Nikhil Kamath on what will curb investor frenzy

After a 1-3-5 years’ correction, people will turn off their computers and not look at what is happening in the stock market. So if the bull run were to continue, I am guessing there would be more participation, says Nikhil Kamath, Co-founder, Zerodha.What do you make of the whole trend of start-ups coming into the primary markets. The slew of IPOs that are coming in is feeding into this excitement for new investors. Is it a tide lifts all boats situation and perhaps not such great picks? It is good that the retail investors are getting to partake in the growth of the economy by virtue of these start-ups. It would have been folly if the start-ups were to all go to say America and raise capital. They are expensive and one is not buying business at a discount. Investors have to research and know what they are investing into and believe in that story for the next five or 10 years and only then enter that particular stock. Who is this retail investor of today? Are we seeing a new breed of retail investors today who are well informed or are they just going with the flow?As a proportion of all investors, if one were to account for where the assets under management lie or where the shares lie, I would still assume that the vast majority of money in assets belong to the group between 45 and 65-70. In terms of participation with the smaller ticket size, a greater number of millennials have come into the market. People are definitely adopting investing earlier in life than they would historically. I do not know if the number has changed drastically but it would have probably moved towards a younger zone. In terms of where that trend will lie in the future, it is very hard to predict. Right now, stock markets, fintech, most asset classes are spoken about so widely in the news, that they are at the back of everybody’s mind. Also we have not witnessed a reasonable correction for a certain amount of time and so a large portion of those who have entered the market in the last 12 to 18 months, have ended up making money and that has kept things going. But it only takes one bear cycle. After a 1-3-5 years’ correction, people will turn off their computers and not look at what is happening in stock market. So if the bull run were to continue, I am guessing there would be more participation. We are also seeing a trend of shareholder activism in quite a few big companies like Eicher, Balaji, Zee. What do you make of that trend?Shareholder activism is not new. It is probably more in the news in India now that it has been in the recent past but in places like America, shareholder activism has been happening for a long time. It is great that companies are starting a two-way dialogue with the shareholders of the company and this will probably lead to higher levels of compliance in governance which is net-net good for both sides of the market.

from Economic Times https://ift.tt/3maQkmi