Nobody knows Anything

Markets have been falling across the board. Some indices more than others. Auditor resignations, Additional Surveillance Measures, Trade wars, Oil prices, the list goes on… The live tracker of stock recommendations for 2018 by the major research and fund houses is down 12% for the year, with 72% of recommendations in the red. There is a general sense of “Oh crap!” about all that’s happening. It’s like that scene from ‘The Matrix Reloaded’ when Neo (the market) battles hundreds of Agent Smiths and they just keep coming and overwhelm Neo. via GIPHY Times like these, it’s natural to look for

Read more

Does sector-picking trump stock-picking?

What do Agrochemicals, Food Products and Household Appliances have in common? What do Telecom Services, Oil Exploration & Production and Electric Utilities have in common? The first set is three of the best performing sectors in India in terms of stock market returns over the last ten years. The second set, you guessed it, is three of the worst performing sectors for stock market investors. Chart shows the top 10 best and worst performing sectors in India in terms of investor returns from 2008 to 2018 Note that cumulative returns here mean median of CAGR returns within each sector Does this

Read more

Bharat 22 ETF FFO – Should you Invest?

Bharat 22 ETF opened its FFO (Further Fund Offer) starting June 19th, 2018 for anchor investors followed by other investors from June 20th to 22nd. link Wait, Back up a little. ETF? Bharat22? FFO? And most importantly, should you invest? Exchange Traded Funds and how they differ from Mutual Funds ETFs or Exchange Traded Funds are baskets of securities traded real-time on exchanges, just like individual stocks. They differ from mutual funds in two key ways: Structure: An investor buying ETF units is usually buying pre-built blocks of shares created by the asset manager or from other investors. With a mutual fund, the

Read more

Curate or Create?

Should you curate or create? twitter is a great medium for discovery of valuable resources. Someone I follow retweets something that leads me to discover high-value content I did not know existed. The best use-cases for twitter are as a knowledge resource and newsfeed in that order. For a consumer, this ecosystem needs creators, those who develop original content, and curators, those who enable you to discover great content. Most social media presence can be classified into one or the other bucket. Both are of tremendous value to consumers, with stark differences. I’m writing from experience of financial twitter but am comfortable guessing it

Read more

Let’s talk investing with Gautam Chhugani

This is the first post in a new series I’m calling the ‘let’s talk investing‘ series. In this series, I’ll write about my conversations with investment practitioners, people who have real-world experience in the field of investment decision-making. My objective in these conversations is to understand their investment philosophy and process, to demystify, at least to some extent, what they do, and to walk away with some thought-starters to help all of us become better investors. Listen to any investment legend speak about what they think works in the markets. One of the recurring themes you will find is the

Read more

The curious case of HUL and how the markets play favourites

Hindustan Unilever just posted its results for the quarter ending March 2018. A healthy 14% year-on-year increase in net profit mostly attributable to a poor base quarter. HUL stock price promptly went up from around 1504 to 1574, a 4% increase in a couple of days. It is now valued at 65 times Earnings This means, If HUL’s profits stay the same and it paid out all of it’s profits to shareholders, it would take 65 years for a shareholder to recover her current buy price. For context, the NIFTY is at 27 times earnings. Chart shows HUL Earnings and

Read more

How to evaluate an investor

Supreme Industries, Cera Sanitaryware, Page Industries, HEG India, Thirumalai Chemicals, APL Apollo Tubes… We see/hear about them all the time. On Twitter, in blog posts and in conversations. Investors or Investment Managers talk of a stock they identified, a few months or years ago that has since several ‘X’d its initial price. When they explain their rationale for why they felt it was massively undervalued, it seems obvious, in hindsight. Let’s temporarily suspend cynicism and appreciate the investors’ skill in identifying multibagger stocks. Now how do you decide whether you should give them your money to manage or take their advice

Read more

Debt in Indian Companies

How much debt have Indian companies taken on over the last few years? Chart shows the aggregate debt on the balance sheets of listed Indian companies from 2008 to 2017. Note this is from a sample of ~ 1,000 largest companies by market cap. Since 2008, total debt has grown by 3.7X from 7.6 Lakh Crores (USD 116.8 Billion) to 28.3 Lakh Crores (USD 434.9 Billion) in constant currency terms. For context, the lines on the chart show total debt as a percentage of market cap and of country GDP (unadjusted for inflation). Which brings us to the natural question: Which

Read more

Beating the Street

I learnt a while ago, when reading non-fiction books, it’s important to mentally separate the content into what’s interesting because it’s entertaining and what’s interesting because it has underlying principles that help me understand the world better. Great books tend to combine entertainment and providing tools/frameworks but most books lean one way or the other. For books on investing and business in particular, I learnt to become wary of eloquent stories replete with hindsight bias that end with convenient and short takeaways as a guide to successful anything (outthinking competition / managing world-class teams / investing…). For investing books, unless the content is

Read more

India Market Cap Growth: 2008 to 2018

Continuing the #indiamarketnumbers series on data-centric posts on the India Market. India Market Cap Growth: 2008 to 2018 Chart shows total India Market Cap from 2008 to 2018 with the year-on-year % growth (orange line). Takeaways Total Market Cap of publicly listed companies in India has grown from ₹26 Lakh Crores ($400B in constant currency terms) in 2008 to ₹140 Lakh Crores ($2,162B) over ten years, a growth of 5.4X Over the last ten years, markets have shrunk in three years, the biggest fall of 29% happening during the 2008 financial crisis. 2012 and 2016 saw marginal negative growth. Other than 2013,

Read more