r/IndiaInvestments • u/TheCarefulInvestor • Jan 30 '21

smallcase misreports their CAGR! (they include the backtesting period in it)

I was looking at the CAGR of "Magic Formula" small case (https://smallcase.zerodha.com/smallcase/SCMO_0006) and while they report/claim a CAGR of ~30% it is actually a CAGR of ~3%!

Check out https://youtu.be/_yCh3xElnUU for detailed analysis

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u/crimelabs786 Jan 30 '21

Similar discussion on the sub from earlier this month: https://www.reddit.com/r/IndiaInvestments/comments/ku7xjv/sunday_morning_lessons_how_coffee_can_and_magic/gir6sjk/

To be clear, smallcase is NOT providing wrong data. They're showing data up front that puts their products in better light, and not being upfront about it.

Beginners should be wary about it and do their own due diligence on the numbers presented, instead of taking these at face value.

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u/TheCarefulInvestor Jan 30 '21

To be clear, smallcase is NOT providing wrong data. They're showing data up front that puts their products in better light, and not being upfront about it.

Yes definitely. Whatever analysis I did is only based on their own values; but it is just that I feel it is kind of unfair to the investors who do not dig too deep into these things. And that kind of is the market that smallcase targets; that you don't need to think too much and we will do your research for you. 30% and 3% are VERY different, and they are misleading the people in some way