Nifty 500 is around 11.3% down from its 52-week high.
But the correction is more brutal at the stock level:
- 211 stocks have plunged over 30%
- 212 stocks are down 15-30%
- Only 77 stocks have fallen less than 15%
A 𧡠on what you can do to build a bulletproof portfolio to handle.
Credit to Aashish P. Somaiyaa (@AashishPS), CEO of White Oak Capital MF, whose recent newsletter provided many insights for this thread.
But the correction is more brutal at the stock level:
- 211 stocks have plunged over 30%
- 212 stocks are down 15-30%
- Only 77 stocks have fallen less than 15%
A 𧡠on what you can do to build a bulletproof portfolio to handle.
Credit to Aashish P. Somaiyaa (@AashishPS), CEO of White Oak Capital MF, whose recent newsletter provided many insights for this thread.
Letβs first understand what has happened in the market over the last few years.
Amid the recent bull run, market segments like defence, railways, PSU, and manufacturing have benefitted from macroeconomic tailwinds or government policies. x.com
Amid the recent bull run, market segments like defence, railways, PSU, and manufacturing have benefitted from macroeconomic tailwinds or government policies. x.com
Recently, in a letter to investors, Aashish P. Somaiyaa, CEO of @WhiteOakCap, pointed out something interesting:
When sectors get a boost from macroeconomic trends, itβs less about the stocks you own and more about being overweight in the right sectors.
When sectors get a boost from macroeconomic trends, itβs less about the stocks you own and more about being overweight in the right sectors.
In the last few months, this macro-driven momentum has cooled off.
And as a result, many of those high-flying sectors have taken quite a hit.
They have fallen much more than the Nifty 500 in the second half of 2024. x.com
And as a result, many of those high-flying sectors have taken quite a hit.
They have fallen much more than the Nifty 500 in the second half of 2024. x.com
Those who are overweight in these sectors are bound to see a steeper correction.
Most investors also lapped up thematic and sectoral funds.
In fact, active Thematic & Sectoral funds reportedly collected the highest-ever inflow of Rs 1,55,743 crore in 2024.
Most investors also lapped up thematic and sectoral funds.
In fact, active Thematic & Sectoral funds reportedly collected the highest-ever inflow of Rs 1,55,743 crore in 2024.
Unfortunately, many investors were quite late in participating in the high-flying segments.
Many schemes launched in the second half of 2024 are currently underperforming the broad market.
So, those chasing hot trends have taken a blow. They learned the hard way that the risk lies in their portfolio, not in the markets.
Many schemes launched in the second half of 2024 are currently underperforming the broad market.
So, those chasing hot trends have taken a blow. They learned the hard way that the risk lies in their portfolio, not in the markets.
What can investors do to build a balanced portfolio?
Letβs understand this using a thali example.
In a thali, if you place spicy chillie pickles where rice is to be placed and keep rice where the pickle is to be placed, you are bound to get gastric trouble.
Letβs understand this using a thali example.
In a thali, if you place spicy chillie pickles where rice is to be placed and keep rice where the pickle is to be placed, you are bound to get gastric trouble.
The first step to building a solid portfolio is to avoid chasing top-performing themes.
Build your core equity portfolio with diversified equity schemes & index funds.
Also, you can include debt and gold into the equation and rebalance periodically.
Build your core equity portfolio with diversified equity schemes & index funds.
Also, you can include debt and gold into the equation and rebalance periodically.
Asset allocation with periodic rebalancing helps reduce sharp drawdowns.
And once you avoid extreme falls, it will give you the confidence to stay invested.
This may sound theoretical.
So, here are some numbers that will help you understand this better.
And once you avoid extreme falls, it will give you the confidence to stay invested.
This may sound theoretical.
So, here are some numbers that will help you understand this better.
We checked how a monthly SIP of Rs 20,000 each would have fared in two portfolios:
-A pure equity portfolio
-A 70:30 equity-debt portfolio
We used NIFTY 50 TRI as the benchmark for equity returns and the I-Sec Sovereign Bond Index for the debt portion.
-A pure equity portfolio
-A 70:30 equity-debt portfolio
We used NIFTY 50 TRI as the benchmark for equity returns and the I-Sec Sovereign Bond Index for the debt portion.
The equity-debt portfolio was rebalanced annually in April for 15 years.
Result?
Both portfolios gave almost similar returns.
However, the equity-debt portfolio fell much less during tough times.
Result?
Both portfolios gave almost similar returns.
However, the equity-debt portfolio fell much less during tough times.
You can read the detailed thread here.
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How much has your portfolio fallen during the recent corrections?
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Please like, share, and retweet the first tweet. π
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