Twitter Polls and Markets
If you were wishing to conduct some large scale social experiments, there seems to be no better medium than Twitter. Given the wide diverse audience, this provides for a nice mix of what people are thinking. That said, since it takes just a click to answer, not every poll will provide you the right context or meaning.
Take this poll of mine for example that I conducted on March 9 (Nifty @ 10,450)
Just 8.9% were selling and in hindsight they seem to have hit the nail right. I of course was kind of mixing between Buying (a bit) and Chilling. Who knew that one can develop hypothermia so fast 😉
Anyway, not satisfied, I decided to another one (Nifty still at 10,450)
Given just 2 options, the audience was evenly split. And Yet I did not. To add, I actually wrote a couple of posts around the time Corona started to break out expressing the view that everything would get better and it wasn’t really going to go bad. Man, was I wrong.
My personal investments in Equity are basically whole and sole in Momentum. Other than ELSS funds, I own no other Mutual Funds that are equity oriented. But when I say Momentum, it’s interesting to observe most to think it as some sort of trading even when the logic is systematic and universal in approach versus just random stock picking based on charts.
So, as usual I asked Twitter for an answer.
As I write this, more than 50% say they would have felt sad to have lost 30% in a portfolio that picks stocks on short term (Momentum) versus just 16% who would feel the same in a portfolio that has long term picks.
The result is not a real surprise to me since I have seen even die hard momentum investors claim this to be some sort of high risk portfolio and hence more of being a satellite versus a long term portfolio that is seen as the core.
It’s similar to the behavioral study that has shown that people tend to spend more when using Cards versus using Cash. Advent of online ecommerce sites that allow for one click buying and home delivery allow for even more instant gratification (I write this looking at my own bookshelf with books I am yet to read but couldn’t stop myself from buying more).
Mutual Fund returns for the month. This from Valuepickr
I have sorted the same by Month Returns, Worst to Best. The fall has been of such a nature that it has not only destroyed the returns of the year for most funds but also pushed into negative territory most fund styles for 3 years and a few even in the 5 year time frame.
Investing needs to be for the long term, but long term investing is fraught with uncertainties and dangers that is barely discussed for long bull markets makes one forget that one also saw long period of bear markets in the past.
A disclaimer before you go further. All my recent views on the Virus and its impact have turned out to be totally wrong. The only ability that I have is for now sticking to my system even when the gut screams for me to break the rules this one time.
The 2008 bear market was one of the worst bear markets to hit the Indian Markets. But the one that was even worse? The one that started in 1992 and came to an end in 1999. If you were to believe Indian Astrology, you would have heard about Saade Sati.
The 2008 was mostly a walk in the park for anyone not associated with Capital Markets. Life went on for the vast majority of folks and even though the Real Estate Index has never recovered (it’s even today down 90% from its peak), Real Estate enjoyed a few more years of boom till the stagnation came in.
The coming bear market is going to be nothing like that given how much of an impact the current crisis has been having on an ordinary citizen. At some point things will return back to normal, the question is how long it would take and what is the damage we shall see in the interim.
When markets fell in 2008, Infrastructure firms and Realty firms whose Balance Sheets were loaded with debts were those who found the bottom giving up. This time around, even firms with low leverage but falling into categories where shifting consumers trends can create havoc.
What is currently happening is unprecedented and hence the previous market behavior may or may not be of significance. We have no way to gauge the depth or the length of this bear market and its impact on our lives in ways we wouldn’t have thought about in the good days.
Targets of 6500, 3000 and 666 (on S&P 500) are being thrown about as if coming down there will have no impact on the real economy. While the last time around, throwing money was sufficient to lift the sentiments and the economy back on track, this time around, we have a Virus which has no use for Fiat money or Gold for that matter.Â
Unlike US which can go with a multi trillion dollar rescue package, options for India is very limited. In the longest bear market (1992 to 2001), Inflation was mostly in double digits and Interest Rates compared to today were mouthwatering.
The social and economic cost of this bear market is not something that may go away soon even though we all hope for a fast recovery. Of course, I maybe too skeptical and we may be back to new highs in this year itself, but the odds at the current juncture seem pretty remote.
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