Good Time for Equity investors of Medium Term

Hello Everyone,

Hope you are doing well. For the last 1.3 years, the equity market is testing out patience. All indexes are flat and mostly range-bound. But, wait In the last 1 month there has been a flurry of good news for Investors with a 3-4 years investment horizon. Let's look at them

The SIP sr ( ie stoppage ratio) shot to 25+ months high of ~0.68 in Feb against a long-term average of ~0.51

Clearly, those who are looking for quick returns and don't know how market cycles work are losing interest and clearing the way for medium-long-term investors to accumulate stocks at good valuations. Here is another example

'Noninstitutional Participation in shares dropped to 30+ months low during Jan 2023'

Daily cash market volumes of non-institutional investors (Retail and HNI investors) were at 22k crore a JAN'23, The lowest since Mar 2020 and 61% below the peak of 58k crores on Feb 21st

Then how come it is good news 😒?

If you have been investing for more than 8+ years, you will realize such times are good for accumulating stocks in the medium term.

As the investor participation is low, one gets good stock prices and enough time to gradually build a stock position

check out the below data for investor participation in earlier years





FY 01, 08, and 18 marked the peaks of equity turnover, and the same also coincided with the peaks of the broader market.

The turnover significantly dropped in FY02-03,09,12-13,19-20 coincided with market lows and we know how markets went up after lows in FY20-21 after lows in FY19


Here is one more chart that gives us a strong reason when to accumulate 


               

The above graphs depict investor greed in terms of searching for the term Multibagger at various points in time. Accumulating when no one is interested is the best way to make money. Currently, google's trend for multi-bagger stocks is around the lows of 2019

If you accumulated stocks in 2019 then you would have got great results in 2020,2021

Remember, I don't expect immediate gains. In fact, the market may continue to be range bound or in slow decline mode. But, unless you know how to time the market perfectly and buy just at the bottom or just before the market moves up, I feel its a good time to accumulate stocks for the medium term


Comments

Post a Comment

Popular posts from this blog

Is it Right Time to Exit Indian Equity Market ? ( A Data Driven Approach)

Image
In the world of stocks, experiencing Bull and Bear phases is a common occurrence. During a Bull Market, everything appears to be flourishing, and portfolios thrive with remarkable returns. However, as retail sentiment becomes increasingly driven by greed, valuations begin to froth, signaling a potential struggle to sustain growth. It is during these moments that savvy investors, personally, I consider Foreign Institutional Investors (FIIs), exercise profit booking strategies to capitalize on the market's ebbs and flows. Over the course of the past few months, we have been witness to substantial shifts in market dynamics, leaving both investors and analysts contemplating the path that lies ahead. Among market participants, a palpable sense of caution has arisen in response to these five months of extreme volatility, while conversely, another faction argues that this period merely marks the inception of a multi-year bull run. In the following article, we will embark on a journey into...
Read more

Is 'Mutual Funds Sahi Hai' really always true?

Okay, I admit that the title goes against conventional beliefs that mass media and TV ads love to parrot daily. So, bear with me for a while to know the other side of the story. Let me tell you what neither the ‘Mutual Funds Sahi Hai’ ad makers nor the AMFI (Association of Mutual Funds in India) will ever tell you. Skin in the game Does your mutual fund manager invest a substantial part of his own personal wealth is in his own fund? If a fund manager is investing elsewhere, what does it tell you about his own confidence in his own ability? Here are some examples . Although this report doesn’t tell the investment amount as a % of the manager’s net worth, you can clearly make out that 20–50 lakh must be a minuscule % of the fund manager’s wealth. This is a clear asymmetry of risk and return. They get to keep the upside in the form of annual bonuses with no equal penalty for the downside. You and you alone get to bear the risk. True skin in the game means one must bear both the upside...
Read more