An IDIOT Strategy to Beat Nifty Index

Reading Time: 3 minutes

Is there any strategy to beat Nifty index? Yes, there is. We call it IDIOT’s strategy.

Index buying is the go to strategy that beats actively managed funds. Warren Buffet won 1 million dollars by betting against a Hedge Fund Manager. He said S&P500 index will beat Actively managed hedge funds on a 10 year time scale. And yes, super smart guys post net fees and charges couldn’t beat S&P500

We already knew a simple stat from our research at

Nifty makes a new high every 3 years

Now we got curious to see what happens when someone buys top 3 nifty stocks on January 1st. Holds on it for ever. You do this purchase every 1st January with top 3 nifty stocks.

Can this 3 stocks portfolio beat Nifty?

Answer was Yes and No.
A 2008 top 3 stock portfolio has under-performed Nifty CAGR. Likewise with 2009 January top 3 stocks.

Check the data for yourself.

2008 January till 2020 August

An ” I Do Investment One Time ” IDIOT guy bought

  1. Reliance
  2. ONGC
  3. Bharti Airtel

As on august 1st year 2020, ONGC and Bharti Airtel turned out to be an disaster. Reliance saved the day. The portfolio ended up making 3.63% cagr.

Also Read on FinMedium:  Bharti Airtel Q1FY21 - Webinar Takeaways.

CAGR is known as Compound Annual Growth Rate (CAGR) is a measure of the average yearly growth of your investments over a certain time period. It tells you the average rate of return you have earned on your investments every year.

Nifty gave 5% while portfolio gave 3.63%. While before year 2020, this portfolio was almost 0% CAGR. You know just 1 year rally in reliance ( recent one) was enough to cover the gap. Probably we will attribute this to Luck this time.

Look at this weight-age power that reliance holds upon nifty.
Nifty needed 47 other stocks to generate a mere 1.4% alpha CAGR w.r.t the 3.63% of portfolio.
That is not convincing enough to me.

  • Demat Equity Long Term 0.37 % (Profit)
  • Black Box ALPHA Short Term 10.92 % (Profit)
  • Demat Equity + Black Box (Combined) 11.29 % (Net Profit)

Trust But Verify. Check out the Capital Gains report (Global MTM) & Standing Position proofs.

Source link

Disclaimer: The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the FinMedium or its members. The presentation of material therein does not imply the expression of any opinion whatsoever on the part of the FinMedium concerning the legal status of any company, country, area, or territory or of its authorities. For more info. please read our ToU & Privacy Policy here. If you have any concerns regarding this post, please reach out to our grievance officer Ghanisht Nagpal and drop a mail to


Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!

Money Dhan

Money Dhan

Sujith comes with 15 years of experience in the derivatives market along with Long term Wealth creation via Large-cap companies. His theory is: If risk-free Bank FD generates 100% in X years, the Stock market should provide that return in half the time.
Please Share Now :)