Is Market Cap the Best Way to Build an Index?
Nifty 50 is a free-float weighted index – a slight variation of market cap weighted wherein we exclude promoter or government ownership. It is the most popular index in India and over the last 5 years it has delivered close to 22% returns. Nifty 50 equally weighted index is another form of index which distributes…
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Vivek Sharma
3 Books That Changed How I Think About Risk and Markets
Over the past two decades, I’ve built a quiet but consistent habit — reading. Not as much as I would’ve liked, and certainly not as widely. But across the years, the books I did manage to read have shaped the way I think, work, and make decisions — especially in markets. Some books left behind…
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Vivek Sharma
All Nifty Bees Are Equal — But Some Are More Equal Than Others
The title, inspired by George Orwell’s classic Animal Farm, perfectly captures the essence of this blog’s topic – Index Funds. Nifty bees are index funds that track the Nifty 50 index. I say that all Nifty bees are equal because they all track the same underlying benchmark, i.e., Nifty 50. However, I say that some…
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Vivek Sharma
Skill vs. Luck – What Drives Investment Returns?
In stock market a good decision can lead to a bad outcome and a bad decision can lead to a good outcome. Luck plays a big role in investment outcomes but is often overlooked—sometimes intentionally. If you tell yourself, you just got unlucky, you are making excuses. If you tell yourself, you got lucky, you…
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Vivek Sharma
The Evolution of Factor-Based Investing
Imagine you’re a student preparing for an important exam. What are the factors you think will determine your score? You can be the smartest person in the whole world, but if you don’t handle the exam pressure well, your performance would suffer. Your score, as you might have correctly guessed, depends not just on your…
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Vivek Sharma
How Investors Lost Money in Peter Lynch’s Magellan Fund
The Magellan Fund, managed by Peter Lynch from 1977 to 1990, is legendary in the world of investing. Under Lynch’s rein, the fund delivered an average annual return of 29%, making it one of the most successful mutual funds of all time. But here’s the paradox – despite this stellar performance, most investors in the…
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Vivek Sharma
Time In The Market > Timing The Market
Imagine if taking a few days off your work cost you your entire salary. Sounds extreme, right? Who would want to work in a place like that? Yet, in the world of investing, where your money is working for you, this happens all the time – missing out on a few of the market’s best…
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Vivek Sharma
Identifying Overvalued Stocks: A Proof by Contradiction Approach
Proof by contradiction is a logical method used in mathematics to prove a statement by assuming the opposite of what you want to prove. If this assumption leads to a logical contradiction or an absurd conclusion, then the original statement must be true. In this blog, I will show how this method can be…
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Vivek Sharma
Debt Funds Deep Dive
Debt Funds are funds that invest primarily in fixed income securities of government and corporates. As of May 2024, it has over Rs. 15 lakh crore in assets under management (AUM) – about 26% of the total AUM in the industry. In this blog, we are going to take a deep dive into debt mutual…
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Vivek Sharma
Equity Mutual Fund Deep Dive
Equity Mutual Fund Deep Dive SEBI classifies mutual funds into five broad categories: Debt, Equity, Hybrid, Solution-oriented, and Others. In terms of Asset Under Management (AUM), Equity leads the pack by a mile as the most popular option among investors. As of May 2024, the total AUM of the Mutual Fund industry in India stands…
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