Author: Kshitiz Jain

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	28-Mar-24	22-Mar-24	Change
Nifty 50	22,327	22,097	1.04%
Nifty 500	20,255	19,995	1.30%
Nifty Midcap 50	13,527	13,330	1.47%
Nifty Smallcap 100	15,270	15,057	1.42%

Chart Ki Baat

Israeli-born psychologist Prof. Daniel Kahneman passed away yesterday. He was honoured with the Nobel Prize for Economics in 2002, was recognized for his groundbreaking research integrating psychology into economic science. His work focused on understanding human judgment and decision-making in uncertain conditions.
RIP🌹

Gyaan Ki Baat

The small and mid cap mutual funds recently were asked to publish their stress test results every 15 days.

The results indicate how much time will respective funds take to liquidate 25% and 50% of their portfolio respectively. The longer the time taken, the more liquidity risk the investor bears.

The idea behind requiring stress test was to evaluate the real risk of redemption pressure that might emerge in case of price correction. In an event of heavy redemption, mutual funds have to sell their holdings and if liquidity is low, selling becomes difficult, thereby resulting in money getting stuck.

A simple way to read this is that funds with lower “days to liquidate” are better. But that is not all. Some key observations we have had are as follows –

• Funds with smaller AUMs are bound to have lower days to liquidate the portfolio. That does not necessarily make them better funds.
• Normally, unless it is a black swan event, we do not see the need to liquidate 50% of the portfolio. This is an extreme case and the readings should be only indicative, not decisive.
• As an investor, do not panic sell the funds which have come out with higher numbers. Evaluate them closely to see if these numbers improve. One can choose to divert additional flows to another fund.

Here’s the list of curated readings for you this week:

Personal Finance

• Renting vs. Buying a House – The article delves into the complex decision of renting versus buying a house, simplifying it to key factors such as rent, mortgage payments, and future inflation. It emphasizes the importance of considering both monetary and non-monetary aspects. Read here.
  
  
• Sharpen Your Perspective – From optimistic outlooks on life to the pitfalls of uncontrolled passion, these quotes explore the complexities of life, work, and success, reminding us that self-awareness and adaptability are key. Read here.
  
  
• Strategies for Mitigating Sequence of Returns Risk (SORR) – Dr. Jim Dahle presents four strategies to mitigate SORR in retirement, encompassing conservative spending, flexible withdrawal approaches, volatility reduction, and the use of buffer assets. Read here.
  
  
• MF Investors’ Rush to Re-Do KYC – Mutual fund investors in India face a March 31 deadline to re-do their KYC, with implications for transaction abilities and document validity. Read here.
  
  
• Disrupting India’s Streaming Landscape – Reliance-Disney merger in India’s streaming market threatens Netflix’s dominance with extensive content and potential pricing undercutting. Read here.
  
  
• The Burger Singh Story – Burger Singh, India’s largest domestic Burger chain, led by founder Kabir J Singh, implements innovative strategies to dominate the QSR industry despite its brutal nature. Watch here.

Investing

• Uncovering Deceptive Practices – JM Financial’s involvement in a debt offering revealed deceptive practices, including buying bonds at inflated prices and selling them at a loss through its NBFC arm, undermining investor trust. Despite the lack of clear losers, the incident highlights the intricate dynamics and risks within the financial sector. Read here.
  
  
• Potential Reversal in India’s Government Bond Yields – Expectations of RBI rate cuts and increased demand from domestic and foreign investors may lead to a reversal in the upward trend of IGB. Read here.
  
  
• Tale of Microcap Mastery – Peter Lynch’s 1994 article ‘Charlie Silk’s 150-Bagger’ illustrates the principles of successful stock investing through the story of finding and holding onto a remarkable microcap stock. Read here.
  
  
• Exploring the investment potential of CMS Info Systems Ltd – A market leader in India’s cash management industry, highlighting its market dominance, industry structure, growth prospects, and strategic initiatives. Read here.

Economy

• Assessing the Impact on Shareholder Value – Regulatory reforms in Japan have led to improved governance practices, but fundamental improvements in capital efficiency have lagged, posing concerns for investors. Read here.
  
