FOMO is the Fear of Missing Out. It’s what causes people to believe that if they don’t get in now, the market will run away, just like it has in the recent past. Something like this
And the moment you get in, you start seeing how frothy the markets are in the news. Fear sets in, and a harmless-sounding word “bubble” come to haunt you.
That’s 2021—a love-hate relationship between FOMO and Fear.
This was also a year when neither the DIIs nor the FIIs but the retail investor has dominated the markets. Capitalmind was started to serve the “non-dominating” retail investors, and here we are. It’s been a fun ride seeing India’s capital markets landscape grow.
Here’s the best of what we analyzed and wrote about in 2021: what worked and also what didn’t work.
Capitalmind Research
Our funda of research is to simplify the complicated. To get you actionable insights that help make better investing and financial decisions.
We cover stocks, mutual funds, industries, bonds, news developments, personal finance, taxation, and everything else that would impact a retail investor. All of our research is curated to ask a simple question, “So how does this help you invest better?”
We published 285+ articles in 2021 at an average of 5 articles per week. Add to it the stuff we cover via podcasts and slack discussions.
Here are many handpicked articles that we think you’ll love to read & re-visit.
▪️ Starting with the As – Adani group caught the fancy of investors in the past two years like no one else. All the stocks related to this business house are booming despite some of its businesses directly being affected by the pandemic.
We covered the rampant rise of the Adani group through our research on each of its listed companies – Adani Enterprises | Adani Gas | Adani Green | Adani Ports | Adani Power | Adani Transmission
▪️ The multi-bagger brag
Alkyl Amines – We added the stock in Oct 2019 with our research confirming “Revenues are likely to increase smartly in the next few years, and with the company’s sharp focus on margins, the profits are also likely to grow”(link) & it played out as excepted.
The stock did nearly 10X return before we exit in Aug 2021 as the PE had expanded from 17 to 63 and moved to better opportunities.
BSE: We published our research on BSE in Feb 2021 and found it in an interesting space. We found enough triggers for growth for this company to outperform the markets but didn’t imagine it would be 3X well within a year. The much-awaited NSE IPO has generated even more interest in the stock.
As of writing this post BSE continues to be part of the CM Focused Portfolio.
▪️ IPOs – There’s no dearth of money on Dalal Street, and the recent IPO subscription figures are a testimony to that. 49 companies raised more than 1 lac crore up to 20th Nov 2021. Analyzed how these numbers stack up against the history of our markets, and it popped out little insights that don’t make 2022 look good.
Among this tide of IPOs, we covered 29 IPOs that we found most interesting and analyzed their business. Not because IPOs are good opportunities for retail shareholders to buy but to understand businesses and possibly earmark them for future potential additions to our portfolios based on how they execute.
What’s more, while we got mesmerized by the glitz of IPOs, we took some notes from the past – The IPO rush: Lessons from the past.
Overall, In 2021, we published research articles covering 88 stocks stories with actionable insights. You can find the list of all these articles here and here.
▪️ Mutual Funds
Undoubtedly, it’s the way India invests. We wrote about how mutual funds work. How your money moves in the MF ecosystem and what roles different actors play. As it turns out, a lot of our reads said,” Whoa! I didn’t know that!“.
We are spoilt for choice when it comes to buying mutual funds. Different platforms offer various feature differentiations that make it difficult for us to choose. We independently compare mutual fund apps in India and make your life easy.
Actionable insights for mutual funds: Best ELSS fund for 2021 | NFOs – Analysis and Should you invest?
▪️ International Investing
Social networks have been a catalyst for making International investing “fancy” with a barrage of articles, videos, and tweets promoting investing in US stocks.
But, should we invest outside India?
Yes! Because India is roughly 7% of the world’s GDP, a large part of economic activity happens outside our borders. Unless you count introducing the sachet version of the 14th variant of a dandruff shampoo as innovation, the most innovative companies in the world are outside India.
But when you invest directly in US stocks, you need to be careful about transaction charges, taxes, and systematic caveats. We cover these in our post. They don’t tell you about investing in US Stocks from India and conclude that for most investors, mutual funds are the way to invest internationally.
Here’s a framework on how Indian investors can go International with mutual funds and, more importantly, actionable insights into India’s best active International mutual funds.
▪️ Personal Finance
Day trading: As surreal as it may sound, in the last couple of months, while some people in this country were making desperate calls looking for hospital beds, oxygen supply, essential medicines, there were others, who from their mobile phones were trying to chase the stock market glory. It only made sense for us to stop and ask whether Day trading as a side hustle makes money?
The actual cost of EMIs: You’ve heard of the zero-cost EMI, no? You have to buy something, and instead of paying for it now, you pay for it for over six months. That’s awesome, correct? Well NO! Here’s the math that shows you How a Zero Cost EMI Actually Costs 9%. This one turned out to be a real eye-opener for many!
▪️ Foundations: Factor Investing
Factor Investing is about defining a characteristic (also called a factor) and consistently applying a set of criteria to buy a diversified portfolio of stocks that share that characteristic.
These strategies have recently gained traction because of their objectivity. Momentum investing is one such factor-based strategy. But, it’s not the only one. Actually, NSE has 96 different indices made from one factor or multiple. Nifty50 is also one such index.
Check out the clumsy chart below to see how these factors perform before reading this post that simplifies factor investing.
▪️ Sector Analysis – The top-down approach of filtering the best stocks to invest in starts with identifying the business’s sector. It helps understand the industry’s scalability, competitiveness, regulatory overhang, etc., while we pick a business to invest in.
