Last Updated on Feb 10, 2022 by Ayushi Mishra
If not advice, we can always do with insights from experts. After all, it gives us a fresh perspective of things and helps dodge avoidable mistakes and risks. Above all else, we wanted to give quality and actionable content to you.
That’s what encouraged us to invite industry experts to share their insights on Blog by tickertape. And now, here’s a roundup of five expert-written articles that you loved the most in 2021. You can read the entire article by clicking on the links given at the end of each excerpt.
Table of Contents
1. Fantasy Players Not Turning Out To Be Valuable? Here Are 5 Stocks Our Experts Have Curated for You by Divam Sharma
Divam Sharma is the founder and CEO of Green Portfolio, has formerly worked as an analyst at CitiBank, IMGC and Kotak Mahindra Bank and has over 15 yrs of experience in investment management in the stock market.
Fantasy Players has been all the rage. But in the end, it is a bet, and you run the risk of losing the entire capital. So, if you are looking for better avenues to make wealth, why not capitalise on India’s growth story? Our country is in a growth phase in multiple sectors. New technologies, CAPEX cycles, and supportive policy regimes create a multi-decadal growth setup for corporate India.
Read five expert stock picks that you can consider for long-term growth.
1. Salzer Electronics Ltd
- Has steady primary business with engagement in wires and cables, which is forecasted to grow with industrial development in the country.
- Has ventured into the Indian EV industry to export charging units instead of selling them domestically.
Salzer Electronics Ltd. is a part of Smallcap Compounders smallcase.
2. CESC Ltd
- It distributes power in West Bengal, Uttar Pradesh, Rajasthan, and Maharashtra. It has a broad portfolio of power generation with an aggregate capacity of 2,500 MW.
- The distribution business of CESC delivers a high return on equity along with steady growth.
CESC (Calcutta Energy Supply Corporation) is a part of High Quality Right Price smallcase.
3. Jubilant Pharmova Ltd
- Revenue is expected to be influenced by a healthy increase in the generics segment due to sales of Remedesivir.
- Operating margins are expected to remain healthy above 25% over the medium term, with a healthy new product pipeline and steady growth in specialised pharma and CDMO business.
Jubilant Pharmova Ltd is a part of High Quality Right Price smallcase.
Continue to read more insights on the above stocks and two other shares picked by Divam Sharma.
2. Significance of Alpha and Beta of Stock by Sonam Shrivastava
Sonam Srivastava is the Founder and CEO of Wright Research. Sonam has more than 9 yrs of professional experience in systematic portfolio management and quantitative trading.
The alpha and beta values are ways to explain the characteristics of stock returns. Understanding these numbers will give you extra dimensions to your stock selection journey. A stock with high alpha is always preferable, but alpha is fleeting and gets quickly arbitraged away.
A good stock picker understands the rationale behind the alpha and can time the participation in high alpha stocks based on the opportunity. The beta exposure is preferable based on the market. When the markets are trending, the high beta stocks will do better, but when markets tank, the high beta stocks will crash more, and low beta stocks will start to look more attractive.
Continue to read how the alpha and beta of stock can influence its returns.
3. Why Markets Are Falling by Harsh Vora
Harsh Vora is a proprietary investor and day trader with more than 10 yrs of experience in financial markets and is interviewed on ET NOW.
The Nifty50, as well as Sensex, fell 5% in the last week of October. This rout in the broader markets, however, caused a much deeper slump in the high beta stocks, which are represented by both small caps and midcaps. The Nifty Midcap index, for instance, had plunged by 10%, while the Nifty Smallcap index had declined by 13% from the top. The obvious question then is whether this presents an opportunity to buy on dips or sell on rise?
Before we discuss this, however, it may help to assess the causes of the current market slump:
- The spell of uncertainty
- The tailwinds to the commodity sector
- The high-ticket deals of heavyweight RIL
Continue to read other reasons for the slump and whether a market correction should be used as an opportunity to buy in dips.
4. Tired of Chasing Fantasy Stocks? Here Are 5 Stock Picks Based on Scientific Investing Style by Vikas Gupta
This article is written by Dr Vikas V Gupta, CEO and Chief Investment Strategist at OmniScience Capital. He believes that “Chasing Alpha leads to Risks and Chasing Safety leads to Alpha”. Check out smallcases created by OmniScience Capital.
Many “Fantasy stocks” or “Story stocks” lure investors with their futuristic stories and how they are likely to grow. One class of these stocks have no profits and large losses. Another class of these stocks have good profits. Still, their valuations are at such a level that even if they perform as expected at heroic growth rates (20%-25%) for extremely long periods (read a couple of decades) without any problems in between—which is highly unlikely—they will still deliver somewhat below the Sensex and Nifty returns.
Consider a company with a PE of 80. Even if it grows at 20% for 20 yrs, it is priced such that the return in the long run at this price is 12%! (based on a DCF analysis with earnings fully retained with an ending multiple of 20.) That is your typical fantasy stock. Don’t get lured by the 20% growth rates and strong moats and think that the price doesn’t matter. It matters. At this price, the short-to-mid-term returns might mirror the earnings growth of 20%, but the long-term returns are likely to be 12% or lower.
A better way is following the Scientific Investing Style, which focuses on “Enhance Safety, Enhance Growth, Enhance Returns”, in that sequence. This means focusing only on fundamentally robust stocks, meaning eliminating Capital Destroyers and Eroders. Furthermore, eliminate the fantasy stocks, i.e., Capital Imploders. What is left is the Capital Multipliers investment universe. One can pick companies with SuperNormal profitability from these companies, which arises due to persistent competitive advantages and is available at SuperNormal prices.
Continue to read Vikas Gupta’s stock pick based on scientific investing.
5. How often should you rebalance your portfolio by Amit Kumar Gupta
Amit Kumar Gupta has over 15 yrs of experience in investment analysis and portfolio management. He had set up the research desk at Adroit Financial Services Pvt. Ltd. across multiple asset classes.
Rebalancing the portfolio is one of the most important questions in investment management but is often the most neglected. The market works in cycles, and hence, no one asset class remains on the upcycle forever. For rebalancing the portfolio, knowledge and implementation of asset allocation are foremost. Once that is done successfully, one can look at this activity on review.
Investors are likely to be invested across multiple asset classes – Equities, Debt, Gold or Cryptos. Certain mutual funds or direct stocks will often do better than others over a given period. For example, assume that your stock funds perform extremely well over one year, but your bond funds perform poorly. Then a rebalancing from the stocks to bonds would make sense if the expectation is for rising interest rates.
For example, if your original allocation was 80% stocks and 20% bonds, your end-of-year allocation may now be 90% stocks and 10% bonds. You are now out of balance, and this new, more aggressive allocation may expose you to unwanted risk. Conversely, if stocks do poorly, and bonds do well the next year, you may be taking a lower level of risk and may miss out on gains in the stock market. To rebalance, you simply make the appropriate trades to return your mutual funds back to their target allocations. At the same time, It is also possible that the return of geopolitical uncertainty is again leading to demand for gold and gold prices could go up. All these are trend-related triggers for rebalancing your portfolio.
Continue to read the ways, frequency, and taxation of rebalancing your portfolio.
With a fair understanding of the market, well-thought investment decisions, and experience, come handsome returns on investments. Toh #DimaagLagana hai toh investments mei lagao. And while doing so, keep your fears at bay kyunki #tickertapeHaiNa.
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