Invest Without Emotions
Brokers came out with their stock picks for Diwali last week. We have created Investment Themes based on their recommendations so that we can track their performance over a period of time and compare them to Nifty’s. Here are the themes:
So, doodh-ka-doodh-pani-ka-pani!
[stockquote]PRECOT[/stockquote]
The Nifty ended the week up +2.64% (+2.18% in USD terms)
Banks stole the show and how!
| PSUBNKBEES | +13.39% |
| BANKBEES | +6.43% |
| NIFTYBEES | +2.55% |
| INFRABEES | +2.47% |
| JUNIORBEES | +2.09% |
| GOLDBEES | -3.17% |
Must have been a snooze fest on the bonds desks…
| Enterprise Yield | +11.96% |
| ADAG Mania | +6.59% |
| Quality to Price | +4.43% |
| Balance-sheet Strength | +3.70% |
| Growth with Moat | +2.58% |
| Financial Strength Value | +2.24% |
| Magic Formula Investing | +1.40% |
| Market Elephants | +1.01% |
| Efficient Growth | +0.88% |
| Momentum 200 | +0.61% |
Source: xkcd
The Nifty went completely bonkers this month: +9.83% (+12.28% in USD terms)
Banks stole the show…
| PSUBNKBEES | +19.26% |
| BANKBEES | +17.78% |
| NIFTYBEES | +9.22% |
| INFRABEES | +6.94% |
| JUNIORBEES | +6.67% |
| GOLDBEES | +0.83% |
The A/D line is finally trending up… longer, stronger, better?
Is the yield curve finally pricing in growth?
| Quality to Price | +19.56% |
| ADAG Mania | +12.49% |
| Balance-sheet Strength | +10.45% |
| Financial Strength Value | +9.24% |
| Enterprise Yield | +8.72% |
| Momentum 200 | +4.97% |
| Magic Formula Investing | +4.19% |
| Efficient Growth | +3.32% |
| Growth with Moat | +3.14% |
| Market Elephants | +1.26% |
There has appeared in our time a particular class of books and articles which I sincerely and solemnly think may be called the silliest ever known among men. They are much more wild than the wildest romances of chivalry and much more dull than the dullest religious tract. Moreover, the romances of chivalry were at least about chivalry; the religious tracts are about religion. But these things are about nothing; they are about what is called Success.
Source: THE FALLACY OF SUCCESS
[stockquote]NEULANDLAB[/stockquote]
… but insider information is.
Recent research (pdf) found that averagely informed traders perform worse than the non informed and only traders with high levels of information (insiders) are able to beat the market.
The conclusion: The results suggest that only those traders with near perfect information can beat the market. Of course, attaining perfect information in real-world markets is equivalent to attaining insider information that is generally unavailable to the marketplace.
In the immortal words of Gordon Gekko: You stop sending me information, and you start getting me some.
The illusion of knowledge
The value of publicly available information is zero
Information Overload
We had posed a question last month whether a USDINR Long Call Condor made sense given decreasing volatility and range-bound behavior. We put the following USDINR October 63.00/63.50/64.00/64.50 Long Call Condor trade on:
We would’ve made 4x if the Rupee traded between 63.10 and 64.40. The trade got blown out of water with the Rupee trading in a range around 61.50:
Lessons learnt:
Next trade will be after mid-November…
[stockquote]ATULAUTO[/stockquote]
