Nifty50: Tweet Buster: Market irrationality a great opportunity, says

As both the Nifty50 and the Nifty Midcap index scaled fresh all-time highs during the week, the one question that’s bothering most investors as well as traders is whether it is better to keep some cash under the pillow and wait for a correction. While most analysts are asking participants to stay invested in equities, it may be prudent to stay stock specific in an expensive market.

In this edition of Tweet Buster, we scan the best of gyan in the world of 280 characters to help you navigate market volatility and spot money-making opportunities.

T20 vs Test Match

DSP Mutual Fund’s Kalpen Parekh said we have earned 40 to 100 per cent returns in the last one year. “There were 36 months between 2010 to 2013 of zero to – ve returns. Last year was T20. Someday we will face a test match,” he said.

We have earned 40 to 100% returns in last 1 year

There were 36 months between 2010 to 2013 of zero to – ve returns

Last year was t 20

Someday we will face test match

— Kalpen Parekh (@KalpenParekh) September 5, 2021

Passive Investing

Parekh said when investing in index funds or ETFs, investors should not expect index returns. “It will be index returns minus impact cost or bid ask spread. Beta can also have negative alpha.”

When investing in index funds or ETFs, don’t expect index returns

It will be Index returns Minus Impact cost / Bid ask spread

Beta can also have negative alpha@AnilGhelani

— Kalpen Parekh (@KalpenParekh) September 4, 2021

Know the risks too

In this thread, Parekh detailed risks associated with various categories of funds:

Active funds : if our view of companies and sectors go wrong, it can earn less than the market / benchmark index (eg Nifty). Fees reduce returns

— Kalpen Parekh (@KalpenParekh) September 3, 2021

Large cap funds : positioned safe, but can miss the benefits of smaller good companies succeeding and becoming large

— Kalpen Parekh (@KalpenParekh) September 3, 2021

Diversified investing : when few stocks rise, this strategy will under perform

— Kalpen Parekh (@KalpenParekh) September 3, 2021

Path to financial freedom

PMS fund manager Basant Maheshwari said while the textbook purpose of equity investing is to beat inflation, the real purpose is to be financially free.

The text book purpose of equity investing is to beat inflation. The real purpose is to be financially free. Which one are you following ?

— Basant Maheshwari (@BMTheEquityDesk) September 4, 2021

Bullish Calls

Independent market expert Sandip Sabharwal said if real estate does well, then companies that do construction for these real estate companies will also do well. “A few high quality construction companies are very cheap and out of investor radar right now should do well.”

This played out well.

If Real Estate does well then companies that do construction for these real estate companies will also do well.
A few high quality construction companies are very cheap and out of investor radar right now should do well.