The speed at which stocks rerate excites us on the way up. But, they can also rattle us on the way down. Derating is happening at the same time as rerating. The concurrent course of events is not new to our markets. When euphoria sets into one part of the…
Recency bias in markets is evident. Funds are desperately trying to ensure their participation in the performing sectors and stocks. This means buying into fast-rising stocks at higher valuations. Their universe is restricted to 500 stocks and they are sticking to that space. What is going on outside this space…
The lure of small caps is the equivalent of a pandemic in the investment world. They transmit virally in a bull market until everybody only wants to own them. Then, the markets collapse leaving investors with huge losses. Worse still, the stocks will be very illiquid. This makes the small…
The NASDAQ 100 Index rose continuously for several days before snapping on Thursday. However, the sharp rise in the Nasdaq 100 VIX, a market volatility indicator, was a clear sign that fears were rising. Now, the markets seem to be treading with extreme caution as the Nasdaq 100 VIX rose…
The past few weeks saw a clear trend in sectoral and thematic indices. The specific thematic or sectoral index rose for up to 8 days in a row. This trend was seen in several indices. This clearly indicated that the interest of the broader market was squarely focused on chasing…
India’s marquee financials are raising capital. This new capital is fortifying weakening balance sheets. We don’t know the exact extent of damage to the health of financial books. Inflation is rearing its head even in a shrinking economy. Our first instinct is to infer this inflation spike as an outcome…
Two distinctly different investment trends are very visible now. Legendary investors like Warren Buffett are moving away from what were their core beliefs. Buying tech and gold mining companies and selling financials indicates a paradigm shift in investment beliefs. Globally, we see paradigms shifting and moving towards a defensive stance where…
When interest rates are low, the dollar is weak, bond prices are high, stocks are rising and gold is soaring. Investing tends to be perplexing. Making choices becomes tougher with every passing day. The issue becomes complex as asset inflation seems elastic, demand seems persistent, and prices seem infallible. It…
The rise in share valuations of one sector is not uncommon. We have seen sectoral trends dominate our markets for the past few years. Effectively, the performance of the market is often just the performance of one or two sectors. At extremes, it becomes even more finely nuanced into just…
The fear of missing out is inescapable. It usually manifests in a singular way. People get obsessed with one thing. This obsession grows so much that everybody becomes greedy exactly when they must be fearful. They end up buying something without thinking of the valuation, attractiveness or return potential. The…
Having money and time at one’s disposal is often a bigger problem than not having both. It is during those phases that the mind tends to seek the unnecessary. It is when we invite problems into our life through hot pursuit. The growing trading culture among millennials and tech-savvy investors…
Investing tends to seek excessive peer validation. There is a strong reason behind this. We constantly worry about whether we are doing the right thing. How do we check on that? The easy option is to compare. So, we compare with friends. This explains why what others are doing interests…
