​Tweet Buster: 7-point checklist for picking new stocks; will cyclicals continue to outperform?

NEW DELHI: Even as the Sensex gained 1.9 per cent last week, investors remained worried over the spike in Covid cases, pace of vaccination and withdrawals by FPI investors. On Twitter, two issues dominated discussions – why is the stock market going up when cases are rising? – and Sebi’s new rule on compensation of key personnel in mutual fund houses.

In this edition of ‘Tweet Buster’, we not only discuss these two issues but also dig out market gyaan and investing strategies to stay financially safe in trying times.

Dalal Street’s smile fake?
Zerodha CEO Nithin Kamath started a new debate on Twitter when he said he feels “disgusted” the way stock markets have gone up despite the second wave of Covid. “I know money shouldn’t care, but maybe it should. Maybe why today’s capitalism is broken?”

Economic depersonalization
Zerodha and True Beacon co-founder Nikhil Kamath blamed the disconnect between the rally in stock market amid increasing Covid cases as an example of economic depersonalization or derealization disorder.

Skin in the game
Radhika Gupta, managing director and CEO of Edelweiss Mutual Fund, explained how Sebi’s order on compensation of AMC employees is going to be “extremely problematic in implementation”.

Oxygen crisis vs credit crisis
Fundoo professor Sanjay Bakshi recalled a famous quote by Warren Buffett: “Credit is like oxygen. When either is abundant, its presence goes unnoticed. When either is missing, that’s all that is noticed.” He said as of now, the oxygen crisis is deadlier than credit crisis.

Metal’s mettle
Fund manager Basant Maheshwari said metals are are a once in a decade opportunity. “When you get it make the most out of it,” he said.

Eat your own food
Amid the debate over Sebi’s new rules, DSP Mutual Fund’s Kalpen Parekh said whenever his team meets any global investor, they always get asked: “Do you invest your own money in your fund that you are recommending to us?”

For long-term investors
Smallcap hunter Arun Mukherjee said investors gave a 7-point checklist that investors must follow while picking new stocks.

What after steel?
Dalal Street veteran Shyam Sekhar ran a poll on what is going to be the next big theme after steel. The results was a tie between infrastructure and PSU reforms.

Cycle leaders
Investment advisor Sandip Sabharwal said each market cycle is different. “Using last cycle moves to predict the next cycle usually goes wrong. Last time consumption led the rally as actual impact on incomes was low, inflation was low & stimulus was present. This time these lack. Next cycle cyclicals will outperform.”

Trading vs Investing
Explaining the difference between investing and trading, microcap investor Ian Cassel said investing is done with an intention to hold, while in the latter case the intention is to sell.

3x will lead to 2x
Cassel said if you are looking for a stock that can double, look for the one that other investors think it can triple.

Other gems from Cassel