5 charts that tell interesting stories on Markets and Investing.
1) Relationship of Inflation and Portfolio Performance:
*Source – JP Morgan for US Data
Everyone is worried about rising inflation and its impact on investments.
As per US Data, in rising inflation, all investments do well. Emerging Market Equity, REITs, Gold etc all give good return.
Inflation is good for investors but unfortunately bad for poor people who have to pay higher for buying food and goods.
2) Real Estate Prices and Inventory of homes:
US Real Estate Prices are hitting an all time high.
Lot of Investors in India are expecting a similar trend for India.
US Residential Inventory for sale is running at an all time low since 2000.
India has huge unsold residential real estate inventory. Will take ~4 years to liquidate
3) Ratio of Sensex Market Cap to BSE 500 Market Cap:
*Source – SBI AMC
Sensex dominance has been reducing lately and we are seeing a broader market rally. Hopefully, this will continue.
This plays well for Mid Cap and Small Cap.
This also explains the Alpha generated by Fund Manager
4) Economy and Stock Market have cycles:
*Source – Compound
In different phases of market, different type of stocks and strategies work.
A single theme or strategy is always not right. Its important to change portfolio and strategy based on the change in market cycle.
5) Expected increase in Interest Rates:
Indian 10 Year G Sec is expected to move to 6.5% from current yield of 6% by March 2022.
As RBI winds up liquidity measures provided for pandemic, yields will start moving up.
Dr. Mukesh Jindal CFA, CFP, CAIA, Ph.D.
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