Hi!
Hope you’re having a fabulous end to the year 2023.
As I type this, the first thought in my mind, “Boi I was wrong about my 2023 outlook, time to spill the beans”
2023 outlook for those who haven’t read it:
However, I’m not disappointed because:
My outlook was that nifty wouldn’t do as well as it has in the past, it doing well was a good thing overall (who doesn’t like making money)
I learnt a few things over the year
So, as I write this slightly longer than usual post, to be published on the last weekend of the year, I invite you to read the following:
My learnings of 2023 within markets and more
My portfolio vs. markets
My market outlook on 2024 with this new found wisdom
Let’s begin
Learnings of 2023 within markets and more
These are in no particular order and they may even change as I dive deeper into markets, win, fail, take some hits and keep going; would love to know yours too in the comments below.
Markets might rhym with the past, but ever so often they do something new or atleast unexpected, look at other data points too for confirmations - this is something I learnt from my market outlook which expected the market to finally break the streak of winning returns
Don’t let your own story get in your head, being opposite and being contrarian are two different things - just because everyone says market is going to go up, chances are, it might just…at times there’s wisdom in the crowd, attack your own analysis at these times rather than just confirming your view.
Sticking to asset allocation and a process is a great way to bet on your own finickiness and stupidity - SIPs + strong direct equity picks + maintaining an asset allocation with a high minimum equity budget helped me still have a decent return this year
Things can actually take longer to play out; be patient and move steadily with focus, adding direction to speed is what gives velocity (true in life too, something I still am figuring my way around)
Non-Market: it’s okay to be wrong, what’s not okay is to not admit a mistake and not taking a chance to learn from it.
Health: Just like in portfolio where you allocate across asset classes, it’s wise to also look at your nutritional allocation and budgets, focusing on maintaining that proportion (fav analogy is equity is protein, helps you build, but you need other stuff too to ensure you’re healthy)
Portfolio View
Looking back, the year was decent, why?
Having small cap exposure which overall did well - some of the direct stock picks also did well here - highlighting why it’s always good to have some exposure to different Mcaps.
Lower churn in asset classes due to managed volatility through debt and gold - safer assets making it easy to sleep at night, even on the days when equity indices lost 1-3% in a day, knowing some part of my portfolio was not that affected, saved me from panic selling.
PS: the above was taken from my Mprofit dashboard, which is absolutely lovely especially to track your portfolio periodically - their analytics side is a boon.
Market outlook 2024
Last year, my market outlook ended with focusing on asset allocation but did showcase equity was perhaps overvalued and may not do that well in 2023.
In 2024, here’s how my view has shaped up
On Equity / NIFTY 500:
Earlier this year I had written on the NIFTY Earnings yield and the US10Y spread as well as how NIFTY 500 returns has shaped up basis the spread
While the spread had gone negative at that point and has since then come above being 0, it’s still beyond the SD-1 range which overall hasn’t been good for NIFTY 500 in the past
Now NIFTY 500 has been in this zone for ~8% of the study period (Jan’00-Oct’23) however, in that period, it delivered a positive return ~28% of the time and actually delivered a return >12% for ~14% of that time.
Now what that means is, while yes, it seems NIFTY 500 might be overvalued, and historically this zone has been negative, there’s still a 14% chance it might return >12%.
Overall, at this time, at the cost of committing the same mistake, I still am gonna stick to my process at this time (albeit hopefully improved) and keep my equity allocation at the lower end of my allocation budget.
On Debt
On debt, the good folks over at Rupeeting recently had a discussion on their podcast as well as released their market outlook for 2024 as a post, the debt allocation bit that you’d see there is partially contributed by yours truly - which you can read by clicking here - do listen to their podcast for a more in-depth and contextual view by Sagar Lele, their founder and the team.
Attaching the excerpt here too:
All in all, debt does seem to be placed quite well in 2024 for me and hence I’d, again at the cost of my mistake last year, keep it on the higher end of my allocation budget.
Views within Equity
Large Caps over Mid Caps - written in Nov’23
Private Banks as a sector - written in Nov’23 and already playing out
Parting Note
If you’ve made it this far, wow, okay I didn’t expect that, so first of all thank you.
2023 has been a great year, while they were many setbacks and failures, I’m ending it on a grateful note being thankful of all it’s lessons and wins.
2024 in my opinion, holds perhaps even more wealth for all of us, either monetary or in form of knowledge (I hope it’s both)
Large Cap and Private Banks are where I do seem some value at this point of time and do feel Debt allocation can help give more peaceful nights.
Wishing you an amazing year ahead and I hope you keep both your asset allocation and nutritional macros allocation in line with what’s best for you.
Until next time, as always for 2 years now, keep manifesting wealth (and health)
Disclaimer 1: All above views are purely for educational purposes and are not to be taken as investment advice. Investment or trades taken of any kind based on this are solely the person’s risk and I bear no liability. Please consult a financial advisor before making any investments. All investments are subject to market risks.
Disclaimer 2: The views presented above are mine and not of any organization(s) I work with / am employed at
Sources:
NIFTY Indices
Investing.com