The WeekendInvesting Newsletter

Another brand new initiative from our Research Desk is The WeekendInvesting Newsletter. This is a daily newsletter that summarizes all the stories we cover during the day(market nuggets), including the daily byte that we shoot every evening. This newsletter will be delivered to your email every evening on market days, providing you with a wealth of market-related information. The newsletter includes both summaries and long-form blogs for all the market nuggets covered. These blogs are also linked to the videos we shoot, so you can choose to watch or read the content according to your preference.

Check out our past newsletters.

From the Research Desk of WeekendInvesting

Role of money supply

The US money supply, known as M2, includes all the liquid money in circulation, such as cash and digital forms of currency. Over the past 65 years, M2 has steadily increased, reflecting the rise in money issued by the central bank. For example, in the 1950s and 1960s, the money supply was around $300 billion. Over time, this has   . . . .

Gold correlation with other assets

Gold is a unique asset with distinct correlations to other financial instruments, such as the dollar index, equities, commodities, and even newer investments like Bitcoin. To better understand how gold behaves compared to these assets, it’s helpful to look at some insights from . . . .

Crude is the black swan for India

A question that comes up frequently is, what could be the next major event to cause a downturn in the market? Currently, there seems to be a lack of triggers that could pull the market down. However, one factor that has the potential to shake things up is the price of Brent crude oil. When we look at the past 20 years and adjust for inflation, the price of crude oil . . . .

Why buying a home is Important

The debate between buying a home and renting one is something many people face. Some argue that renting is better, especially for those with jobs that require frequent relocation. However, when we look at housing affordability over time, the data tells a different story. In many countries, such as the US and UK, the gap between home prices and affordability has . . . .

How far can this rally go

Bull markets are a fascinating aspect of the stock market. They represent extended periods of rising prices, creating opportunities for investors to gain significant returns. Historically, some bull markets have lasted for several years and delivered exceptional returns. One of the longest bull runs lasted  . . . .

Stock options and Luck

Market cap per employee is an interesting metric that can reveal how much value a company generates for each person working there. For example, Nvidia leads this list with a market cap of around $97 million per employee, even after a recent drop in stock value. Following Nvidia, Netflix sits at $23 million, while Apple comes in at $22 million. On the other hand, Walmart, which is known for its large workforce, has a market cap of  . . . .

Bonus vs Split limitations

A common question in the world of investing is the difference between bonus shares and stock splits. Many people wonder whether one is better than the other. Both involve increasing the number of shares, but  . . . .

Perception vs Reality

In many areas of life, including investing, our perceptions can often lead us away from reality. This can be seen in a simple example like looking at a map of the world. Africa, when viewed on a standard map, appears much smaller than it actually is. In reality, Africa is vast and can fit many countries within its borders. This difference between perception and reality is not just   . . . .

Importance of a good strategy

The Income Tax Department recently released a report that sheds light on individual short-term capital gains for the financial year 2022-2023. The data gives us a clear picture of how many people are profiting from their investments, particularly from short-term gains. In this post, we explore some key insights from the report and what they mean for investors in India . . . .

Asset allocation Case Study

When it comes to investing, one of the most common questions is how to ensure that your money lasts over time, especially if you’re making regular withdrawals. A recent case study provides a great example of how different strategies can impact the longevity of an investment portfolio. This article walks through the key insights from the study and highlight the importance of diversification and asset allocation. . . . .

WeekendInvesting Specials !

Don’t BUY GOLD – Part 2

When will your Networth Explode ?

Markets this week

What a week this was! At the start of the week, it felt dull and gloomy, but by the end, the markets had perked up to a new all-time high, not just in equities but also in precious metals. Suddenly, the entire world has pivoted on the expectation that interest rates are coming down. The EU has already cut rates twice, and there’s talk of a 50 basis points cut from the Fed in the coming week. Whether it’s 50 or 25 basis points, the probability is gradually shifting toward 50.

India is yet to announce any interest rate cuts, but I think it’s time for them to at least signal that cuts are on the way. India is in a favorable position right now: oil prices are down to multi-year lows, yet at the pumps in India, prices haven’t dropped. Similarly, the interest rate yields on Indian ten-year bonds have fallen dramatically, but banks haven’t reduced interest rates on home or auto loans.

