The Inopportune Moment for a Skilled Stock Picker: The Perils of Delaying Research, as Explained by Samit Vartak

The Surprising Synchronicity of Asset Classes

It has been a remarkable year for various asset classes, with gold, bitcoin, equities, bonds, and commodities all experiencing synchronized growth. This is unusual as asset classes typically do not rise together. The question arises: why are these assets performing well globally? It cannot be attributed solely to high liquidity or interest rates. One possible explanation is that individuals who made money during the pandemic are now seeking investment opportunities. Liquidity remains high, and there is still cash available for investment. The influx of money into the market may be a result of funds printed during the COVID-19 crisis.

Investing in India’s Market

If you’re considering investing in India’s market, it’s important to understand how long the money flow will continue and whether it’s wise to make tactical calls. Despite the market appearing frothy for small and midcaps, larger market cap agnostic calls may still be favorable. The Indian economy and corporate sector do not exhibit signs of frothiness, with operating cash flow surpassing investments and low levels of capex depreciation. Private capex is also on the rise after being stagnant for some time. These factors suggest that India has strong fundamentals and may attract more investors in the future.

Valuations and Quality Investments

One concern in the Indian market is valuations, particularly in small and mid-cap stocks that are trading higher than their historical averages. Additionally, investors face the challenge of striking a balance between conducting thorough research and taking quick investment actions. In some cases, investors may compromise on the quality of companies they invest in due to limited time for research. It’s essential to analyze fundamental growth and cash flows when considering investments in both PSU and non-PSU companies. While there may be winners among PSUs, many will likely not generate significant returns in the long run.