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

Asset allocation Golden guide

In the world of investment, understanding asset allocation is crucial. One chart that stands out in depicting this dynamic is the comparison between the gold price in INR and the Nifty index over the past 30 years. Despite market fluctuations, this ratio has consistently ranged between . . . .

Unbiased Investing Advantages

The comparison between Domino’s Pizza and Google stock prices from 2004 to 2024 reveals an unexpected similarity: both have surged by approximately 7000%. Despite their differences in industry and public perception, these two stocks have experienced . . . .

Case Study : The BBC Principle

Looking back a few years, the idea of investing in a stock like NTPC might have seemed unappealing. With its stagnant performance and modest dividends, it didn’t attract much attention. However, this reluctance to invest often stems from . . . .

Is inflation coming back strongly ?

In this intriguing analysis, we’re presented with a comparative chart showcasing the dynamics between gold prices in dollar terms and the US ten-year real rate. Traditionally, these two metrics have exhibited a strong inverse correlation . . . .

Change is the only constant

We’re all familiar with the prestigious Forbes 400 list, showcasing the wealthiest individuals in America. However, what many may not realize is the transient nature of this elite club. Over any given decade, more than 20% of individuals on this list drop out, making way for new faces. This phenomenon mirrors the . . . .

Peter Lynchs diversification will shock you

Diversification is a topic often discussed in the realm of investing. Many experts advocate for a limited number of stocks in one’s portfolio, typically ranging from 15 to 25. However, a closer look at the approach of legendary fund manager, Peter Lynch, challenges this conventional wisdom. . . .

Can you predict the future ?

The Hang Seng index and the Nifty in US dollar terms have long been observed for their correlation. Over the past 30 years, these markets displayed striking similarities in performance. From the early nineties until the COVID-19 bottom, their movements were almost . . . .

Can Dollar Index disrupt INR stability

The dollar index, a measure of the value of the United States dollar relative to a basket of foreign currencies, has been displaying significant movement recently. Since October of 2022, it has been fluctuating within a range of 106 to 100. However, there are indications that it may soon . . . .

Markets this week

Throughout the week, Nifty experienced a downward trend, marked by consecutive declines on Monday and Tuesday, followed by mixed movements on Thursday and Friday. Despite fluctuations, the overall sentiment remained subdued, with the market ending the week with a net loss of several hundred points. Additionally, the US markets, particularly leading stocks like Nvidia, Super Microcomputers, and AMD, also witnessed declines, indicating a potential continuation of negative sentiment into the following week. However, despite the bearish tone, Nifty’s performance for the week was not exceptionally dire, with key support levels around the 21,650 mark holding firm. Nevertheless, there remains a possibility of further downside towards the 21,200 level if current support levels are breached.

Benchmark Indices & WeekendInvesting Overview

During the week, all benchmarks, including Nifty 50, experienced declines, with Nifty 50 recording a 1.7% decrease. However, small caps (Smallcap 250 index) fared relatively better than Nifty 50, showing smaller losses. The Nifty Next 50 index also saw a decline of 1.9%, indicating broader market weakness.

Among various investing strategies, some managed to mitigate losses more effectively, with HNI Wealth Builder experiencing only a 0.2% loss while Mi 30 & Mi 35 experienced minimal declines. However, half of our strategies faced losses between 2% and 3.5%. The overall FY 25 performance of benchmark indices remained mixed, with some strategies outperforming benchmarks while others lagged behind.

Sectoral Overview

During the week, the metals sector emerged as the least affected among all sectors, demonstrating resilience amid market downturns. Despite market challenges, metals showed a notable uptrend, with a 7.9% increase in FY 25, indicating relative stability. Conversely, the financial sector, particularly PSU banks, experienced declines, with real estate and private banks also showing negative trends. Additionally, the pharmaceutical sector recorded losses, contributing to the overall sectoral downturn. However, despite sector-specific challenges, the overall market performance remained relatively stable, with sectoral losses of 1% to 1.5% aligning with broader market benchmarks.

In the short term, gold has shown upward momentum, acting as a hedge amid market volatility. Additionally, real estate has experienced a slight decline compared to the previous month, while public sector enterprise stocks have shown strength. Metals and energy sectors have exhibited positive movement, indicating short-term resilience. Conversely, PSU banks and pharmaceutical stocks have faced significant declines, positioning them at the bottom. Overall, real estate, metals, energy, and public sector enterprises emerge as leading sectors in the short term.

WeekendInvesting Strategy Spotlight

The art of dealing with (no) emotions !

Investing can be a rollercoaster ride, often driven by emotions like fear and greed. These emotions can lead to impulsive decisions, resulting in market volatility. In the world of investing, there are bulls, bears, pigs, and sheep. Bulls and bears represent confident investors, while pigs and sheep are prone to losses due to emotional trading.

To navigate the market successfully, it’s crucial to remove emotions from investment decisions. This requires adopting rule-based strategies that you trust. Just like training a muscle gradually, removing emotions from investing takes practice and discipline. While some investors thrive on emotions, transitioning to a more rational approach can lead to more consistent results over time.

I’ve spent nearly three decades experimenting with different investment approaches. Despite initial success, emotional investing led to significant gains followed by devastating losses. Transitioning to rule-based investing transformed my experience. By relying on tested strategies and removing emotions from the equation, I achieved more stable returns.

Let’s delve into a case study involving Coal India. Imagine holding a stock for over a decade as it fluctuates within a certain price range. Suddenly, the stock price surges, prompting thoughts of selling to chase better opportunities. However, impulsive decisions based on emotions often lead to regrets when stocks continue to soar after selling.

In contrast, a rule-based approach focuses on identifying trends and making calculated decisions. Even if entering a trade late, the key is to exit strategically. While losses are inevitable, focusing on big wins over time leads to overall profitability.

Rule-based strategies also allow for automatic identification of new performing sectors. Unlike conventional investing, where you may feel stuck with underperforming stocks, a rule-based approach adapts to market dynamics. This flexibility minimizes opportunity costs and maximizes capital efficiency.

Key Takeaways

Automatic Identification of new performers / sectors : Momentum helps you discover new leaders / sectors that may have been completely off the radar / interest

Opportunity Cost : You will enter stocks only when there is momentum and will exit when momentum fades away. Your capital remains busy always and is put to maximum work.

Emotion-less approach : No concept of waiting forever for a stock to revive, no attachment to a stock or sector, no regrets in letting a stock go.

Peace of Mind : You remain peaceful forever knowing that the strategy will do what is to be done without you having to interfere

Mi India Top 10 Summary

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.

WeekendInvesting Telegram and YouTube Channel

We post daily content related to investing on our Weekendinvesting Telegram Channel and YouTube channel to help our community take stock of the performance of markets, sectors & our products and touch base upon a new topic every day. We look forward to having you all there! Several videos in this blog are from this series.

Introducing M Profit

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