GOLD vs Smallcaps : Is this the next up-cycle ?

Today’s Daily Byte

The markets came off a little bit today. I think the good sentiment that we were experiencing since the 1st of February is a bit nervous right now. There is a potential surprise in the income tax bill that may be in the fine print. We’ll only know once it comes out. Additionally, the daily election results are also around the corner, so some profit-taking is probably happening in general as well. The RBI outcome is also due tomorrow, so the combination of all these factors is probably causing some nervousness in the market. However, even if the market consolidates near its current level, I think that would still be a good outcome.

Today, we will talk about the same mistakes, similar losses, and how to be aware of certain things. Beware of sectoral concentration and sectoral selling. We will also discuss some sectors that have not performed well recently and how market intermediaries have benefited from that.

Reading Time : 4 Minutes

Is this the next up-cycle for GOLD vs Smallcaps ?

This is a ratio chart comparing gold (in INR) to the CNX Small Cap Index over the last 20 years. The chart shows an interesting cycle where the ratio fluctuates between 1.3 on the higher side and sometimes even as low as 0.2. This repeating pattern highlights how the performance of gold and small caps moves in cycles, sometimes favoring one asset class over the other. . . . .

Reading Time : 4 Minutes

Lessons on performance distribution

A recent chart by Global Markets Investor highlights an interesting pattern in the S&P 500. It shows the percentage of companies that are outperforming the index at any given time. Historically, whenever the number of outperforming stocks drops to very low levels, it signals a period of high concentration—where only a few stocks are driving the market upwards while the majority lag behind. This has happened several times in the last 35 years, most notably in 1998-99, 2000, and even 1990 to some extent. . . . . .

Reading Time : 3 Minutes