Tweet Buster: Zerodha CEO Nithin Kamath’s formula for trading profitably

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Tweet Buster: Zerodha CEO Nithin Kamath's formula for trading profitably


NEW DELHI: In what looked like a David vs Goliath battle, the viral image of a lone excavator trying to free up a giant container ship stuck in Egypt’s Suez Canal sparked a meme fest on social media. Smart investors were quick to draw a parallel with the world of investing. Here’s two such interesting memes from top money managers.

In this edition of Tweet Buster, we find out investing strategies, market trends and behavioural tips from market gurus.

Counter Trend
Fund manager Shankar Sharma of First Global said investors should understand a basic fact about investing: “Two stocks start at Rs 100. Stock A goes to Rs 150 in 3 months. Stock B goes to Rs 70. In month 4 or 5, it’s very likely that A will fall to Rs 130 and B will rally to Rs 90 (or so). That’s a counter trend move. It happens all the time.”


Trading Checklist
Zerodha CEO Nithin Kamath advised retail traders to bet with as little as possible on 90 per cent of trades. “Trade with more only when the odds of being profitable are higher,” he said explaining how to know when odds are higher.

Magic of Compounding
Radhika Gupta, MD & CEO, Edelweiss Asset Management Limited, shared a story of how letting money sleep can produce multibagger returns in the stock market.


Ignore Noise
Kalpen Parekh, President at DSP Mutual Fund, said for all 260 working days in a year, the reasons, pitches, data points and stories keep changing. Investors should, therefore, bet in equity for the long term.


Hedging Tool
Parekh said although debt funds are a drag on long term compounding, yet they are a cushion in bad times as they allow us to live through sharp fluctuations of equity funds.


Growth vs value
Ravi Dharamshi of ValueQuest Investment Advisors said one must avoid labelling stocks as growth or value. “There’s zero value-add in that. Look at it as business, it’s prospects and valuations in relation to that. If prospects are changing so will the valuations.”


IPO Frenzy
Investment advisor Sandip Sabharwal argued that if market correction continues, the obnoxiously priced IPO party might end soon and make future IPOs a bit better priced.


Watch Your Words
Microcap investor Ian Cassel has a behavioural tip for investors who are always loud about their holdings: “Don’t get so loud with your current convictions (politics/investment style/perma bears/individual stocks/etc) that it becomes your identity – you stop growing because it’s too hard to publicly change who you are.”


Liquidity Worries
One of the laws of small stocks is liquidity always increases as the stock price rises. Don’t worry about illiquidity, worry about being right.





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