- Wealth PMS (50L+)
The stock market is a village square where various thought processes come together. When you buy a stock that you feel will outperform, there is a seller at the other end who has the very opposite view.
This means that you’re not investing in stocks, you’re investing in your views, your research, and your conviction. Having good ideas and putting money behind those ideas are two very different things. While market participation forces you to do the difficult task of allocating money to your ideas, a fantasy league – like this one – lets you experiment with your views without the fear of you losing money.
Taking a cue from sports fantasy leagues in 2021, we started Capitalmind Premium League (CPL) – a virtual stock picking contest for Capitalmind Premium subscribers. With this post, we conclude the second edition (2022) of this contest and launch the 2023 edition.
Over the last two years, we have learned that picking stocks for a fantasy league game is not the same as picking stocks for long-term wealth building. When you know, your contest is going to get over at the end of the year, you are better off picking the stocks that are “in trend” right now rather than finding the stocks that will do well in a longer time frame.
It gets far more interesting when you know that only the top 10 out of 250+ participants are going to make it to the winners’ list. In this case, you either need to hit it out of the park or try again next time. There’s no glory in being in the belly of the bell curve.
This is not how investing in the real world should be. That’s why we scratch the itch of taking outlandish punts through this virtual league.
Generally, the top performers of the markets beat the index by a huge margin. This makes it apparent that the participant who correctly predicts the next outperformed wins. Or they can just pick Adani stocks.
It’s no surprise that an Adani stock tops the chart but it’s surprising that out of ~280 portfolios that picked 5 stocks each, there were only 7 portfolios that had any of the top 5 performing stocks. So that’s 7 out of 1400!
All participants dodged “Top Losers” with equal efficiency as they missed “Top Winners” except for Indiabulls Real Estate which beat up the returns of 29 portfolios.
The key point to notice here is that the hole left by a ~70% loss is far worse because it can’t be filled by a 70% gain. To recover a 70% loss on capital, you’ll need to grow your capital by 300%. That’s why it is more important to avoid the destruction of capital than to look for that extra return.
Where did the house bet
Around 20% of the portfolios bet on Nasdaq 100 probably thinking that it would keep on with its stellar run. Everyone who could have potentially spoilt this party actually did. We had inflation, recession, energy crisis, political instability, and of course Putin.
The bet on Gold proved to be better off as against the stock Index (Nifty) while Reliance was a disappointment against the Index. In the long run, we won’t be surprised to see the opposite – reliance outperforming and gold underperforming the index.
Here is the leaderboard. The top 10 winners, apart from the bots and Nihit (CM team), stand to receive Capitalmind goodies and bragging rights till the next contest concludes.
Special shout out to Vinod Rangwani for making it to the top 10 list for two consecutive years. And also, somehow, I have made it to the leaderboard again this year. Both of us are low-key feeling like Nawaz Bhai.
Objective – To step into the shoes of a fund manager/asset allocator with a 1-year view and try to beat the market with a fantasy portfolio. Note, this is a theoretical exercise and does not involve actual money.
The rules are basically the same as last year.
The contest closes 1 week before the 2022 Muhurat trading day. We’ll also share regular leaderboards to show how everyone is doing.
Premium members will receive an email with a link to a simple form to submit their fantasy stock picks. The link will also be posted on the slack channel.
Please make sure to enter your Capitalmind registered email id. Only entries received before 3.30 pm on 4th November 2022 will be eligible for participation. The portfolio will consider closing prices for 4th November as the buy price of the portfolios.
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