- Wealth PMS (50L+)
All of us at Capitalmind wish you a Very Happy and Joyous Diwali 2020. Hope the next year will be filled with joy and wealth, even if it’s not in that order!
We don’t like predictions. But every year, we make an exception for Diwali where we predict our posterior off. It’s like an annual ritual where you get a license and the only thing that happens the next year is to find out how good (or bad) the predictions were!
Last year, we predicted in our long post about various things. What we did not foreses is that Covid-19 would have come and changed life as we knew it, and yet, a year later, the markets would be higher. Even the markets worked from home. But here’s what we said:
This feels like it’s happened. But it hasn’t, really. Many NBFCs came to the edge of default and were rescued by the massive intervention of RBI, the TLTRO offered to banks, and the general glut of liquidity.
But there was a big casualty. The Franklin Templeton debt fund destruction. Franklin, you might say, was an NBFC or behaved like one. It took money from investors and gave it to, let’s just say, not the best of firms. The model collapsed after Covid, when it appeared like many of these businesses would find it difficult to continue, and investors asked for their money back. Given that in a mutual fund, it’s the investor that is the actual lender (not the mutual fund), the “hit” was taken in the form of a locked in fund that currently is going through a court case. We’ll probably take 5 marks for this out of 10.
The year belonged to either everybody or nobody. The Mid-Caps rebounded just as well as the Small-caps and as the Nifty.
There were however sub-cycles of falls and recoveries throughout, and there definitely was extreme volatility. The revival did happen till Jan – as you can see above, and then Covid-19 took it all the way down. The economic recovery is definitely slow. So some marks for that, of course. Let’s just say another 5/10
Of course, we have full points here. We’re at 4% on Repo and 3.35% on reverse repo. Liquid funds are yielding 3.5%. So we’ll just take 10/10 on this.
Total Score: 20/30
This has happened in CG Power. The bankruptcy court was suspended for new cases post March, but the older cases continue to get resolved. The DHFL resolution is nearly done, with about two more weeks to handle this. So yes, this one’s a winner too. 10/10.
Total Score: 30/40
Stocks in the auto sector will rebound. They may not be valued as richly as before though. This is a good point to make a bet on a few of them.
This has happened in some stocks. Eicher Motors, Hero Moto Corp and Ashok Leyland are up more than 10% in the last year (more than the index). But Tata Motors, Bajaj Auto and Maruti are down between -5% and -18%. We’ll just call it 50-50. (5/10)
Total Score: 35/50
This is written in such a way that it was most likely true. Markets have flattened a few of the expensive names (Page Industries, Pidilite). But a few have risen strongly – like Asian Paints and Jubilant Foods. In fact the low p/e stocks like ITC have crashed a lot more.
But indeed, the deep crash did happen, and took those stocks down with it. So again, 5/10.
Total Score: 40/60
I should have bet on a big crash 🙂 But we did see a -30% move. So I’m just going to say 10/10 on this.
Total Score 50/70.
There was some but it mostly was break up. Trump, being Trump, did mention how he had a “good relationship” with China’s Xi Jinping (like here) while at the same time banning Huawei, forcing Tiktok to sell its US assets, and so on. We’ll take 8/10 on this.
Total Score: 58/80
Technically, Brexit is happening. The BBC says the withdrawal agreement was signed Jan 31. This transition, though will go on till December 2020, and trade deals with the EU and other countries are yet to happen. It still doesn’t look bad, but honestly it will only start to reveal itself after next January. So yes, let’s just take a 5/10.
Total Score: 63/90
This combination has done extremely well. It has beaten the Nifty and Next 50, and likely most mutual funds. (We did a quick check: Ranking all large cap, large+midcap and multicap funds, only two funds have done better – PPFAS Long Term Equity and PGIM India Diversified Equity). So in this case, we’re going to claim 10/10.
Total Score: 73/100
As you can see, we’ve done pretty well with 73% accuracy, because we can twist statistics to wherever we like.
A few things we think will happen:
The problem with predictions is that you have to remember what they are and wonder what you were thinking the last time you said them. So even once a year, this is as painful as it gets. But we got lucky this year!
We have an exciting new site coming up, with a new dashboard. All users who sign up now will see the new portfolios on their dashboards. Wealth as a PMS too has more information and website changes coming our way. It’s going to be a fun year!
Yes, you can subscribe to Capitalmind Premium for a discount now. Go to https://www.capitalmind.in/pricing/ and use code WELCOMEABOARD for a 30% discount. (Valid till 24th November!)
Happy Diwali once again!