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.