimal capital) at fair prices over fair businesses at “wonderful prices” (current low price to book / other earnings multiples”. The term “wonderful business” has since then

Read more

5 things not commonly known about the NIFTY

Earlier this week, NSE announced effective Sep 29, 4 stocks (ACC, Bank of Baroda, Tata Power, Tata Motors DVR) will be dropped and 3 (Bajaj Finance, Hindustan Petroleum, UPL) will be added to the NIFTY. When analysts talk about the performance of the “Indian Stock Market”, they are typically talking about the NSE NIFTY Index, and the BSE Sensex Index (to a lesser extent). Most investors know the NIFTY consists of 50 stocks (currently 51), of the largest companies by market capitalisation trading on the Indian markets. 5 things not commonly known about the NIFTY: 5. How the NIFTY 50

Read more

The NIFTY in 2016

A little over a year ago, I published predicting Indian stock market returns based on historical analysis of the NIFTY and the CNX500. I did this with tongue firmly in cheek, given the very concept of value investing accepts inherent unpredictability of markets, especially in the short-term (anything less than five years) as laid out in my calm investing principles. “Anyone who says they know where the market will be a week / month / year from now is guessing (or has super powers)…“ Since I am yet to find evidence of my super powers, except for my ability to order the best thing on any restaurant

Read more

What the biggest fall in six years means for Indian stock markets

So this happened this week… A single day fall of almost 6% and an 8.3% fall for the week before a partial recovery. So what does the biggest fall in six years mean for Indian stock markets? TCI is no economist and apart from a word-cloud of “China” “commodities” “yuan devaluation”, I wouldn’t know to explain the sharp fall in global markets last week. Hence a look at more erudite opinions was called for and directly from this Vox article helpfully titled ‘The global stock market crash, explained‘, here are three (unquestioned) reasons for the Aug 24th fall in stock

Read more

Why the Nifty is falling and the futility of forecasts

People in the market aren’t happy. This wasn’t how it was supposed to go. Not after a landmark electoral mandate and all the promises it held. The professionals were unanimous. India was poised for takeoff and so were India’s stock markets… Dec 2014: Nifty to hit 9,500 by end-2015 on capital inflows: Goldman Sachs (link) Nov 2014: UBS sees Nifty at 9,600 by 2015-end (link) Sep 2014: See Nifty at 10,700 by Dec 2015: Bank NIfty to lead: JM Financial (link) But looks like noone told the Nifty. Departing from script, after steadily rising to the cusp of 9,000 at the beginning of March 2015, it

Read more