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Am I Worried

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With Covid-19 pandemic looming around the globe, this has raised questions on human capabilities to handle epidemics. This has caused panic amongst the investors leading to a fall of more than 30 per cent in major indices in a very short span of time. Not only equity but debt market has also taken a beating due to surge in the outflow from FIIs. Am I worried? Off course with the global shutdown and net worth going for a toss, this has lead me to the question about the sustainability of capital markets. Which further leads to a few questions  Is this the end of the world?  I don’t think so, mankind has faced some big crisis like Spanish flu pandemic which killed 5 per cent of the world population in 1918, Bubonic Plague which almost killed 50 per cent of the global population. Still, the resilience shown by mankind has defeated all this. so later or sooner this will end and we will get back to our normal lives.  Is the market fall over? I don’t know and infect nobody knows this. No one has seen this type of crisis in the modern era so it’s almost foolish to compare this to 2008 financial crisis or with IT bust, the bottom of the market is made when there is nothing left for optimistic people, but still I can see some optimism at lower levels so some brutal falls can definitely hit markets.  Shall I invest now? If you have some cash in your account then you can definitely start increasing equity allocation, but you should be ready to see big falls in your portfolio in the near term. Investing in phases help you from fear of losing out and the part of cash left can help you enter markets later on when the market falls more. At this point in time, when cases are increasing at a brisk pace, it’s better to protect ourselves and our portfolio rather than predicting and exposing ourselves at one go. In the next article, I will be talking about the valuation of markets

Asset Allocation & Diversification

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If there is any mantra to success in portfolio management then practicing asset allocation and diversification are those two practices worth focussing on. When it comes to capital markets, predicting returns is nothing but fools game as no one can consistently do this.

Why Modi Inspires Me

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Leaders! Who are they? Are they actually born or are made too? What according to you or me or all of us should a leader be like or what is common between the successful leaders that we see around us like Steeve Jobs, Bill Gates and Narendra Modi. The most relevant answer to these would be that, all of them consider success to be an infinite game. They are disciplined, persistent and are patient enough to know that the results take time but they are going to turn into a reality and that is what they are sure of!. These leaders not just plainly know how to be successful but they very well know how to remain one. They are well aware that consistent efforts and innovations are required to remain at the height. Well, talking about the leader of the largest democracy, Narendra Damodardas Modi, for me stands right amongst the top of the list who not only has made at the top but has made it sure to sustain that place for a longer period of time. We all have observed good leaders and businesses fall once they achieve their goal of reaching the top. Many of them either fall down or go sideways, the Anil Ambani group is one of such example we have. It can also be framed a one same as the tendency of that of a human, once you achieve your goal the aspirations and motivation generally go down and things start floundering. Although, I am not a part of the Bhakt gang, still the journey of Modi inspires in developing a firm determination where the goal in itself is infinite; where all your stakeholders (employees plus shareholders) are your brand ambassadors, a system where all of them communicate freely with top management directly. It was somewhere 15 years back, post the Godhra massacre, Narendra Modi was not welcomed at Delhi which was then being ruled by the intellectuals of Luteyan Delhi but with his sheer brilliance and consistent efforts in Gujrat, Modi made it to the top in one of the largest democracy of the world. His promise of pradhan sewak connected him directly to the middle and lower class masses which accounts as the majority of votes in the country. He is not only the 24*7 Prime Minister of the country but is always thinking about the next step or we can say the next election. He is not simply a successful leader but a very influential speaker too. He knows the publics’ sentiments and is well aware of where to strike and create a picture of his and his work in the mind of the masses.Be it his dominance exhibited during his handshake with Trump or him going in the southern attire with Chinese premier or ploughing at the beach or meeting the Bollywood bashers like Aamir and Sharukh khan, Modi is not only walking the talk but also diluting his bashers and that’s one of the reasons a person who was not acceptable in the country has so much of control over the Indian voters that almost whole opposition has surrendered. His 24*7 hard work along with the long term goals in the mind is an ideal leadership quality for entrepreneurs like me, who need to implement ideas with hard work along with an eye on vision of the organisation and above all a business unlike to any other sport is an infinite game where the aim is to create an environment and ecosystem where people love to work and help the organisation to grow by implementing new ideas and that also consistently.

