'You Can Be A Great Stock Picker, But...': Shankar Sharma On Why Investors Can't Escape Macro Cycles
Sharma cited the period between 2014-2020 in India, where growth was dismal and corporate earnings were distressing.
Veteran investor Shankar Sharma, known for early bets on Amazon and Apple, stresses that macro market cycles overshadow stock-picking skills.
In a post on social media platform X, Sharma cited the period between 2014-2020 in India, where growth was dismal and corporate earnings were distressing.
"No matter how great a stock picker you are, remember one thing: the majority of your returns will be driven by the macro cycle of the Market. Hence, timing the macro cycle is not just critical, but Essential. (Eg: between 2014-2020, nobody made much money. Small caps were a disaster. GDP growth was abysmal. Corp earnings were saddening. For all investors across sizes, approx 90% of their current portfolio worth came in only the last 4-5 years.) Think deeply about this [sic]," wrote Sharma.
This illustrates how crucial it is to time one’s investments according to the macroeconomic environment rather than rely solely on stock-picking prowess.
Sharma's take aligns with financial theory and empirical data showing that periods of macroeconomic strength, marked by GDP growth, supportive monetary policy, and positive earnings trends, tend to create the most favourable conditions for wealth generation.
For instance, the post-2020 global liquidity surge and policy stimulus markedly boosted equity markets worldwide, including major indices such as the S&P 500, Nasdaq Composite, and India’s Nifty 50
Sharma cautions investors who may focus excessively on micro-level factors and individual stock selections without considering broader economic forces.
By encouraging investors to 'think deeply' about the market’s bigger picture, Sharma urged investors to think whether success in the stock market was as much about understanding economic tides as it was about picking winners.
