OPM Managers / Opium Users and the Market Reality
20th March 2025
OPM Managers / Opium Users and the Market Reality
Dear Fellow Investors,
Namaste! Around the Feb end when the nifty made low below 22000 around – the Media was flooded with the videos of OPM managers(Other People’s Money managers) about the FIIs selling. They argued that the Indian Government is wrong in charging the long term capital gains from the FIIs and they should make it tax free. They are selling in India – because of the TAX rates / Exchange rate differentials ( subconsciously they are saying - had they not sold our NAVs would have been super up and our performance bonus!!). Let us deal with some facts.
1. LTCG is in force since 2018. So, why didn't they come up at that time and why now when the market has fallen. In 2020 – they could blame on COVID but this time they couldn’t find anything worthwhile to blame on.
2. The value of Rupee was stable against dollar through-out 2024 around Rs.83/84 and selling started in October 2024. So, the argument of rupee falling is also not valid as it was stable for 2024.
3. The other reason is LTCG increased from 10% to 12.5% in the recent budget. This was effective 23rd July 2024. Now, why does sales start in October? It should have started in July itself.
I know there are some die-hard fans of Mutual funds and SIP. Some of the fund managers enjoys the status and respect of a GURU for some investors. Now, let me share the realities.
Too Much Money Chasing Too Few Stocks: -
One common word is HIGH Valuations. Why did the valuations go up? Simple – people were buying good and not so good stocks at any prices. From April 2024 – our call was simple – the economy is not doing well. Stay away from the market. In fact, we had given bold calls to our members to be in cash by 50%.
But when the market is moving up – people consider our right advice as – he doesn’t understand the market. When they look back – they tell me that I was right.
This time also I was bullish in FEB END and gave a bold call to buy. They chose to listen to the MEDIA. Now, they are telling me you were on DOT. This is normal for me.
Since the economy was not doing well – TOM DICK and HARRY came to the market. Small business owners also came to the market. They all started pouring money to the market directly or through MF and SIPs. So, the market and valuations moved up.
Another aspect for OPM managers is to get more and more funds from new investors and existing investors. The TRICK is to pump money in the FAST MOVING STOCKS of the portfolio. When the stocks which commands good holding in percentage terms and it moves fast – naturally – NAV also moves up. NAV up means more funds / more performance related income / and more luxury.
So, high valuation was not by fluke. It was by the design of the market.
The TRUMP effect and the US RATES:-
In the October – market was betting on TRUMP’s comeback in the USA. TRUMP was seen as a saviour to the USA economy at that time. In his inauguration speech, he said the same thing – he wants to MAKE AMERICA GREAT AGAIN.
So, in the expectation of the good things – many FIIS would have sold and moved back to the USA.
In the last 40 years – some amazing thing happened to the USA interest rates. When the FED cut the rates – interest rates on the Government bonds went up!! Now, those FIIs who are investing in the Indian bond market – they found it better to earn around 4.5% in the USA bonds in DOLLAR TERMS. So, the bond market also witnessed the selling.
Small investors and the Opium Users: -
It is said that Opium uses can lead to Euphoria / Relaxation / Pain Relief / Slower and shallower Breathing / Lower Heart Rate and many other effects.
When the market goes down Small investors are in PAIN. They don’t know what to do? Frankly, they don’t know the investment as a subject and they are investing. But, now they are in pain.
So, when a STAR FUND MANAGER tells them stories about why the market fell down – they find solace in their wrong investments. Now, they can confidently blame the government policies instead of their half baked knowledge about the investing and misadventure of investing at the wrong time.
All they want is fast relaxation from the pain of losses instead of really understanding the investment process.
What NEXT?
I am a student of BUFFETT and I often think what would he do in any given market situation? He taught me one beautiful lesson – You are not right when the market moves up and you are not wrong when the market moves down. You are right because your calculations says so.
Focus on your study / your calculations and not on STORIES. Mistakes in your calculations will teach you the right way to think !! But if you listen to the quick pain relief stories – you will not be able to take right investing decisions
Take your call.
If you need ACCURATE inputs for investing your hard earned money or ACCURATE inputs for personal destiny management – approach us NOW.
Have a happy investment.
Follow me on Twitter @hiteshmparikh / WhatsApp - +91-9869425399.
Learn a Lesson. Live with Passion & Invest with Reason.
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