Do it yourself

Yesterday’s post ( No margin for error ) evoked a multitude of thoughts. Some readers have challenged the premise that the broader markets, especially the small-cap stocks, have sharply outperformed the large-cap components of the benchmark indices. They have argued that — ·          Nifty Next 50 Index (YTD higher by ~21%), which comprises the top 50 stocks outside the Nifty50 (YTD higher by ~2.7%) universe, has performed much better than the Nifty Midcap100 (YTD higher by ~9%) and Nifty Smallcap 100 (YTD higher by ~10%) indices. ·          If we exclude private banks and IT services stocks from the Nifty50 universe, the rest of it has performed better than the broader market indices. ·          These statistics (index performance) completely fail to present a correct picture of the market. The narrative that small caps have done better than large caps is mostly...

Equity markets are making new highs every day. Other assets like gold, bitcoin, bonds, cash, real estate, etc., are also performing decently. Logically, investors should be happy and looking forward to a great holiday season. However, multiple interactions with investors and other market participants, over the past couple of weeks, indicate to the contrary. Investors appear stressed for a variety of reasons. Those who are underinvested are suffering from fear of missing out (FOMO). Those fully invested are worrying about protecting their gains, should there be a sharp correction. Those invested largely in defensive large caps (likes of Infosys, TCS, HUL, RIL, Nestle, HDFC Bank, and SBI, etc.) are disappointed to see their portfolios underperforming the friends and relatives who were more adventurous and invested largely in the broader markets. Those who are leveraged are constantly worried about a sharp correction, margin calls, and rising cost of borrowing but are too greedy to cut ...