The WeekendInvesting Newsletter - 5 April 2024

Mi India Top 10 was launched in 04 Aug 2022, and has largely benefitted from its bias free approach towards weightage allocation where a standard 10% weight is allocated to all 10 stocks in the portfolio.

The stocks are selected based on the momentum ranking and every month a rebalance ensures that the strongest of the pack remains in the portfolio. This is akin to the concept of survival of the fittest.

Winners are allowed to run while losers are removed at the next balance if they meet the exit criterion.

Use code FY2025 to avail a 25% discount on subscription to Mi India Top 10 (Valid till 10th Apr 2024)

A Strange comparison

There’s a common belief among many investors that small cap stocks are the holy grail of investing, the only way to achieve substantial returns and generate alpha. However, let’s take a step back and examine this assumption by comparing the performance of small cap stocks with that of another asset class—gold.

Over the past two decades, we’ve seen the PSC small cap index represented by the light blue line and the price of gold represented by the dark blue line. Surprisingly, the performance of gold has been quite comparable to that of small caps. Despite their stark differences in volatility and perceived potential returns, both asset classes have exhibited similar trends over time. . . . .

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$Gold is just getting started

In this blog, we look at the logarithmic chart of $GOLD to discern patterns that offer insights into the precious metal’s trajectory over time.

Gold has experienced two major cycles in the past, characterized by significant price surges. The first cycle, from 1976 to 1980-81, saw the price of gold skyrocket from $100 to $800, marking an astounding seven to eightfold increase in just four years. Similarly, in the second cycle, gold surged from $250 to $1800 or $1900, once again demonstrating remarkable growth over a relatively short period. . . . .

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WeekendInvesting Daily Bytes

On April 4th, the Nifty made a wild move, as illustrated by the five-minute chart, showcasing the day’s volatility. The market opened with a gap up from yesterday’s close at 22,440 to 22,620, then within the first half an hour, it closed the gap and further dropped to 22,300, losing 300 points.

By 11:00 a.m., much of this loss was recovered, and the market closed in the green at 22,540, reaching a new high. This roller coaster ride, especially on an expiry day, likely resulted in significant gains for short-term option buyers and losses for others.

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