SIP is New Gandhi

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Mahatma Gandhi, the father of our nation, our Bapu whose thoughts and persistencey were so compelling and compounding that it became completely impossible for the British government to sustain any more in India and today we are witnessing the 150th anniversary of one of the greatest freedom fighters. Gandhiji, the more I read about him the more I get fascinated about his perception towards life, people and the country. His life was a prefect example of discipline and consistency and how the blend of all this makes a person not only successful but a disciplined human. In India, we have 50 roads named after him and if we talk about abroad, 48 roads are being named after him and it doesn’t just ends here. Today, along with our nation, 80 countries are celebrating his anniversary along with Uzebekiztan releasing a stamp in honour of him. What a respect and glory he has across the world, even today! Bapu, he had set us free! The biggest thing that any citizen can desire, a free life; and now, since Gandhi has given us the freedom and the biggest right i.e. the right to choose, I would like to use his principles and help our citizens to attain another type of freedom, i.e. the Financial Freedom. Financial freedom doesn’t means retirement from work but it is your right to choose what you want to do in your life without being perturbed by the tension of finance. As India gave the messiah of peace to the world, so is our MF industry innovated the SIP. The instrument has become really popular tool of investment between the Indian masses. If we follow these two principles of Gandhiji i.e. discipline and consistency, SIP can very well help us in achieving our goal of financial freedom in a very simple and an easy manner, provided we should not be disturbed by hickups and noises of TV channels and the so called “market experts”. One interesting thing is that Gandhiji lost his first court case as a lawyer but in the end he was the real winner. Similarly, in the initial phase SIPs do not look attractive or might show negative returns at times but over a longer run it can really make you enjoy the riches of your wealth. SIP, with a very small and regular investment can create massive wealth with the use of power of compounding tool which can help us in achieving the financial freedom and thus we can easily work towards our passion much more enthusiastically and can contribute a lot towards the society too, as our financial health is being then taken care of! Einstein, who once said, “He cannot believe that we can have a person like Gandhi on earth”, has also said that compounding as the 8th wonder of world. So, I can proudly say that SIP as a new Gandhi can really take us out of this poverty and rat race. Happy Gandhi Jayanti!

Budget that counts

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After facing massive backlash from India inc. and media, Nirmala Sitharaman has done which no finance minister has been able to do since 1997.For me this is more than a budget, it’s basically a budget that counts. Slashing Corporate taxes and incentivising new manufacturing in such a huge manner, puts India into drivers situation and provides a platform which can give a much needed impetus to make in India drive, Timing of announcements just before PMs Howdy Modi event at Houston shows India’s eagerness to attract Manufacturing from China. Not only cut in corporate tax has happened but FM has tried to attract FPI money by removing surcharge on equities.Bringing Ordinance to make such huge changes gives a sense of confidence in the Modi government, it reflects that the government is ready to take any action admist global and local slowdown. By doing this government has done it’s job of generating animal spirits and addressing supply side issues, with monetary easing in process with rate cuts, capital markets are discounting machines and will take a cue from all this and I am sure will give birth to a new dream bull run and wealth affect can really change sentiments within the country sooner rather than later FM Nirmala Sitharaman who was considered to be one weakest FM but has made this ordinance as one of the best budget or we can say Budget that counts.Following are the steps taken: 1. Corporate Tax Cut from 30 to 22 Percent and 15 Percent for New manufacturers. 2.

Budget of Bharat: Missed Opportunity?

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After the decisive mandate received during the Lok Sabha elections, it was expected that the Modi govt. 2.0 will provide enough firepower to generate the animal spirit in the economy which already is going through one of the worst phases. Against all the expectations, our new finance minister Nirmala sitharaman chose play a safe budget which, on face of it looks more like a socialist one with a long term vision rather than such which was much required to kick start the dwindling economy in a very short term. Let’s just quickly have an inside dig on the highlights of the budget 2019. The hits: 1. Fiscal Under Control: Despite being the economy in a very bad shape, the FM has not gone overboard and has stuck to the fiscal prudence and has infact stepped up a ladder by reducing deficit target to 3.3 per cent. 2. Incentives for electrical vehicles: Sticking to green push, this government has stood by its environment-friendly incentives by offering a deduction of 1.5 lacs. 3. NBFC Crisis: With the HFC’s struggling to get liquidity, the buyback of quality loans by banks and RBI as their new regulator will hopefully bring some stability in the market. 4. CPSE as ELSS: To give push to divestment the CPSE will now get all the benefits of ELSS. 5. Reduction in Corporate Tax: For smaller businesses tax has been reduced to 25 Percent. It will prove to be very fruitful for small business houses. 6. Recapitalisation of PSU banks: Recapitalisation of 70000 crores is much more than what was expected. This definately is going to give a boost to PSU banks for increasing their overall lending. The flop ones: 1. Increase in a minimum public float: Increasing the minimum float from 25 to 35 percent will bring in almost 4 lac crore new securities in the market. The new supply is very likely to depress the overall value of shares. 2. Funding of fisc using capital from abroad: The government has decided to find a portion of borrowing from capital raised from abroad and by doing so, will increase the risk in case of currency devaluation. 3. Super Rich Tax: Increasing tax surcharge on 2 crores or above is going to create negative vibe within the market. 4. Taxation on Buyback: 20 percent tax on the buyback of shares is a big turnoff for stock markets. 5. Excise on Fuel: The increase of excise duty by Re. 1 on Fuel will have a negative impact on middle class and can also be inflationary. Now, having discussed all the whites and greys the overall budget looks more of safe and a balanced one. The same could have been great if our economy was in a growth mode but, keeping in mind the struggling economy this budget is more of a waste opportunity having such a huge mandate. As far as markets are concerned, it is negative for equity markets in a short run whereas the decision to stick to fiscal prudence will pull the yields down and will prove to be fruitful for the debt market.

