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The Equitymaster Research Digest

Up, Up, and Away!
Jan 17, 2017

  • Profit Velocity - exploiting another market anomaly
  • ValuePro 2016, the year that was
  • Countdown to Equitymaster Conference 2017
  • The India Letter's upcoming recommendation

Rahul Shah, our Co-Head of Research, is super excited to speak at the Equitymaster Conference on 21 January. He'll be presenting an idea he's been working on for a long time.

At Equitymaster, we know there are different styles of investing...more than one way to exploit market anomalies. And Rahul is on to an investment style that's even bigger than value Investing. It is called 'Momentum investing'.

For those inclined towards physics, Momentum is akin to Newton's First Law: Bodies in motion tend to stay in motion.

Intrigued by this anomaly, Rahul backtested his idea. And he came to some startling revelations...

  • Our own experience backtesting a simple momentum strategy has been phenomenal.

    Over a ten-year period, every Rs 100 invested using this strategy turned into a whopping Rs 1,766. In comparison, the BSE Sensex and the BSE Small-Cap Index returned Rs 288 and Rs 204 respectively.

    In other words, our momentum strategy was a huge 18-bagger while neither of the benchmark indices could reach the level of a full 3-bagger.

    That's a huge outperformance...even better than a lot of value investing strategies.

Hear Rahul talk about his results in greater detail at the conference.

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