Does anyone invest in US equity or mutual funds? I am in US and struggling to invest in US stocks due to below reasons.
It is hard to find companies apart from FAANG stocks and some other stocks like Costco etc? How do we find good mid and small cap companies in US? Since most of us are born in India and know most of the companies since we have consumed their product. Atleast I am facing this challenge.
Any mutual funds which can give 15% type of return in US
Is there any small case concept in US? I couldnāt find similar concept here
Are there any good forum like our favorite value pickr for US stocks as well?
Is there an online tool to sort mutual funds (equity or hybrid) by expense ratio and portfolio turnover. All sites I have checked just stress on returns which doesnāt tell much about fund manager behaviour.
Assuming some subjectivity towards certain fund houses, AUM size etc exists, resulting in some fund houses being removed, the remaining funds wont be too many. So we can check manually as the expense ratio and turnover are available. Also, not all fund houses are present in all the categories.
And fund managers change with in the schemes, and also move to other fund AMCs, so it helps to read and watch their interviews, because churn turnover can be based on real time, whereas philosophies are usually long term.
Just a thought :
In Nifty , we have roughly 5-6 companies whose sales growth, profit growth is above 15, ROCE above 20, Non-PSU, profit making, non-cyclical companies.
Similarly in case of Nifty Next 50 we have around 4-5 companies which fulfill above criteria. In case of Nifty Midcap 150 , its around 15-16 companies and in small cap 250 , around 3-4 companies. So instead of investing in Nifty 50 Index , Nifty next 50 index, Midcap 150 Index, Small cap 250 index, isnt it better to invest in these 40 companies curated for above factors?
Instead of active funds like flexicap , multicap, such curated list has more chance to outperfrom indexes. But then u cant remain concentrated, you have to spread into these 40 companies.
Tracking 40 names may not be worth the effort. To some extent, it again feels like an index fund. And should these stocks have equal weightage or weight depends on the index? Should better performing stocks be given more weightage or even if underperforming but undervalued stocks should be added more? And if one stock does not fit the criteria, should it be changed with a better performing stock, and what duration of underperformance should be considered here? And one may feel to allocate more to some stocks and have only small portions in other stocks because he knows more about some sectors etc.
Also if one is investing in direct stocks, I donāt think a comparison with indices is necessary, in the sense that, if I am underperforming w.r.t Nifty 500, should I stop and invest in Nifty 500?
There are many ways to do these things, but if we are going broad with the idea and the work, then we may have to spend considerable time doing it to come to a conclusion of continuing it or stopping it.
If we invest in actual indices , Nifty 50, Nifty next 50 , Midcap 150, Smallcap 250ā¦Out of these 500 stocks, roughly 90% stocks are not worth investing, either they are loss making, or cyclical businesses, degrowing businesses, High Leverage , debt ridden businesses, Govt owned and PSU businesses, some newly listed , useless crap businessesā¦And such businesses are around 450 out of 500. Why one should invest their hard earned money into such crappy businesses, just because , index provides them.comfort of not selecting their stocks, and no mental pain of watching their stocks going down daily.
As far as , 40-50 numbers are concerened , once some.basic parameters are in place, you may not have to monitor minutely. Just a cursory glance will be fine.
I have seen portfolio of many active funds and PMS, flexicap, multicap and they have another kind of compulsion, lots of money is entering in market and fund managers are running short of ideasā¦they have to deploy money in these 450 companies too, knowing fully well that they are entering into shitty companies, but its not their money, they are just thinking of their fees and very short term view.
As for weightages, maybbe those stocks from Nifty 50 and nifty next 50, which qualifies above criteria , can be upto 60% while remaining can be upto 40%.
Only issue is , you need to keep watch, over time many companies from these 40 will slide into 450 and vice versa.
I want to learn in more detail about banalce sheet data shown by screener like website (like Reserves, liability, fixed assets etc.) & then how to calculate cash on hand/book, DE ratio etc.
Can anyone help me with any material, youtube video etc. to enhance my understanding in these topic.
