Opposite of Good doesn’t have to be Bad
A quality stock with stable margins / growth vs a cyclical stock with volatile cycles have both over time earned same returns but with different paths
Gold and nifty (proxy to growth and cash profits) returns are same since 2000 (nifty was at 23 times)
Nifty has outperformed Gold hugely in last ten years since its lower PE start point
At extremes, timing matters and valuations also
Small cap index went up 15 times since 2003 to 2007 but next 15 years could not even beat sovereign bonds
Opposite of speed (small caps) can be slow and sleepy debt (again at market extremes, timing matters)
Opposite of active is passive - two years back an active fund did 12% alpha. Today 9% lesser than Index. Mean reversion keeps happening. Opposite of passive - active is good at times and vice versa
Opposite of quality is said to be value & vice versa ! 2 years back a quality style fund did 21% better than value style fund - and the same has reversed today
(I like both the funds - their styles - their managers)
Mean reversion happens
Opposite of india growth story is global investing & opposite of global diversification is home country (best country) thinking
2000-2010 : india shined
2010-2020 : USA (innovation) made money
Opposite to each other but yet money can be made by blending the two
Diversify
The rich say sips are for poor. Opposite of Lumpsum is SIP. From expensive markets, sip s do better. From cheap markets, Lumpsum does better
Both are good depending on context
Concentration is conviction - diversification is for ignorant.Yet globally diversified indices beat active managers
research says that only 4% cos made more money than debt returns. Hence concentrate in these 4%
Here, skills matter. Concentration can earn more yet can kill too
So what now
Don’t be binary always
Investing has dualities and many dimensions and nuances
Don’t get trapped in zero or one
Respect context - & then decide
Takeaways 👇👇
Final credit for these thoughts once again
Lecture by @Sanjay__Bakshi
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