Author: shyam

Weekly Recap: Hard Work ≠ Value

Equities

world equity markets 2014-06-13.2014-06-20

Major
DAX(DEU) +0.75%
CAC(FRA) -0.04%
UKX(GBR) +0.70%
NKY(JPN) +1.67%
SPX(USA) +1.46%
MINTs
JCI(IDN) -1.60%
INMEX(MEX) +0.42%
NGSEINDX(NGA) -0.93%
XU030(TUR) -0.91%
BRICS
IBOV(BRA) -0.27%
SHCOMP(CHN) -2.13%
NIFTY(IND) -0.41%
INDEXCF(RUS) -0.70%
TOP40(ZAF) +1.16%

Commodities

Energy
Brent Crude Oil +1.24%
Ethanol -3.01%
Heating Oil +2.02%
Natural Gas -3.72%
RBOB Gasoline +2.02%
WTI Crude Oil +0.36%
Metals
Copper +2.97%
Gold 100oz +3.15%
Palladium +0.90%
Platinum +1.54%
Silver 5000oz +7.18%

Currencies

USDEUR:-0.47% USDJPY:+0.05%

MINTs
USDIDR(IDN) +1.50%
USDMXN(MEX) -0.08%
USDNGN(NGA) -0.26%
USDTRY(TUR) +1.01%
BRICS
USDBRL(BRA) +0.01%
USDCNY(CHN) +0.24%
USDINR(IND) +0.69%
USDRUB(RUS) +0.18%
USDZAR(ZAF) -0.32%
Agricultural
Cattle +0.19%
Cocoa -0.41%
Coffee (Arabica) -0.54%
Coffee (Robusta) +0.30%
Corn +1.57%
Cotton +1.51%
Feeder Cattle -0.55%
Lean Hogs +10.36%
Lumber +6.89%
Orange Juice -3.87%
Soybean Meal -0.39%
Soybeans -0.60%
Sugar #11 +5.23%
Wheat +0.04%
White Sugar +5.72%

Nifty heatmap

CNX NIFTY.2014-06-13.2014-06-20

Index Returns

index performance.2014-06-13.2014-06-20

Top winners and losers

UPL +5.34%
GAIL +5.69%
ZEEL +6.92%
SRTRANSFIN -7.39%
M&M -6.91%
GODREJCP -6.39%
Churn, churn, churn…

ETFs

INFRABEES +6.21%
GOLDBEES +3.87%
JUNIORBEES -0.40%
BANKBEES -0.53%
NIFTYBEES -0.89%
PSUBNKBEES -2.01%
Gold finally caught a break…

Investment theme performance

Sector Performance

Textiles – the winning streak continued.

sector performance.2014-06-13.2014-06-20

Yield Curve

yield Curve.2014-06-13.2014-06-20

Advance Decline

advance.decline.line2.2014-06-13.2014-06-20

Nifty OI

nifty.puts.calls.2014-06-13.2014-06-20

Thought for the weekend

When we work hard for something, thereby “earning” it, we can ascribe a higher value to it than may be justified. A form of egotism affects how we value the “trophy.”

Source: Trophy Effect

Related: Ego: The Single Biggest Impediment to Successful Investing

Ego: The Single Biggest Impediment to Successful Investing

From Why Inexperienced Investors Do Not Learn: They Do Not Know Their Past Portfolio Performance (Glaser, Weber)

A necessary condition to learn is that investors actually know what happened in the past and that the views of the past are not biased. Investors are hardly able to give a correct estimate of their own past realized stock portfolio performance. People overrate themselves. On average, investors think, that they are better than others.

Here’s a telling chart on what investors “thought” they made vs what they actually made:

realized vs estimated returns

I loved the academic euphemism for “most investors are clueless”: The correlation coe±cient between return estimates and realized returns is not distinguishable from zero. And this gem: The correlation between self ratings and actual performance is also not distinguishable from zero.

Read the whole thing here (pdf) and open a StockViz account and start tracking your portfolio now!

Investment Theme Performance Roundup

WHAT IS A “THEME”?

