Performance Review for the week ended on 19/12/2020.

Nifty continues to march on, albeit at a slower pace!

Nifty ended 1.83% up over the previous week at 13760.55 while the broader Nifty 500 rose 1.64% to settle at 11355.

Although there was broad participation from various sectors, the pace has definitely slowed down! The stars sectors for the week were Realty, Pharma & Fin Serve while PSU BANK, FMCG, AUTO, ENERGY, and BANKs were the laggards.

So what’s in store for the markets over the next few weeks?

Look at the monthly chart of Nifty…

The Nifty has, for the most part, been contained in the trend channel for the last 10 years. This month it has clearly closed out above the channel which is nothing but bullish. Although there are still nine days left to the close of 2020, this chart shows a strong breakout!

An what I know about all-time highs is that the probability of the trend to continue is much higher. You might wanna take a look at the article I had written on all-time highs in January this year.

The other important chart to look at is this one…

DXY or the Dollar Index has clearly broken the trendline of almost 10 years and has closed below 100 Months MA after 6 years. We might see some kind of reversal from 88-89 levels which will bring down the markets around the world.

Although there are nine days to close 2020, we painfully saw in March what could happen over just a few days!

Ultimately, nobody has any clue as to what happens next!

Until then, focus on risk, follow the process, and enjoy the rally while it lasts!

As for my Hybrid Portfolio, the performance has been satisfactory!

Here’s the real-time snapshot of the actual 10 stock model portfolio established based on the DYR Hybrid Strategy. The Hybrid Strategy is the combination of Dual Momentum Monthly Rotational Strategy and Mean Reversion Long/Short strategies applied together.

This is the actual portfolio dump taken from Angel Broking back office.

The portfolio equity at the end of the week stands at 18,71,637.64, up around 35.63% since 30/06/2020 on initial equity of Rs. 13,80,000. Nifty during the same period is up around 33.57% while the Nifty 500 is up close to 34%.

A few weeks back a reader commented that

I am also wondering if you think it is worth investing so much time/effort in beating the index by 1%-2%

Well, a valid concern to which I replied…

“The objective is to beat buy and hold with less risk, time & stress over the long term. Short-term under/overperformance will keep on happening. Historically though, the strategy has outperformed by a wide margin.”

The words marked bold are extremely important for me! I am looking for a conservative return that I can sustain for a long period of time!

The following quote from an excellent article written by Morgan Housel sums up the debate…

…the most important question to answer as an investor is not, “How can I earn the highest returns?” It’s, “What are the best returns I can sustain for the longest period of time?”

Have a great weekend!

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