Demystifying relationships using loss aversion bias

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On the face of it, heading of this topic, connecting biasness with relationships does not seem to make any sense, but if we deep dive into human behaviour like Nobel laureate Daniel Kahneman, we would realise loss aversion is the bias which can predict the longevity of any relationship. First of all, let’s try to understand what is loss aversion biasness,  loss aversion is basically people’s tendency where they prefer avoiding losses to acquiring equivalent gains: it is better to not lose Rs 100 than to gain Rs 100. As per some research losses are twice as powerful, for example, Rs 100 gain is equal to Rs 50 on the losing side i.e we will demand at least a gain of Rs 100 if there is a chance of losing Rs 50 in a bet. Let’s try to apply this in few of our daily life relationships Friendship: In our lifetime we make so many friends but hardly a handful of them continues for the long term, time constraint can be one issue but as there is one saying we can always find time for the people who are at the top of our priority list, Initially things go well and people enjoy each others company but as the time progress, small losses not necessarily monetary but can be emotional also can wipe out all the gains of the friendship, expecting more gains and benefits than losses is one of the major reason that causes friendships to break. Partnership: As friendship, partnerships also gets broken very frequently , during the initial period say the first couple of years, lack of long term vision,  synergy and over expectation of gains causes partnerships to break, on the other side if we see an older partnership hardly breaks reason being fear of loss of reputation and networking build over the long term causes people to adjust even when they have to go against their will, here fear of loss compared to gain is binding the partnership. Before moving into our third relationship that is marriage I would like to point out, there is one more bias,  availability bias which in tandem with loss aversion causes bigger damage in the above two mentioned relationships, what availability bias does is to force us to take decisions based on recent events and reliance on those things which we can immediately think of. So a recent problem between the partners or friends can really prove to be fatal on the relationship. Marriage: Here Loss aversion plays an altogether different role where it causes people to stick to the relationship despite differences. What happens due to societal pressure, the responsibility of kids and insecurity causes people to continue in relationships. Here we can see the difference in India and western countries where there is lack of societal pressure and less responsibility of kids(low birthrate) along with less insecurity due to working spouses, causes more divorces in the western world than in India. Sometimes it gets very interesting to apply your studies in relationships, tried my best but as there is saying feedback is your best teacher, please do give your feedback.

God in us!

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In this fast moving life where we all are part of the rat race, competing for every single rupee and position, doing all sort of politics, trying to belittle people, by doing all this we have lost humanity in ourselves. Today morning while going to the golf course, I heard a short story on some FM channel which really moved me from inside, sharing the same so that we can start taking steps towards becoming a good human being if not God. There was a child in Lucknow, one fine morning, he went to his mother and told her that he is going outside to meet God, so she should pack some food for God, Mother’s are Mother’s, she packed few sandwiches and gave it to the kid, then this child in search of god went to a park and saw a smiling old lady sitting on a bench, she hardly had any teeth left but her smile was as charming as possible, attracted towards her this child went to her touching her feet he told, dadi I have brought in some sandwiches for you would you like to eat, seeing his gesture old lady starting smiling more profusely and took the sandwich and gave half of it to the child and ate half of it.After having sandwiches this lady gave lots of blessings and looking at her smile this kid also got very happy and went back to his home As he came back to his home, mother asked child did u meet God, he said yes I meet her, she was very beautiful and accepted my food and gave me lots of blessing and she was very happy. At the same time when this old lady reached her home, her son asked how was your experience at the park, she told her son that God himself came to park at gave me food to eat. Moral of the story is that both of them saw god in each other and were very happy to meet God, all of us have a part of God in us, we just suppress the God in our daily life routine and negativity plays in our mind only, and we have lost even humanity in ourselves. Let’s pledge to become a good human being and make a difference to someone’s life, maybe god inside wants us to do that.

FY 18-19, Markets up but portfolios sulking

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As today marks a start of a new financial year with Sensex touching lifetime high as I am writing this blog, if we look at the past financial year, it has been a year of dichotomy, Large cap indices Sensex went up by 17.3% and nifty went up by 14.9 %, whereas if we look into broader indices of midcap and small cap, they lost 3 and 11 per cent respectively. Due to this dichotomies portfolio of retail investors took a beating. Barring last one month or so when FII started pouring in the money, markets have been majorly supported by domestic money of mutual funds and insurance. For the first ten months of the last financial year markets were lead by top 5 or 6 shares whereas broad market was sulking under uncertainty of volatile oil prices, weak rupee, increasing global interest rates and state elections. Elephant in the room is coming Loksabha elections, FIIs have discounted continuity of regime and that’s why they are pouring money since last one month and any change of scenario leading to the unstable government can really lead to pain in short term. Though earning growth has still been not up to the mark, but dovish tone by FED along with stable oil prices has given some impetus to global liquidity, From hereon markets are not looking cheap at current valuation but continuity in regime can lead to an extension of this bull run. But given election season we need to prepare for extreme short term volatility.