Tweet Buster: Zerodha founder on trading vs gambling; stock-picking tips for long term


NEW DELHI: In a pandemic-ravaged year, Dalal Street managed to surprise even the rosy-eyed optimists. After recording gains for the third consecutive month, Sensex ended 2020 with a gain of 15.75% and posted its best yearly performance since 2017.

The midcap and smallcap indices beat Sensex and Nifty by a wide margin during the year, as the rising tide lifted all boats. With no sign of a trend reversal in the Dollar Index and the US Fed maintaining an accommodative stance, foreign inflows are likely to continue well into the first half of 2020.

In today’s edition of Tweet Buster, we sift through social media posts by market gurus and spot investing mantras to help you sail into the New Year.

New Year Outlook
Independent market expert Sandip Sabharwal says the most bullish brokerage forecast for Nifty in 2021-end is 15,000. “It implies a 7-8% return from current Nifty levels. Risk- free 10-year bond is about 6%. Risk-Reward?,” he says.

Trading = gambling?
Is trading the markets gambling? This is one question that Zerodha co-founder and CEO Nithin Kamath gets asked often. “My answer is that yes, you can gamble when trading, just like you can gamble with everything else in life,” Kamath quips.

For your portfolio
Retail investors often confuse investing with trading and end up either with losses or poor returns. Value investor Arun Mukherjee says while making long-term investment decisions, look out for companies that can grow at 15% for the next 10-20 years, instead of those that can grow 50% for next 1-2 years. “Consistency is more important than speed of growth. Market is very fond of such companies and rewards handsomely,” he advises.

Sectoral calls
Sabharwal says residential real estate revival is very strong, despite the overall economy still languishing well below potential growth. “Companies that benefit due to this trend should do well in 2021,” he said.

Sabharwal warns that rising prices of commodities like steel, copper, aluminum, fuel, chemicals, polymer, etc will hit profitability across the board, except for the producers themselves. “Worst impacted sectors will be auto & consumer durable companies which were already grappling with shortages, higher import duties, restrictions, etc,” he said.

Forget all predictions
Microcap investor Ian Cassel says the older he gets, the more comfortable he is in remaining silent and letting others voice their opinions. “It’s the great thing about investing. Opinions and predictions don’t matter. Being right matters,” he insists.

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