You can read this book called Romancing the Balance Sheet by Anil Lambal. In a very lucid language, the book will help you understand how to read them.
Index investing is not for people who can manage a stock PF, it is for people who want to participate in the markets via a diversified basket of companies, and this basket whose components from time to time, has the history of delivering inflation beating returns, although in a non linear fashion, without worrying about the issues that exist with active funds. As passive investors value time more than return, or are content with the return that an index provides, they donāt look at the performance of stocks, they look at the performance of the whole index, and if it is a market weighted index, there is always the chance of the larger companies dragging the return, so one can look at equal weight indices, but the return will be limited, as the weight is limited. We have many options with indices too, vanilla, equal weight, factor based, sectoral, many.
If one can manage a stock PF, then as we know, we can do this in many ways, which is evident in VP with members having many approaches.
any idea, if there a way to chart all the names in pf (i think it may help in concentrating pf for moementum/theme follower like me, by identifying names which ran faster during particular time period) ?
Watched, but as money managers cannot be compared to retail because of the they work, what they say may not suit us in its entirety, their advantages, targets and challenges are different to that of us. They say and do what benefits them.
On a different note, the speakerās views about Buffett seem unfair or even correct, I donāt think I have come across this before, more so when the speaker is invested in Berkshire Hathaway and has been to Omaha. Even I, a very very miniscule retail participant, got some ideas from Buffett.
I donāt know how to twist data to make my own point, but presenting a selective portion of a large conglomerate like BH, does not reflect or present the entire picture of such an enterprise, the slice may have been part of the pizza but that slice is not the pizza, when that pizza is the costliest of all the listed companies in the world, even I know this.
If you want to go the fundamental route, then the whole forum exists for that purpose, hundreds of threads exist, with many investing styles to choose from, and if you want to try the mathematical/technical approach, here is a very good resource.
Mudit - here we asssume that high ROE, ROCE etc gives higher than index returns and hence assume that it will beat index.
However most stock market return occures when company turn to good from bad. Or when low ROE / ROCE company progressed to normal or high ROE.
Once company is good stock price in factored it as good company hence return will be normalised.
And in same line high ROE company become stedy or lower ROE than most return will be destroyed. Just my POV
Iām looking for some clarity on this particular issue. Will be grateful if someone can put their opinions.
Letās say there are 2 companies: A and B. Both have done considerable capex. Both are in the same industry and the industry is seeing tailwinds. Both companyās ROEs are currently dented due to capex.
Company A characteristics:
Company A is facing a turnaround situation. Has lost the past few years of growth due to a lack of proper future vision. Has a relatively low ROE. Management is guiding for higher EBITDA margins and there are signs that the efforts of the management are fruitful (rising ROE). Is trading at relatively lower valuations (18-25 TTM PE). Can be a candidate for rerating.
Company B characteristics:
Company B is relatively more stable. Higher ROE. Has seen a few past years of high growth. Can expect above-average growth to continue with prevailing EBITDA margins. Trading at 30-35 TTM PE.
Company A is an improving business + capex play whereas Company B is a consistent business + capex play. Considering these factors which one should be a more favourable bet/investment?
Considering both are in an industry with tailwinds and have done significant capex (I assume capex is completed), both could be good investment candidates. Since cashflow parameters arenāt mentioned, letās assume they are equally capable on cashflow conversion (probably an oversimplification but letās proceed).
It all depends on risk appetite and starting valuations.
Company Aās recent past is chequered and you mention this is due to incorrect vision, so is there reason to doubt managementās capabilities and decision making? Due to suppressed RoE and margins, with better margins and growth coming back you can expect earnings growth and rerating. Look at mean margins and increasing utilisation for forecasting. How much can they grow the business in a good cycle? Put together with your exit multiple, you could estimate the returns.
Company B is already probably a market leader thanks to sustained higher margins. How much can this company grow? With same margins, the returns should mimic the earnings growth largely. Importantly, are there levers for margins expansion through operating leverage or efficiencies? This would add to returns above.
One thing to note is typically during a good cycle, you never know for sure if the growth is sustainable or just a good cycle upbeat.
