Being a research analyst, I used to think that stocks are superior to all other asset classes, gold included.
However, I was in for a big surprise when I compared returns from gold with that of the Sensex. Not only did gold go up as much as the Sensex, it did so with much lower volatility.
This made me think whether investing in the stock market is as attractive as it is made out to be. It then struck me that it does not have to be case of either/or when it comes to gold and stocks.
We can combine the two in a smart way and benefit from the individual strengths of each asset class.
How good is the result of this combination and what happens when you combine a deep value portfolio of mid and small caps with gold?
I discuss this and more in this interesting video.
Do take a look.
Here's more on value investing:
Rahul Shah (Research Analyst), Managing Editor, Microcap Millionaires has led the team from the front in developing some of our most stringent and rewarding research processes. As per his own admission, the turning point in Rahul's life as a financial analyst came a few years back when he got introduced to the works of Warren Buffett and Charlie Munger. From Buffett, he understood the value of investing in good quality business with powerful moats and strong management teams. Charlie Munger on the other hand inspired him to be a lifelong learner and use mental models in order to arrive at the crux of matters across most disciplines. Rahul firmly believes that in order to be successful at investing, you have to do the big things right and possess a great temperament and a contrarian streak.
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4 Responses to "I Combined Stocks & Gold and Saw the Magic Happen"
Anand Chaudhary
Jan 10, 2021Hi Rahul, It's an interesting perspective (based on past data) that you have presented. I've been using gold only from hedging aspect but the data you showcased over the last 16 years or so puts gold at a very good position to be viewed as a profitable investment in overall portfolio.
Girish Sanghavi
Jan 9, 2021Great analysis.
I really appreciate your efforts and giving a different perspective. I really feel that this analysis should be combined with any of your services of MC or EP or DI could work wonders. What I suggest is a new product or modifying existing service.
I have always felt you should also follow STOP LOSS principle - i.e sell when you feel market is against and reenter when things are improving. This is a fusion of Value Investing and Street Smart concept. I think the returns record will improve by itself..
Honestly I find hard to stare at heavy RED nos in stock profits/ loss. Hence have not been able to take advantage of your services. Do examine and revert.
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yvsc chowdary
Jan 13, 2021Great study Rahul. Appreciate the great effort put in the analysis. Since you are the mentor and expert for us, I request you to start a separate service for this combination. Nowadays its difficult to find good companies with long term sustaining power with P/E ratio between 4 to 7!
Regards. Chowdary