CAGR Insights is a weekly newsletter full of insights from around the world of web.
| Index | 22-Dec-23 | 15-Dec-23 | Change |
| Nifty 50 | 21,331 | 21,457 | -0.58% |
| Nifty 500 | 19,038 | 19,145 | -0.56% |
| Nifty Midcap 50 | 12,827 | 13,029 | -1.55% |
| Nifty Smallcap 100 | 14,827 | 14,886 | -0.40% |
Chart Ki Baat
Gyaan Ki Baat
Buffet Indicator – The stock market capitalization-to-GDP ratio serves as a key metric to assess whether the overall market is currently undervalued or overvalued relative to its historical average. The significance of this ratio gained prominence following Warren Buffett’s acknowledgment that it is likely the “best single measure” to gauge valuations at any given moment.
In Fiscal Year 2023, the market cap to GDP ratio in India stood at 95. However, due to a recent rally, the ratio has surpassed 100. While the long-term average hovers around 80%, the elevated ratio suggests that the market might be overheated in the short term. Notably, the ratio has remained above 100 since Fiscal Year 2021, diminishing its effectiveness as a short-term indicator.
The reliability of the Market Cap to GDP ratio is notably higher in economies where the market cap more substantially mirrors economic activity. Consequently, advanced countries like the US, UK, and Singapore exhibit Market Cap/GDP ratios well above 100, given the prevalence of formal sector businesses in these nations.
Here’s the list of curated readings for you this week:
Personal Finance
- Intellectual Dishonesty in What’s Being Sold – The article discusses the trend of individuals making money by selling advice on how to do something rather than actually engaging in the activity, emphasizing the importance of honesty in the face of potential financial scams. Read here.
- Unmasking Financial Charlatans – The author critiques financial doomsayers, including Robert Kiyosaki, for their persistent predictions of economic collapse, emphasizing the importance of realistic financial advice. Read here.
- Fintech Solutions Revolutionizing Indian Offline Retail – This blog explores promising fintech solutions for Indian merchants, emphasizing practicality and incremental adoption, including diverse payment methods, enhanced credit accessibility, and tailored insurance offerings. Read here.
Investing
- An Alpha generation strategy – Turtle Creek Asset Management, a value investing firm, distinguishes itself by actively trading around core positions through Continuous Portfolio Optimization clocking compounded annual returns of 20% over 25 years. Read here.
- Discovering Your Investment Philosophy – Establishing a robust investment philosophy involves identifying market inefficiencies, the underlying causes, corrections, and providing a foundational framework for consistent decision-making. Read here.
- Navigating the Risks of Market Concentration – The article explores the potential challenges arising from the current unprecedented market concentration in the U.S., emphasizing the need for investors to reconsider traditional strategies for better risk management and alpha generation. Read here.
- The importance of having a well-defined investment process – The note emphasizes the critical role of drawing insights from the experiences of successful investors and highlighting the importance of sticking to the process for long-term success in equity investing. Read here.
Economy
- Potential Consequences of Suez Canal Crisis – The blockage of the Suez Canal may lead to increased freight costs, affecting India Inc’s earnings and potentially stoking inflation, with sectors such as textiles, oil and gas, chemicals, capital goods, metals, and pharma being particularly vulnerable. Read here.
- Private Capex Surge: Unveiling the Resurgence – Private capital expenditure in India has surged with optimism driven by supportive government policies, rising GDP growth, increased capacity utilization, and higher corporate profitability, indicating a potential boost in long-term economic growth. Read here.
- Facebook’s Struggle in India – As India tightens platform laws ahead of the upcoming general election, Facebook witnesses a tenfold increase in content restrictions, reflecting a significant shift in the online landscape and concerns about free speech. Read here.
- Diverge views on Exchange Rate Regime and Policy Recommendations – IMF’s reclassification of India’s exchange rate regime, including tax measures and trade restrictions, has been met with strong disagreement from Indian authorities. Read here.
- Comparison of Global Inflation – India’s inflation for November 2023 appears higher than most countries; the analysis includes real policy rate comparison and movement in global commodity prices. Read here.
- Macro and Bond Market Insights – The Fed’s recent pivot signals the end of the hiking cycle, with potential rate cuts discussed, influencing a bullish bond view and supporting an elongation of portfolio maturities. Read here.
- Indri: Transforming India’s Spirits Market – India-made single malt whisky, Indri, named the world’s best is challenging global brands and fuelling a boom in Indian whisky consumption. Read here.
****
Check out CAGRwealth smallcase portfolios here.
****
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.