
ETMarkets Smart Talk: Chasing easy money is the quickest way to lose it, warns Vivek Sharma of Estee Advisors
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In this edition of ETMarkets Smart Talk, Vivek Sharma, Vice President and Head of Investments at Estee Advisors, highlights why chasing quick returns in the market often leads to financial setbacks.Sharma explains that successful investing isn't about finding the next multibagger or following market noise, but about maintaining discipline and consistency.Drawing on Estee's systematic, quant-driven approach, he shares insights on why data and long-term strategy trump speculation and short-term bets in creating sustainable wealth. Edited Excerpts –A) Struggling is a stretch—we're just ten days into H2. Markets are back near September 2024 levels, absorbing the gains from a strong Q1.In the short term, there's more noise than signal. Q1 earnings are expected to be modest at 4–5% YoY, below the 10% projected for FY26, and global jitters aren't helping.But it's hard to reliably translate any of this into clear outcomes. It's always more prudent to focus on the long term than react to short-term noise.A) It's very hard to make reliable quarter-on-quarter projections. Short-term earnings and market movements are often dominated by noise and sentiments rather than information.A well-known study by Philip Tetlock showed that expert forecasts—particularly those made with high confidence—were often no better than random chance. At Estee, we take that seriously.Rather than trying to predict how each quarter will play out, we focus on maintaining a long-term, systematic approach.Our models adapt to evolving data over time, allowing us to stay responsive without being reactive. That's been far more effective than chasing short-term noise.A) In my experience, chasing easy money is the quickest way to lose hard-earned money.As a systematic quant investor, I don't subscribe to the idea that wealth creation depends on finding that one golden multibagger or having access to insider information.Our Long Alpha portfolio is built on a disciplined, factor-based strategy and typically holds 80 to 100 stocks. This breadth helps manage risk efficiently while still generating healthy alpha.Over the past five years, the strategy has delivered returns of nearly 35%. That's not luck—it's the result of staying systematic and consistent. In investing, it's discipline that compounds, not shortcuts.A) FIIs have been net sellers since October last year and were a major catalyst behind the market drawdown. While some inflows have returned, they remain modest relative to the earlier outflows.FII flows are rarely dictated by a single factor—it's a blend of valuations, earnings outlook, global rates, amongst other factors.What stood out in this phase was the strength of domestic mutual fund flows. Equity inflows remained strong and helped cushion the impact of FII selling—reflecting the rising confidence among retail investors in India's long-term fundamentals.A) We don't make directional sector calls. Sector performance tends to be cyclical and unpredictable—what outperforms in one half can underperform in the next.Our approach remains sector-agnostic, relying on data and factor signals to dynamically allocate exposure. This helps us stay balanced and responsive, without anchoring to short-term themes.A) Rather than label sectors as overheated, we prefer to let the data speak. Our models track valuation dislocations and crowding indicators, and rebalance exposure accordingly.Sector-level excesses—when they appear—get corrected through our systematic process without needing to make subjective calls.A) I think we need to move beyond the notion of SEBI being a protector of retail investors. SEBI is a regulator, not a guardian. Greed is a deeply rooted human trait—despite knowing the odds are stacked against them, people still gamble, and that industry thrives globally.Speculating in derivatives to earn quick money taps into the same impulse. SEBI has done commendable work on investor education, and the risks are now well known.But ultimately, adults making wilful decisions in pursuit of profit must bear responsibility for the outcomes.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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Can SEBI truly level the playing field for retail traders?
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The Bank Nifty near-term futures price is 57,200. Taking a long position in this futures contract would require an out-of-pocket cost of ₹ 3.2 lakh as margin. On the other hand, buying an at-the-money Bank Nifty option with a premium of around ₹ 350 would require only ₹ 12,250. This is a huge difference. For a trader who has a fixed amount of capital, they could potentially trade more lots of options than futures. For example, if they have ₹ 3.2 lakh, they could take a position in one futures lot or 26 options lots. This is one possible reason for index options volume being greater than index futures volumes. Data from the World Federation of Exchanges supports this—the ratio of index options notional value traded to that of index futures rose from 32 in 2018 to a whopping 964 in 2024. This cost issue is further exacerbated by the difference in the way STT is calculated for futures and options. In both cases, the seller has to pay STT, but for futures, it is calculated as a percentage of the futures price, whereas for options, it is calculated as a percentage of the option premium. Let me continue with the previous example of the Bank Nifty derivatives to illustrate the impact of this difference. For reference, the STT on futures is 0.02 per cent and that on options is 0.1 per cent. The seller of the futures would have to pay ₹ 400 in STT for one lot, whereas the seller of the options would have to pay only ₹ 12.25 in STT for the same one lot. This further makes it cheaper to trade options rather than futures. It is very likely that retail traders understand these advantages and hence prefer to trade index options rather than other derivatives. One step is to revisit the physical settlement requirement on stock derivatives. While shifting stock derivatives to physical settlement helped reduce stock price volatility—one of SEBI's objectives—it appears to have pushed volumes toward index derivatives instead. Conducting detailed studies that track trading patterns at the individual account level would help understand whether traders shifted from stock derivatives to index options. If this is confirmed, SEBI might consider reverting stock derivatives to cash settlement or finding other ways to reduce the spillover effect. On the cost side, policy changes could also help. Allowing different lot sizes for futures and options, rather than enforcing identical lot sizes, would better align margin requirements and reduce excessive leverage in options. Another proposal is to adjust the STT calculation for options to be based on the strike price plus premium, not just the premium, which would narrow the cost gap between options and futures. It's important to acknowledge that retail traders will likely continue to incur losses due to asymmetries in information and market experience. The goal should be to reduce the scale of these losses and promote fairer market participation. However, in the hopes of creating a more level playing field for retail participants, SEBI should not make trading unattractive for institutional traders because they are still critical to having efficient and liquid markets. Read all market-related news here Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.