A StockViz Investment Theme is a portfolio of stocks that follows a particular strategy. It is a convenient way for you to:

  1. stick to a strategy
  2. follow a preset rebalancing schedule
  3. think in terms of your portfolio strategy rather than individual stocks
  4. avoid common behavioral pitfalls
  5. systematically track your P&L and strategy performance

WHAT IS AN INVESTMENT STRATEGY?

An investment strategy is a specific way of going about the process of investing. It identifies specific variables that define a stock. Variables can be anything: risk, style, sector, balance-sheet items, etc..

By mapping specific Themes to your account, you ensure that you stay pure to your strategy allocation. And that there is no “flying by the seat of your pants” investing.

HOW HAVE YOUR THEMES PERFORMED?

Theme Commencement Performance NIFTYBEES Performance JUNIORBEES Performance
Market Fliers
2013-Oct-28
64.79%
24.5%
35.1%
Magic Formula Investing
2013-Aug-19
68.67%
39.89%
48.38%
Enterprise Yield
2013-Sep-16
49.51%
30.24%
46.46%
Pharma 10
2013-Jul-17
8.36%
27.88%
35.85%
Pharma Growth
2013-Jul-17
13.01%
27.88%
35.85%
Private Banks
2013-Jul-15
28.82%
26.61%
33.45%
Quality to Price
2013-Aug-28
132.47%
43.5%
54.91%
Gold and Jewellery
2013-Jul-15
-0.34%
26.61%
33.45%
Alcohol and Tobacco
2013-Jul-25
8.84%
29.05%
38.35%
Industrial Value
2014-Jun-02
13.57%
4.27%
1.36%
Market Elephants
2013-Sep-02
28.51%
37.15%
49.96%
Balance-sheet Strength
2013-Sep-11
93%
28.88%
45.66%
For-Profit Education
2013-Jul-25
81.33%
29.05%
38.35%
Momentum 200
2013-Aug-19
42.34%
39.89%
48.38%
Financial Strength Value
2013-Sep-13
56.54%
30.06%
45.69%

Detail of draw-downs can be found here.

Performance Charts

Gold and Jewellery.2013-07-15.2014-06-17

Private Banks.2013-07-15.2014-06-17

Quality to Price.2013-08-28.2014-06-17

Enterprise Yield.2013-09-16.2014-06-17

Magic Formula Investing.2013-08-19.2014-06-17

Pharma 10.2013-07-17.2014-06-17

Pharma Growth.2013-07-17.2014-06-17

Market Fliers.2013-10-28.2014-06-17

Financial Strength Value.2013-09-13.2014-06-17

Momentum 200.2013-08-19.2014-06-17

Balance-sheet Strength.2013-09-11.2014-06-17

For-Profit Education.2013-07-25.2014-06-17

Industrial Value.2014-06-02.2014-06-17

Market Elephants.2013-09-02.2014-06-17

Alcohol and Tobacco.2013-07-25.2014-06-17

WHAT SHOULD I DO NEXT?

You should open a demat account with StockViz and invest through our Themes.

Rates and USDINR Update

We recently pulled up a chart of Indian 10 year rates to show how the interest rate curve went all bullish on Modi. But given the all around bullishness, we were curious as to how the 10-year rate differential between US Treasuries and Indian GSecs looked.

UST vs. GSecs

ust-ind-10yr-spread

The spread compression is nowhere near all-out bullishness and may have more room to run.

USDINR

The recent ISIS induced flight-to-safety notwithstanding, USDINR has tagged along the spread.

USDINR

Even if ISIS ends up occupying Iraq, given that their primary source of revenue is going to be oil, they might just decide to pump more of it. Our expectation is that once we get past the current knee-jerk reaction, the above trends will reassert themselves.

Related

It’s important to be politically agnostic and think about the potential market impact of the event. There are three sources of event risk that could cause the markets to swoon:

  1. Iraq
  2. Russia-Ukraine
  3. Chinese financial crisis

“My conclusion is that the so-called tail-risk are wrong and the immediate threat posed by tail-risk is lower than the market thinks.”

Source: Apocalypse Later