Additionally, despite GST collections increasing every month, the average GST rate hasn’t come down. Taxation remains a situation where the benefits aren’t trickling down to boost consumption. In good times, more disposable income isn’t being allowed, which might hurt consumption during a downtrend when liquidity becomes scarce. The government will then be forced to do deficit spending to get the economy going.

Benchmark Indices & WeekendInvesting Overview

Across the indices, there was a 2% gain, with Nifty, Nifty Next 50 and Smallcap 250 slightly behind. As for the WeekendInvesting strategies, many were in line with gains ranging from 2.9% to 1%. Mi NNF 10, however, lost 0.5% this week, but despite that, it remains on track for FY25, still beating the benchmark on a yearly basis.

There will always be times when certain strategies underperform, even for an entire year, but patience is crucial. For instance, during a market rally, stocks with fantastic momentum may outperform, and then during a downtrend, they may fall faster than the broader market. The initial phase of a downtrend can result in higher losses, but as the market turns back up, a churn happens where the weaker stocks are weeded out and new winners are brought in. Over the long term, this process helps the strategy come together. Over the last eight years, we’ve seen all kinds of markets, from heady rallies to COVID crashes and sideways markets. If you’ve been with WeekendInvesting for a while, you’ve likely observed that sooner or later, the strategy realigns and delivers as expected.

Sectoral Overview

Consumption stocks led the pack with a 3.2% gain, followed by FMCG and private banks, each gaining around 3%. IT stocks were up 2.8%. Most of these sectors, except for private banks, are more defensive in nature. Towards the end of the week, metals and real estate made a comeback along with autos. On the other hand, PSU banks and public sector enterprise stocks faced continued pressure. As a result, many strategies are now rotating out of these sectors and into pharma, metals, and FMCG.

In terms of sectoral momentum ranking, consumption, FMCG, and pharma are at the top, while PSU banks, PSE, and energy are at the bottom. This shift in momentum is happening both in the short term and across longer frequencies, highlighting the sector rotation in play. Even over a three-month basis, the top sectors remain consistent, with financial services also picking up momentum.

WeekendInvesting Strategy Spotlight

Bajaj Auto – A break out stock

Bajaj Auto is in the spotlight this week due to a major breakout that has seen the stock nearly triple in value. Despite being a slow mover over the years, it took off in a major way, moving from Rs 4000 to almost Rs 12,000. This highlights the importance of staying unbiased toward any stock, focusing solely on the strategy, and allowing winners to run their course. A few large gainers, like Bajaj Auto, can make up for underperforming stocks in a portfolio.

Mi Evergreen is a well-loved strategy, known for its conservative approach. The stock universe comprises the top 200 stocks, with a slower churn as the portfolio is reviewed only once a month. A fixed allocation to a gold ETF provides stability during market volatility. The strategy allows winners to run and resets to equal weight each month, making it an excellent core portfolio. The portfolio includes large-cap stocks (the top 100) and mid-cap stocks (101st to 200th positions).

Mi India Top 10 gained 60% last year, compared to the Nifty’s 26%. Since going live, it has outperformed by nearly 30 points. The strategy focuses on extracting strength from the Nifty, investing only in the strongest components. This approach is ideal for investors who want to move beyond index investing without adding unnecessary risk. Unlike holding the entire Nifty 50, which may include underperformers like Yes Bank, these strategies allow you to avoid laggards and focus on the strongest performers.

Nifty 50 is the universe for Mi India Top 10, with ten stocks and a monthly rebalance. The outlook for this strategy, as with any long-term strategy, should be at least four to five years. That’s the underlying theme for long-term investing with any of these strategies.

Rebalance Update

We give advance notice here on the upcoming changes in your smallcase for Monday. This advance notice can be used to ignore Monday’s update if there is no change. If there is a change indicated you can use the smallcase app or log in to weekendinvesting.smallcase.com to see the rebalance. A backup email is sent by mid-day Monday if you have not rebalanced by then and yet another one a

Note: We are not including LIQUIDBEES as an ADD or an EXIT count.

WeekendInvesting Strategies Performance

WeekendInvesting Products – LIVE Index Data

Many of you had asked us to make the index series of all WeekendInvesting Products available so that you could perform your own analysis and studies. You can find a link to the LIVE sheet here and also on the HUB under the support column in the content tab.

Check out M Profit

Disclaimers & Disclosures

That’s it for this week. See you in the next week’s edition