Tweet Buster: Market irrationality a great opportunity, says Shyam Sekhar

As both the Nifty50 and the Nifty Midcap index scaled fresh all-time highs during the week, the one question that’s bothering most investors as well as traders is whether it is better to keep some cash under the pillow and wait for a correction. While most analysts are asking participants to stay invested in equities, it may be prudent to stay stock specific in an expensive market.

In this edition of Tweet Buster, we scan the best of gyan in the world of 280 characters to help you navigate market volatility and spot money-making opportunities.

T20 vs Test Match

DSP Mutual Fund’s Kalpen Parekh said we have earned 40 to 100 per cent returns in the last one year. “There were 36 months between 2010 to 2013 of zero to – ve returns. Last year was T20. Someday we will face a test match,” he said.

Passive Investing

Parekh said when investing in index funds or ETFs, investors should not expect index returns. “It will be index returns minus impact cost or bid ask spread. Beta can also have negative alpha.”

Know the risks too

In this thread, Parekh detailed risks associated with various categories of funds:

Path to financial freedom

PMS fund manager Basant Maheshwari said while the textbook purpose of equity investing is to beat inflation, the real purpose is to be financially free.

Bullish Calls

Independent market expert Sandip Sabharwal said if real estate does well, then companies that do construction for these real estate companies will also do well. “A few high quality construction companies are very cheap and out of investor radar right now should do well.”

Let it go

PMS fund manager Shyam Sekhar said selling a stock that has done extremely well giving 4X in 4 years during the toughest times in markets gives mixed feelings. “But, letting go is critical where you know tailwinds are working at their highest speed and could lose their impact over a few quarters.”

Be opportunistic

Sekhar said market irrationality is a great opportunity as it gives investors a chance to change what didn’t do too well. “We can revisit our ordinary decisions and correct our mistakes. Understand what we can do better and change strategies. Approach irrationality with our strongest rational response.”

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