The WeekendInvesting Newsletter - 27 March 2024

Mi NNF 10 - A Consistent Outperformer !

This chart denotes the CAGR of both Mi NNF 10 and its benchmark, the Nifty Jnr Index on which the strategy is based. The strategy has recorded a CAGR of 33% compared to 24% on the Nifty Jnr (Period : 12 Nov 2020 to 26 Mar 2024 - 3 years and 4 months)

The sheer consistency in outperformance of the strategy is essentially an outcome of ;

- Picking and riding the strongest stocks within its universe in a non discretionary - rule based manner.

- Allocating a standard 10% weightage to all stocks without any bias towards market capitalization

- Riding winners as long as momentum exists and dumping losers as soon as momentum fades away

Why all good stocks cannot be in all strategies!

Every investment strategy operates differently, tailored to specific risk-reward profiles and objectives. Just like how different models of cars have varying engine tunings for performance or fuel efficiency, investment strategies are tuned for specific purposes. For instance, momentum-based strategies share the same core principles of buying winners and selling losers but may differ in how frequently they assess stocks, how aggressively they cut losses, and how well diversified they are.

Consider the case of Tanla Platforms, a stock that soared from Rs87 to Rs1000 within months, yielding an impressive 800% gain. While this stock performed exceptionally well in one strategy, it didn’t appear in many others. . . . .

Reading Time : 3 Minutes

Can you really go wrong in India ?

Over the past few decades, Japanese investors have witnessed remarkable growth in their equity and gold portfolios. For those who entered the workforce around 2000, their journey has been marked by a staggering 1100% increase in gold and only a mere 150% rise in equity. This experience shapes their investment preferences and decisions, especially as they approach middle age.

The investing landscape is heavily influenced by generational experiences. In India, where equity has outperformed gold with an impressive 11.5% growth rate, the preference for asset classes is evident. Contrastingly, in countries where equities remained stagnant while gold soared, investors naturally leaned towards the latter. Historical experiences, whether positive or negative, significantly impact investor behavior and choices. . . . .

Reading Time : 3 Minutes

WeekendInvesting Daily Bytes

IMoving to today’s market performance, Nifty presented a mixed yet hopeful picture, slightly pressured around the 22,200 mark but managing to stay afloat thanks to significant contributions from heavyweights like Reliance and HDFC Bank. Despite a broader downtrend in the Nifty 50 universe, the performances of these giants reflected positively on the index.

It’s critical to note the ongoing resistance around 22,200, a level we’ve discussed in previous sessions. With Nifty taking multiple supports around 21,900, today’s slight selling pressure below the 22,125 mark signals cautious trading as we approach the financial year’s end. Yet, if heavyweight stocks maintain their strength, we might witness Nifty breaking past this resistance, potentially paving the way towards new highs.

Reading Time : 4 Minutes