Are we Investing in ‘A Market of Stocks’ or ‘A Stock Market’?

Cartoonist: Schwadron, Harley –; Sunday, 10 December 2017 Are we are investing in a loose collection of individual stock names or a monolithic stock market? What would happen to the different stock prices that are not part of the benchmark composition if the benchmark indices were to correct? To answer this question, one needs to understand the difference between the terms ‘a market of stocks’ and ‘a stock market.’ There is a school of thought that says that since it […]

When’s the Crash: Keynes Beauty Contest

Cartoonist: Schwadron, Harley,; Sunday, 12 November 2017 John Maynard Keynes is known as an excellent economist for his work titled “The General Theory of Employment, Interest, and Money.” Many renowned economists do not agree with what Keynes has said. Regardless of his economic theories, unbeknownst to most is the fact that Keynes was one of the greatest investors of his time (1883 – 1946). Keynes was one of the first to recognize that investing is an exercise in mass […]

Do Colours Nudge Our Investment Behaviour?

Cartoonist: Veley, Bradford –; Sunday, 15 October 2017 The National Stock Exchange of India (NSE) uses the colour Red to indicate a downward tick in the Last Traded Price (LTP) and the colour Blue to show an uptick in the LTP of a given stock symbol. Bloomberg terminals all over the world also use colours to highlight changes in the LTP. Three types of shades are ubiquitous; Red, Blue and Green. Whereas the tone Red is ALWAYS used to indicate […]

Share-Weighted Portfolios: Do they work?

Cartoonist: Carpenter, Dave –; Sunday, 18 June 2017 The concept of share weighted portfolios means that one buys an equal quantity of all the shares in one’s portfolio, without any regard to their market price. Nifty 50 as a benchmark – Background Information The Nifty 50 consists of fifty stocks and accounts for twelve sectors of the Indian economy. It tracks the behaviour of the largest and most liquid Indian corporates and captures approximately sixty-five percent of the float-adjusted […]

Is India a Small-Cap Market?

Cartoonist: McMillan, Brad –; Sunday, 14 May 2017 In the current bull run, Small-Cap stocks have outperformed their Large-Cap counterparts. This feature is also known as the Small-Cap effect or the size effect. In this post, I have tried to (a) quantify the Small-Cap Premium in the Indian Stock Market and (b) find a way to ‘capture’ this Premium? Small-Cap v/s Large-Cap Historical Returns The image below shows the historical returns of the Small-Cap and the Large-Cap universe from 01 […]

The Index Effect on Inclusions & Exclusions in the Nifty 50

Cartoonist: Schwadron, Harley; – Sunday, 9 April 2017 The increase or decrease in the price of a stock pursuant to it being added to or dropped from a benchmark index is known as the index effect on the price of the stock. I have tried to quantify the ‘Index Effect’ on the inclusions and exclusions in the Nifty 50 benchmark index. The Index Effect Before I get into what is presented, a bit of background information is essential. India […]

Stock Market Seasonality: Will 2017 be an Outlier Calendar Year?

Cartoonist: Farris, Joseph; – Sunday, 26 March 2017 The returns for the calendar year 2017 (thus far) have surprised the most optimistic of market participants. Using Stock Seasonality, I have tried to answer the rhetorical question: Will 2017 be an outlier calendar year for the Indian Stock Market? Monthly Stock Market Seasonality For the uninitiated, Seasonality is the characteristic whereby data experiences changes that recur every calendar year.  Any predictable pattern in a time series that recurs over a one-year […]

SIP Investing: Active Funds v/s Index Funds

Cartoonist: Collins, Dan; – Sunday, 12 March 2017 I think the image above correctly describes the ethos in the minds of the Indian Mutual Fund Investor. Practically everyone now uses a Systematic Investment Plan (SIP) for investing in the Indian Stock Market. A Systematic Investment Plan (SIP) as an investing strategy has stood the test of time, and its efficacy is beyond doubt. However, I wish to highlight the fact that the asset class that is chosen is far […]

Mutual Fund Investing: Active Share

Cartoonist: Farris, Joseph; Saturday, 25 February 2017 In the world of Mutual Fund Investing, one can be an active investor by investing in an actively managed fund or a passive investor by investing in an index fund. How does one decide as to how ‘Active’ a money manager in an Actively Managed Fund is? That’s what ‘Active Share’ is all about. Passively managed funds are those that mimic the benchmark. Actively managed funds are the ones whose composition varies from […]

Investment Strategy: The Nifty100 Equal Weight Index

Cartoonist: Schwadron, Harley; – Sunday, 12 February 2017 How many of us have a strategy while investing? How important is it? I think that having an investment strategy in place is a precursor to the actual investment process and its importance cannot be understated. Investment Strategy: Why? In the extremely noisy world of investing products, there are multiple strategies. To be fair, there cannot be any one strategy that fits all. Each of us has to devise or tweak our […]