Friday morning. Friend. Brokerage app after a four day rout.
His boring stack barely moved. His exciting stack lost a fifth. Same week. Same Nifty drawdown. Two completely different P and L tapes. The factor doing the work is forty years old and still not priced in.
-7.4pct
Quality cohort . 12M max drawdown
HUL. NESTLE. ASIANPAINT. ITC. HDFCLIFE. High ROE. Low debt. Stable earnings. Boring earns its keep when the tape turns.
VS
-38.6pct
Junk cohort . 12M max drawdown
ADANIENT. JSWSTEEL. TATASTEEL. ONGC. VEDL. Cyclical earnings. Higher leverage. The lottery ticket pays in the bull and bills you in the bear.
Same index. Same six months. Same Brent shock and INR record low. The quality cohort lost a sliver. The junk cohort gave back a third. The factor edge does not show up in the bull, it shows up in the drawdown.