Yeah, that's why "The market can stay irrational longer than you can stay solvent." is more a statement about the "mob behaviour" of the participants. Social psychology studies that crowds have a "mind" of their own, somewhat distinct from the mind of the participants , or at least affecting the participants a lot : https://en.m.wikipedia.org/wiki/Crowd_psychology
Indian Stock Market and Mutual Funds
- Thread starter anmolbhard004
- Start date
variablevector
Disciple
The market as a single entity definitely exists. This is like saying temperature doesn't exist because it is the emergent property of the brownian motion of individual particles. That might be technically true, but practically it doesn't matter. Because we can measure the temperature and use it. Similarly, we call the emergent property of the combined preferences of millions of people in the market...the price action i.e all of that information is encoded perfectly into the single value of price.
The market can definitely be irrational as well. Market actors are rarely ever strictly rational, they are boundedly rational, or from an objective perspective, irrational. And the collective push/pull of their actions on the price frequently leads to mispricing of assets either higher or lower than their fair value. This is why it is possible to be profitable as a trader or a hedge fund, because you can learn to spot these inefficiencies and exploit them, otherwise the longer term EV of such market participants would be zero.
Not disagreeing with this.
BUT
Is there really a crowd? Most of the money enters the share market through AMCs. As they say about US, the share price of a US company is exactly what the big three want it to be. Small retailers, or 'the crowd', has little influence on the price. It wouldn't be any different in India.
Our 'share market' is a 'market' just like our 'telecom market' is.
Anyway, I am out. I spent some time trying to learn about share markets and ended up disillusioned. Don't want to spread my cynicism.
Last edited:
Ok, interesting. I don't have a strong opinion on it, but I was reading Deepak Shenoy 15-20 years ago, AFAIR, he was saying half a billion dollars can seriously change the price of even large caps, maybe barring the most traded few stocks. If that number is 5 billion now, there are many FIIs that play at that level. And mid caps move much more easily.
The same experience with me, if I buy a stock it falls and the moment I sell at lose, it's price rockets. Had this experience with HAL, invested very few shares few months back <2500/-, sold at minor profit, now seeing it's price give me a kind of uncomfortable feeling deep inside.
Reason why I shifted into Quant mutual funds. Looking for focused funds and contra funds now to invest at a comfortable entry point. Also, looking for smallcase.
However this is a known effect, it's about investment discipline they say. Whatever, am not good at it
Last edited:
hold off of investing in quant mf, they are under investigation for front runnersThe same experience with me, if I buy a stock it falls and the moment I sell at lose, it's price rockets. Had this experience with HAL, invested very few shares few months back <2500/-, sold at minor profit, now seeing it's price give me a kind of uncomfortable feeling deep inside.
Reason why I shifted into Quant mutual funds. Looking for focused funds and contra funds now to invest at a comfortable entry point. Also, looking for smallcase.
However this is a known effect, it's about investment discipline they say. Whatever, am not good at it
Had lot of info about that, it's not a big deal at all.
Also, the front running issue is in 2 of funds they manage, they provide other funds, which are working fine.
anmolbhard004
Disciple
just accusations until proven its nothing wrong
If proven, they may remove the fund manager against whom allegations are made, pay a small fine and get along.
Similar issues happened with other AMCs and that is how SEBI handled it.
Also, now such issues are getting more attention, so hope things will turn fine:
timesofindia.indiatimes.com
Similar issues happened with other AMCs and that is how SEBI handled it.
Also, now such issues are getting more attention, so hope things will turn fine:
CJI advises Sebi and SAT to be cautious in surging markets | Mumbai News - Times of India
Chief Justice of India D Y Chandrachud advises Sebi and SAT to exercise caution in the significant surge in equity markets and advocates for stable regulations for a secure investment environment.
timesofindia.indiatimes.com
yeah, but still fluctuations in NAV and fund holdings be there, why risk it on the off chance its true? specially for newcomers
If proven, they may remove the fund manager against whom allegations are made, pay a small fine and get along.
Similar issues happened with other AMCs and that is how SEBI handled it.
Also, now such issues are getting more attention, so hope things will turn fine:
CJI advises Sebi and SAT to be cautious in surging markets | Mumbai News - Times of India
Chief Justice of India D Y Chandrachud advises Sebi and SAT to exercise caution in the significant surge in equity markets and advocates for stable regulations for a secure investment environment.
The impact on net asset occurred in the first few days after the announcement and it was less than 1% for the funds under investigation. It is unlikely there will be a major impact.
Their entire appeal was that they are quant and algorithm based with very less involvement of the fund manager. I doubt the people actually writing the algo will be fired, so the firing of the fund manager will hardly have any impact, compared to traditional funds.If proven, they may remove the fund manager against whom allegations are made, pay a small fine and get along.
Similar issues happened with other AMCs and that is how SEBI handled it.
Also, now such issues are getting more attention, so hope things will turn fine:
CJI advises Sebi and SAT to be cautious in surging markets | Mumbai News - Times of India
Chief Justice of India D Y Chandrachud advises Sebi and SAT to exercise caution in the significant surge in equity markets and advocates for stable regulations for a secure investment environment.
It is mistake not to be invested in a market like India, don't do trading or speculation if one is not cognizant enough about.
Hope you are at least investing through MFs, ETFs, SGB, etc.
Had the same feeling for long years, but now feels I should've studied market more and keep on investing good stocks.
Friend of mine is working as a small group with their own software following momentum investing, he is comfortably in profit for some time.
I agree. Thankfully, I am fully invested right now (smallcase+mf+sgb). What I have stopped doing is reading and trying to devise new schemes of investing. My current philosophy is that investing is a dark art and should be left to people with that special talent.
All my money is in the hands of fund/portfolio managers managers
One strategy from an old sage of the Indian market:the moment I sell a stock it rockets up, I bought MAZDOCK in dec 2023 sold it on 3rd july it was close to 3k , now its close to 6k.
Buy good stocks and never sell them
I like to follow it but then I get an itch to cleanup my portfolio once in a while.
Sold Exide at ~200 and Amara Raja at ~600 last June. They are both trading now at about thrice that price
Confession. I even bought this book
Tip: Don't waste your money. Its high Amazon rating worries me.
Attachments
Last edited:
The impact after the announcement is the least concern - that happens more due to perception, investors redeeming in droves, fund manager having to redeem more liquid assets, and hence having trouble. It would happen whether or not there was actual front running. The real issue is the money already last due to front running.
The people writing the algo will not be fired because most likely the front running was not part of the algo. If front running was happening, it must be someone human front running the algo.