Tweet Buster: Why most great investors start their stock picking journey with microcaps


NEW DELHI: As the broader market continued to outperform the benchmark indices, investors chose to book profits in metal stocks while making fresh bets on capital goods and PSU stocks. Both Nifty and Sensex declined 1 per cent last week, while the midcap index restricted its loss to 0.7 per cent and the smallcap index eked out a gain of 0.3 per cent.

In this week’s edition of ‘Tweet Buster’, we scan through the world of 280 characters to discover investing gems, market outlook, mutual fund gyaan and a lot more.

Active vs passive investing
DSP Mutual Fund’s Kalpen Parekh explains that there is a chance of getting beaten in both active and passive investing.

Are you overreacting?
Parkeh said that when the stock market moves up 100 per cent in about 230 working days, it creates an expectation that the default move every day should be up and to the tune of 0.5 per cent on an average.

Nifty vs Nifty Equal Weight
Parekh shared some data to prove that the Nifty Equal Weight index beats Nifty50 by a decent margin in the long run.

Wealth is for the believers
PMS fund manager Basant Maheshwari reminded investors that the primary job of a bull market is to occasionally shake the naysayers off. “The secondary one is to make wealth for the believers.”

Expect the best from the worst
While replying to a tweet, Maheshwari said that during a cyclical recovery, stocks that are worst fundamentally actually give the best returns.

Gems from Ian Cassel
Microcap investor Ian Cassel said great investors like Warren Buffett, Peter Lynch and Joel Greenblatt started with microcaps because it is the only place in public markets where an astute investor managing a small sum has a structural advantage over institutions.

Here’s a collection of some of his notable tweets during the week:

Derating happens quietly
Fund manager Shyam Sekhar warned retail investors that nobody will tell them before a sector goes into derating. “People come after you only to talk about rerating. Rerating needs advertising. Derating works on the sly.”

MF gyaan
Financial advisor Sandip Sabharwal said mutual fund investors should stay away from sectoral or thematic funds. “When a theme is working, salespersons will push that. However, it’s always better to be diversified in long term. Fads should be avoided,” he said.

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