Invest Without Emotions
Good monsoons and election spending is apparently going to boost rural consumption in the medium term. The guys at UBS and Deutsche Bank put together a bunch of stocks that would benefit from rural growth and published it on ET.
We created a Theme that tracks this portfolio. So dood-ka-dood, pani-ka-pani.
Check out the Theme here: “Betting on Bharat October-2013”
Previously: Prabhudas Lilladher Midcap 10-Sept-2013
[stockquote]PRECOT[/stockquote]
We spend way too much time picking stocks and too little time figuring out how to allocate our capital between them. Even if you end up picking the “right” stocks, poor allocation will drag down the performance of your portfolio.
For the first time in India, you can now find out the appropriate weights that individual stocks should have within your portfolio and constantly monitor your portfolio as the market changes – automatically.
Users who have uploaded their portfolio can have a look at these statistics under the “Analytics” section:
And if you just want to upload an adhoc set of stocks and just see what the most efficient allocation is, you can do that using our Marko tool, named after Harry Markowitz who introduced Modern Portfolio Theory.
Be efficient, be smart!
The market opened October with a bang, rallying 3% (+5.3% in USD terms).
Pretty much everything except FMCG ended in green.
| YESBANK | +9.74% |
| SAIL | +10.21% |
| BANKINDIA | +10.48% |
| APOLLOHOSP | -4.91% |
| HINDUNILVR | -3.30% |
| NTPC | -3.29% |
| BANKBEES | +5.00% |
| PSUBNKBEES | +2.83% |
| NIFTYBEES | +2.61% |
| INFRABEES | +2.52% |
| JUNIORBEES | +1.12% |
| GOLDBEES | -1.88% |
The curve seems to be normalizing…
… and so are interbank lending rates.
Thinking about time has the opposite effect on people from thinking about money. It makes them more honest than normal, rather than less so. Moreover, the more reflective they are, the more honest they become.
Source: Time is not money
There are no “new new” things in finance, there are no “unique” opportunities and the stock that you labored so hard to pick is no “diamond in the rough.”
In the olden days, stocks were classified either based on the industry they operated in (i.e., sectors) or based on their market cap (i.e. cap-weighted indices.) But neither of them do justice to the underlying risk or technical behavior of the stocks themselves. Not all stocks in an index are similar, nor do they have a 100% overlap with other stocks within the same sector. Buy say you really liked a stock, like ACCELYA for example, but found its valuation unattractive, how do you go about finding a substitute?
This is where machine learning can help. Using clustering algorithms, stocks can be grouped based on parameters different from just industry or market-cap. What if stocks are grouped based on risk metrics (alpha, beta, Sharpe…) and technicals (RSI, ADX…)?
This was the question we set out to answer and we are now proud to present the results in the “Quant” tab in the equities page. Here’s how the Quant section looks like for Accelya:
It shows that Accelya, although a retail value favorite, is not alone when it comes to its risk profile and technicals. There are other fish in the sea that is worth a gander.
This might be a scary thought for most investors: their favorite stocks are not alone, and there might be cheaper substitutes to the stocks that they like.
Related:
Alpha, Beta, Sharpe and Information Ratio
Risk Adjusted Returns
The NIFTY ended the month up 4.82% (+11.16% in USD) on the back of improving sentiment regarding the economy and the US Fed’s continued QE program.
FMCG was the leader but commodities was not too far behind.
| JUNIORBEES | +8.00% |
| BANKBEES | +7.33% |
| NIFTYBEES | +5.71% |
| INFRABEES | +0.61% |
| GOLDBEES | -2.39% |
| PSUBNKBEES | -6.51% |
It was the month of the “surprise” rate hike…
The volatility in the interbank rates over the last month has been phenomenal…
[stockquote]NEULANDLAB[/stockquote]