  
• South Korea and India Inclusion in Key Global Indexes Delayed – FTSE delays inclusion of both countries in key global bond and emerging-market indexes for at least another six months due to criteria unmet by both countries. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	22-Mar-24	15-Mar-24	Change
Nifty 50	22,097	22,023	0.33%
Nifty 500	19,995	19,825	0.85%
Nifty Midcap 50	13,330	13,346	-0.12%
Nifty Smallcap 100	15,057	14,847	1.41%

Gyaan Ki Baat

In the latest FOMC meeting concluded on March 20th, the Federal reserve decided to keep the interest rate steady. You would also have read articles saying that the dot plot still indicates that 3 rate cuts are on the table for 2024.

But, what is dot plot? And What is its implication?

It’s almost certainly the most closely scrutinized scatter chart in world financial markets.

The “dot plot” shows projections for the federal funds rate … a key short-term interest rate that can affect savings yields and consumer loan rates.

Each dot represents the view of a Fed policy maker for the rate’s target range at the end of each year shown. Markets generally focus on the median “dot” or projection.

The Federal Monetary Policy Committee meets eight times per year. In conjunction with four of those meetings—those held in March, June, September, and December—the committee releases its updated dot plot.

Think of the dot plot as a transparent window into the Fed’s individual guesses. You can use it to better understand what the Fed is currently thinking and what it might do in the next FOMC meeting. Read more.

Here’s the list of curated readings for you this week:

Personal Finance

• Insights on Investing, Optimism, and Intuition – Larry Siegel, CFA Institute Research Foundation director, discusses the importance of optimism, intuition, and education in investing during an interview with Morningstar. Read here.
  
  
• Unraveling the Time Zones of Microcap Investing – Early investments in microcap turnarounds require patience, conviction, and a willingness to hold through initial skepticism for long-term growth potential. Read here.
  
  
• Maximizing Efficiency – Navigating the complexities of task management and productivity strategies while emphasizing the importance of prioritization and maintaining operational capacity. Read here.

Investing

• SBI’s Smallcap Scheme Defies Market Rout – Despite having the most illiquid portfolio, it experienced the least damage to Net Asset Value during the recent small-cap market downturn. Read here.
  
  
• Mumbai’s Real Estate Outlook – The Mumbai real estate market faces challenges including excessive competition, inflated prices, and a shift towards branded players and payment plans amidst a slowdown in luxury sales and moderation in project acquisition. Read here.
  
  
• Nvidia: Leading the Innovation Revolution – CEO Jensen Huang’s vision and persistence have positioned Nvidia at the forefront of AI development, with its GPUs and platforms driving breakthroughs in robotics and automotive technology. Read here.
  
  
• Baskin Robbins’ Market Expansion Tactics – Expanding its presence in the Indian market by targeting premium hotels, diversifying its offerings, and leveraging synergy with Dunkin’ to enhance customer appeal and accessibility, contributing to its success. Read here.
  
  
• India’s Capex Boom – The rising prominence of PLI and emerging sectors in capex, driven by EVs, semiconductors, and electronics, underscores the importance of incorporating these themes into investment strategies for disruption-proof portfolios. Read here.

Economy

• From Lifelines to Vanishing Relics of History – Rapid urbanization and neglect led to the demise of Bengaluru’s once-thriving cascading lakes, which were essential for the city’s water needs and livelihoods. Read here.
  
  
• Tracing the Paths of Growth and Struggle – India’s economy faces a dual challenge of sluggish growth and widening income disparities aggravated by structural issues and global economic uncertainties. Read here.
  
  
• India’s Billionaire Boom – The wealth concentration among India’s top 1% has reached its highest level in six decades, surpassing even the income inequality of countries like Brazil and the United States. Read here.  
  
  
• Japan Ends Era of Negative Rates – In an unprecedented move in 17 years, Japan’s central bank raised interest rates, reflecting shifting economic conditions. Japan’s central bank raises interest rates for the first time in 17 years amid rising wages and inflation concerns. Read here.
  
  
• Reservoir Levels Hit Five-Year Low – India’s main reservoirs hit lowest March levels in five years, raising concerns over drinking water and power availability. Read here.
  
  
• India’s Rise to Upper-Middle Income – India’s expected transition to an upper-middle-income country by fiscal 2031 could significantly boost demand for discretionary goods like automobiles, driven by rising incomes and a shift in consumption patterns towards non-essential items. Read here.
  
  

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.