Dear retail investor, here is how to account for politics in your investing

livemint.com:

‘savvy investors’, which makes for a very interesting reading. It plots the net buying/selling carried out by retail investors from 3 June to 6 June. The chart shows that retail investors net sold stocks worth ₹8,588 crore on 3 June, the day the market rallied.

Then they net bought stocks worth ₹21,179 crore on 4 June, the day the market fell. And then they bought a little more over the next two days. So, the point here being that retail investors managed to sell high and buy low, an investor’s dream.

Now, the trouble as mentioned earlier is that the aggregate figures hide a lot. The definition of retail investor here is quite loose. It includes high networth individuals (HNIs), and family offices, which manage thousands of crores of money for the richest of the rich.

So, the word retail here doesn’t exactly mean the small retail investor. Given this, it’s possible that HNIs and family offices, who have money lying around, may have done the bulk of the selling on 3 June and bought the dip on 4 June. Of course, to be able to say this with total confidence one needs a breakdown of this aggregate data and that’s not available in the public domain.

But there’s a way of getting into some more detail. We can look at mutual fund buying and selling data in chart titled ‘costly ways’ and try building a clearer picture. So, what does the chart tell us? On 3 June when the stock market rallied, mutual funds net bought stocks worth ₹3,073 crore.

On 4 June when the stock market fell, mutual funds net sold stocks worth ₹6,249 crore. Over the next two days, as the market rallied again, mutual funds net bought stocks worth more than ₹7,000 crore. Now, what does this tell us? It tells us that at an aggregate level, mutual funds sold at