Check out our research on – Airlines | Telecom | PSU Oil & Gas | Digital Payments | Tractors | Electric Vehicles | Building Materials
▪️ Stock Of The Week – We did a series on slack where we pick a company each week to discuss in detail, starting from the very basics and moving to the nuances. This series of posts saw some great participation from the community to discuss & debate the businesses.
All the companies covered on slack in this series are listed here. Some of the discussions made it to the “house view” posts – Bajaj Finance | Kovai Medical | VST Tillers | IRCTC | Acrysil | Gujarat State Petronet
▪️ Things that didn’t go our way 👻
It’s difficult to make an error while swimming with the tide. In these cases, when the markets are booming, much of your investing mistakes are covered by the market’s invisible hand.
But, when you try to swim faster than the tide, you are bound to get some bruises and sprains. We had our fair share of learnings (or mistakes) in 2021:
- We avoided banking and financial stocks after the pandemic hit. Our reading was that loan moratorium, struggling economy (mainly unorganized), and distressed incomes will lead to higher NPAs. Although all these things seem to be happening, the stock prices of banks and finance companies kept going up.
- We included MGL in our focussed portfolio betting on a hope story that the earnings growth will kick in and PE expansion will give the upside. Certainly, that didn’t happen, and we had to exit the stock at an -19.5% loss.
- Our Experimental portfolio has done exceptionally well across 2020, with each trade giving us a positive return – but there was a wrinkle this year. We had bet on ONGC, banking on the increase in crude and gas prices along with potential favourable tax regulations. The price did move upwards, but it was a little too late as we had already exited the trade at a 12% loss.
- The PayTM IPO – It is challenging to get an IPO wrong in this market. We take pride in getting the most difficult stuff done. Jokes apart – our “subscribe” on PayTM IPO was based on our read on the potential of the PayTM business as a whole and not at all on the listing pop. We are confident in our analysis and feel that this company can make an impact in the digital payments & banking space. But for now, we’ll count this as a miss from our end.
Model Portfolios
Model portfolios are the proof of the pudding, as they say. All of capitalmind research and analysis is distilled into model portfolios. You can pick the portfolios that could help achieve your financial goals & asset allocation mix while keeping in mind your risk appetite. Check out How to allocate to Capitalmind model portfolios?
Portfolio Performance
At Capitalmind, Premium subscribers access six investment portfolios: 4 equity, one fixed income, and a NIFTY + Futures Trading Strategy. And then there’s the Experimentals portfolio which captures all ideas that can deliver returns.
🚀 CM Momentum Portfolio did what it does best – handsomely beat the markets in 2021 and gave 3X returns vs Nifty. Check out the latest factsheet (as of 30 Nov 2021)
⭐️ CM Focussed Portfolio got revamped this year in April 2021 to become more responsive to volatility. We added weights to stocks and introduced a layer of technical analysis to aid in long-term investing. More details are in the revamp post, and portfolio performance is updated here.
♠️ CM Fixed Income Portfolio is a portfolio aimed at generating better returns than FDs net of tax. This portfolio adjusted itself to a lower interest rate regime and modified the strategy by adding exposure to REITs and INVITs in the Fixed Income Portfolio.
🆕 CM Low Volatility Portfolio is a new entrant to the portfolio mix where we take the core concept of lower volatility stocks and get a better risk-return profile. Learn more about Capitalmind Low Volatility portfolio.
🏖 CM Passive Portfolio is our answer to investing in Largecap stocks in India and abroad. It’s a portfolio of passive instruments – not because we don’t like picking stocks – but because data shows us large-cap funds have no major advantage over the long term.
💡 CM Chase Strategy went LIVE last July and absolutely dominated all of 2020, delivering ~58% returns. It’s a long-short trend following strategy based on trend following principles (detailed post). This year was full of whipsaws, yet the strategy has beaten the market by a little margin. We post the weekly performance of this strategy on this Twitter thread.
Beyond Research & Portfolios
Capitalmind Tech
We enjoy leveraging technology to make our offerings more valuable and efficient. There were breakthroughs and feature updates in 2021 that we are happy to highlight:
- Capitalmind EasyInvest – We launched a DIY utility that helps you easily invest, rebalance and SIP into Capitalmind Portfolios. We will add more features to enable portfolio tracking and return reports in the future.
- Slack archives – Our slack community is now 2150+ members strong with more than 1 lac messages exchanged a week. We have neatly organized these messages in archives so that it’s easy to search and refer back.
- Gift a subscription Or Refer a friend with just a few clicks. Why keep all the good things to yourselves.
Saturday Coffee Newsletters
We launched our weekly newsletter, Saturday Coffee and have had a phenomenal response with over 20k subscribers. It drops on each Saturday where we simplify one or two newsy topics, share the research we published last week, highlight the top 5 conversations from slack and share five articles (outside Capitalmind) that we liked.
It’s basically a way for you to catch up on most of the things that happened at Capitalmind that week. Check out – Saturday Coffee Newsletters.
Deepak’s first book is published!
As Vashistha aptly put it, “Deepak managed to write a book while getting through a pandemic, running two business verticals, and studying for an MBA”.
While Deepak has taught us to become wiser at managing money over the years, this book is a good way to sum things up. Here’s the post to the book launch – MoneyWise – Timeless Lessons on Building Wealth
And finally…
A big thank you for your support all these years and in 2021 as well. This year has been extra special because:
- Capitalmind Premium community grew by manifolds to 7150+ members, including Premium and Smallcase
- PMS crossed an AUM of 500 Cr
- The podcast crossed 3 Million listens
- And, most importantly, the portfolios have done well – this is due to the kindness of the market too 🙂
That’s us signing off from 2021. Hoping for a healthier and wealthier 2022! ☘️
Go Premium in 2022!
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