Quant Mutual Fund's Sandeep Tandon has cautioned investors against falling for hype-driven stocks that are popular but lack clear earnings visibility.
He said names in the “admired territory”—those trading at expensive valuations simply because they're in fashion—often don't justify their price tags. Instead, he urged a shift towards fundamentally strong, under-owned stocks that offer better long-term value.
We must avoid all those stocks which are in the admired territory, Tandon said. “These are fashionable names—whether they generate cash flow or not, they're simply in vogue right now.”
Tandon argued that investors should steer clear of hype-driven stocks and instead back companies with tangible earnings potential.
He acknowledged that while some previously high-flying platform companies and energy-transition plays have bounced back sharply, many of them still lack the fundamental backing required for long-term conviction. “We don't want to pay for just some new valuation technique... That's the reason I use the word ‘fashionable'—the fact is not justified in normal circumstances.”
Instead of chasing sector-wide trends, investors should focus on stock-level opportunities, he advised. “2025 is about stocks, not about sectors… In the same sector, a few stocks will do very well and a few stocks will not.”
Sandeep Tandon, Founder and CIO, Quant Capital (Image source: Linkdin)
According to Tandon, the current market environment is one where investors must be more selective and valuation-conscious. “I like to participate where we think there is a real opportunity and my downside is limited,” he said.
'It is the right time to look at segments that have been ignored in recent years,' he said. “Some of the names which have been in neglected territory… the consumption cycle moving up could be the trigger.”
On the broader strategy, Tandon advised trimming exposure during euphoric phases and using market corrections to rebuild positions. “Any sort of sharp rally in the market or any euphoria category, you reduce your exposure. When you see a panic happening in the market, you rebuild.”
He asked investors to stick to basic investment principles: earnings visibility, disciplined valuations, and a long-term mindset. “We have been taught from early school—cash flow we have to look at.”
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