The WeekendInvesting Newsletter - 17 Nov 2023

Freshly Brewed - Market Perspectives from WeekendInvesting Research Desk

The roller coaster case study on WONDERLA

Imagine being an investor in Wonderla Holidays when it went public. The stock was initially listed at Rs160 per share and quickly surged to Rs400 within a year and a half. As an investor, you would have been thrilled to see your Rs150 investment turn into Rs400. However, the stock’s growth trajectory took a turn in December 2015, and it entered a sideways mode for the next two years, with prices fluctuating between Rs400 and Rs320.

During this period, small-cap stocks took a hit, leading mutual funds to sell some of their small-cap holdings. This reshuffling caused a reset in valuations, and Wonderla Holidays’ stock dropped from Rs400 to Rs105, falling even below the IPO listing price. Over the next three years, the stock experienced a total decimation in price action.

As an investor, what should you have done ?

Nobody can forecast the market right !

As investors, we are constantly bombarded with predictions and forecasts about the stock market. We look to experts, like Mike Wilson, the Chief Investment Officer at Morgan Stanley, to come up with accurate forecasts. After all, they have access to extensive knowledge, teams of experts, and sophisticated modelling techniques. However, the truth is that even the best minds in the industry, with all their resources, often make incorrect predictions.

In a fascinating analysis published by @Barchart, we can see the S&P 500 plotted alongside the statements made by Mike Wilson. What this analysis reveals is that Mr. Wilson, despite his esteemed position, has made several incorrect predictions about the market. Time and time again, his forecasts . . . .

WeekendInvesting Daily Byte

The end of the week action saw the market trading within a range, with yesterday's range being particularly high, ranging from 19,600 to 19,850. Today the market opened a gap down due to the performance of the banking sector. Despite this, the Nifty remained reasonably buoyant, reaching 19,900 before experiencing some sell-off.

Overall, it was a positive week, with the markets moving from 19,400 to 19,731. Currently, the market is retesting the resistance levels at 19,800 to 19,850, and it is expected that at some point we may see a right shoulder formation leading to a bullish run towards 21,000.

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