Are You Ready To Pay High Price of High Returns ?

Today’s Market Update

The big news is the clean sweep that the NDA achieved in the Bihar elections, an outcome that I think surprised most people, perhaps even the party itself. The lesson we can take away from this is that what we expect may not actually happen. This is proven repeatedly, whether it's in markets or, in this case, elections: the masses and the markets have a mind of their own that all analysis often fails to capture.

Therefore, when thinking about stocks, sectors, or the market, it's essential to remember the "Bhaav Bhagwan Che" (Price is God) principle—the BBC principle—which proves that all predictions and analyses can fall flat; the real thing is where the trend, or Bhaav, is actually moving.

The markets were volatile today. We saw a "sell on news" event this morning, where the markets tried to drop below the previous two-day low. However, there was a strong recovery towards the end of the day, indicating that the markets are in fine shape from that perspective.

• Looking at the Nifty chart, you can see it opened low and remained weak for a significant part of the day but importantly, it did not close the gap created earlier.

• The Nifty Junior was absolutely flat, down 0.09%.

• Midcaps were also absolutely flat at 0.04%, forming a Doji candle. Small caps saw a marginal gain of 0.18%.

• The Nifty Bank, however, moved up nicely and closed at what is perhaps an all-time high close, up 0.23%, which is a fantastic outcome for any index.

• Gold was very flat today, down a marginal 0.08%.

Other Market Triggers

• TCS was absolutely flat. Gaining stocks included State Bank of India, Bajaj Finance, Axis Bank, Jio Financial, Coal India, Adani Enterprises, Sun Pharma, and Hindustan Unilever.

• Stocks that were losing ground included some steel stocks like Tata Steel and JSW Steel, commodity stocks such as Hindalco and UltraTech Cement, auto stocks like Maruti, Eicher Motors, and Tata Motors, along with Infosys in the IT space, ONGC, and ICICI Bank.

• Overall, it was a fairly even split between gainers and losers. Similarly, in the Nifty Next 50 space, stocks like Hyundai, Pidilite, TVS Motors, Naukri, HAL, Divi's Lab, BPCL, and Hindustan Zinc were losing, while Mazdock, Varun Beverages, ABB, Adani Ports, Canara Bank, Bajaj Holding, Bank of Baroda, and PNB were gaining.

• PSU banks, in particular, looked like the flavor of the day.

• The Mover of the Day was KRBL, whose shares jumped 13.26% after reporting a 68% surge in quarterly profit, along with margin expansions and higher revenue.

U.S. Market Update

• Looking at the US markets in the previous session, it was a down day: the S&P 500 dropped 1.5%, the Dow Jones was down 1.65%, and the NASDAQ was down 2.25%, which is a big deal given the massive market cap size of the US market—a 2% drop translates to a huge loss in value.

• The Russell 2000 was also down almost 2.75%. Several big counters saw significant drops, including Walt Disney down 8%, Tesla down 6%, Palantir 6%, Intel 5%, and Broadcom 4%.

• The dramatic crash in Walt Disney is particularly notable, where shareholders were ambushed as the stock went from 110 to 117 in four sessions and then crashed to 104. The disclaimer here is that some of these stocks may be part of the Weekend Investing U.S. stock strategy and are certainly not recommendations.

What to watch next ?

• Although we didn't gain much overall, with the Nifty up a marginal 0.12%, it shows the market's underlying health.

• Silver continues its rally, up 1.14%, and is very near its previous highs. Silver appears to be taking the lead in this movement.

Get your Portfolio Momentum Report today and ensure your investments are positioned for success!

Important Announcement

We are now live on our official WhatsApp Channel. We have been sharing all our strategy updates, rebalances, and important announcements here. Please watch this video to know more & join in at the earliest possible.

Why this change?

Because it’s simpler, faster, and right where you already are — WhatsApp makes staying updated effortless.
Stay updated with:

• Strategy Updates & Rebalances
• Exclusive Announcements & Offers
• Important Reminders – all in one place

Here’s an instruction manual if you are new to Whatsapp Channels

Top Trending Strategies

What To Read This Week ?

Are we in a Commodity Super-Cycle ?

LIQUIDCASE stings LIQUIDBEES !

The High Price of High Returns: Surviving Market Drawdowns

🚀 The Survivor's Tale: Looking Back at the US Stock Market Giants

The lure of incredible stock market returns is powerful, especially when we look at the last decade's performance of US tech behemoths. Based on a chart sourced from Charlie Bilello, the numbers are staggering:

It sounds fantastic to imagine having invested in NVIDIA 10 years ago and achieving a near 30,000% return, or a 3,200% return with Tesla. However, the path to these monumental gains is anything but smooth.

📉 The Pain of the Drawdown: Could You Have Held On?

While we focus on the spectacular final returns, it is crucial to remember the steep drops investors had to endure along the way. The left side of the chart (see the image above) reveals the devastating mid-journey drawdowns that even these survivor stocks experienced.

This brings us to a fundamental question for every investor: Could you stomach those massive ups and downs? Facing a 77% drop in your portfolio requires immense psychological fortitude and conviction.

👻 The Ghost of Non-Survivors: The Crucial 'Comeback' Question

The returns above are based on survivorship. These are companies that not only survived massive drawdowns but also roared back to deliver exceptional performance. But what about the many companies that had a great run for a time, only to eventually fail and never recover?

Many once-dominant giants, such as Intel, Citibank, Deutsche Bank, or Cisco, looked great on the "right side of the chart" for a period, only to suffer a painful decline on the "left side" from which they never truly recovered their former glory. Identifying the eventual winner during the decline is nearly impossible.

⏳ The Time Concentration of Gains: The 20% Phenomenon

Examining the 15-year log chart of a stock like Tesla reveals a surprising truth: the significant gains are not spread evenly across the entire period.

• Major rallies for Tesla occurred only during two brief periods: around 2013-14 and the 2019-21 timeframe.

• Most of the gain over 15 years happened in only about 20% of that time. The remaining 80% was largely flat or volatile (e.g., flat for four years recently).

This observation emphasizes the importance of a strategy that ensures you participate in these short, explosive trend periods and avoid getting stuck during the multi-year flat or consolidation phases.

Key Learning

The Majority of Long-Term Stock Gains are Concentrated in Short, Intense Periods. The financial rewards of a winning stock are not distributed uniformly over time. A small fraction of the total holding period (e.g., 20% of the time) accounts for the vast majority of the gains.

Meme Of The Day