Stagger your money and review asset allocation if skewed towards small & midcaps: Aashish Somaiyaa
Aashish Somaiyaa, CEO, White Oak Capital Management, points out that “bulk of whatever net flow is there, a good part of it is going into smallcaps. Those are the signs which tell us that there is some amount of froth in valuation. Some exuberance also points to that and in the last three-four months, suddenly the smallcap and micro cap index have shot up a lot. So, sharp movement in a short time that actually tells you a lot.”
You must have read the latest note by Akash Prakash, which is based on your previous boss Raamdeo Agrawal’s recent presentation on flows. Raamdeo has made a presentation to a clutch of investors which is the talk of the town on how meaningful and sustainable domestic flows has the potential to become over the next decade or so. Are you seeing signs that now it is not about retail investors trying to time the market and gradually cyclicality is moving out of it?
Yes, I definitely read that interesting piece by Mr Akash Prakash.
Frankly speaking, a lot of that note or a lot of that data, I would assume, is more structural, more long-term in nature and lays out certain forecasts about how retail liquidity will shape up, how it has shaped up not only in the last three to five years but how that is likely to persist over the next say decade or so.
I frankly do not have very many doubts about the structural element at all. But coming to your point about cyclicality, let us look at what is happening right now vis-à-vis how things have shaped up in the last two years and I would like to point out to you with some data that in investor behaviour, investor psychology, the cyclical element still persists.
I have no quarrel with the structural part of it at all.
