Category: CAGR Insights – weekly newsletter curated by Kshitiz

Wish you and your family a very happy and successful new year!

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

Index	30-Dec-22	23-Dec-22	Change (%)
Nifty 50	18105	17,806	1.68
Nifty 500	15448	15,046	2.67
Nifty Midcap 50	8751	8,400	4.18
Nifty Small cap 100	9731	9,182	5.98

Gyaan of the week

Hybrid mutual Funds are funds that invest in a combination of different asset class mainly debt and Equity. The objective of the fund is to diversify the portfolio with an aim to reduce the risk and also generate income.

Hybrid Funds are suitable for first-time investors and for investors looking for lower volatility than pure equity funds. Some of the popular Hybrid Funds are Aggressive Hybrid Funds, Conservative Hybrid Funds, Arbitrage Funds, etc.

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

Personal Finance

• The new Mutual Fund Challengers – India’s tightly regulated and highly competitive mutual funds market is dominated by large established players. But a bunch of new fund houses is looking to disrupt the space that is already riding high on technology, innovation and digitisation. Read here.

• To Parents with love – Must read. A compilation of essays on how parents can be prepared to support their children’s future aspirations! Read here.

• Massive decline in new MF investor registration due to change in KYC norms- AMFI data shows that the MF industry added 78,045 investors in November 2022, the lowest since April 2022. Between April and October, the industry added over 3.75 lakh new investors on a monthly basis. Read here.

• An underappreciation for how small things compound into extraordinary things – Howard Marks once talked about an investor whose annual results were never ranked in the top quartile, but over a 14-year period he was in the top 4% of all investors. If he keeps those mediocre returns up for another 10 years he may be in the top 1% of his peers – one of the greatest of his generation despite being unmentionable in any given year. Read here.

Investing

• Stocks ki Baat – Globus spirits– The 2nd edition of new “Stocks Ki Baat” series, talks about an Alcoholic beverage company. The company is the largest grain-based ENA manufacturer in India with a capacity of 250 Mio lts. Read here.

• MF CIOs see weak case for equity mkt next 1-2 years, recommend debt– “Our fund house applied three main criteria of corporate earnings, valuations and sentiments and while macro drivers were positive for corporate earnings, the other two factors did not portend well for the equity markets in the next couple of years,” said SBI MF’s Srinivasan. Read here.

• How to learn from others – A time comes when the teacher has to disappear and we need to be comfortable in the driving seat without any guidance. At this stage we need to be self-aware about our limitations and our style of processing ideas. Read here.

• Warren Buffet says “When I want to do something, I want to do it big” – In this video, Warren Buffett, the chairman and CEO of Berkshire Hathaway shares a wide-ranging interview with Charlie Rose about the Berkshire Hathaway he created, his friends, his values, and life at a young age of 91, compared to Charlie Munger. Watch here.

Economy

• Indians spent 11 bn minutes travelling in Uber cabs in 2022 –The year 2022 saw Indians start travelling big again, and cities swinging back open for business after the pandemic. Uber trips during the year covered as many as 4.5 billion kilometres, which is the distance from Earth all the way to Neptune. Read here.

• Central Bank watching is like an art form – Central bank actions and communications are as much as what is said as what is left unsaid. It is both reading the lines as well as reading between the lines. Read here.

CAGR Speak

• How does Inflation impact equities and various factor strategies? This can be a useful read to help us navigate the period of high inflation. Read the linkedin post here.

• Small advice firms vs large ones. Large is not necessarily credible. The reason we tend to prefer larger brands as consumers is because we feel they are more credible. In the space of personal finance, parameters which vouch for credibility can exist with smaller firms as well. Read the linkedin post 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’d 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 the web.

Index	23-Dec-22	09-Dec-22	Change (%)
Nifty 50	17,806	18,269	-2.53
Nifty 500	15,046	15,636	-3.77
Nifty Midcap 50	8,400	8,831	-4.88
Nifty Smallcap 100	9,182	10,017	-8.33

Gyaan of the week

Term Plans are Life Insurance Policies where the payout is made on the death of the insured. However, unlike hybrid Insurance – Investment products (Read: LICs, Endowment Plans, and so on), one does not get any payout if the insured survives the term of the plan.

Life Insurance like any other insurance should be taken only to protect against the risk of absence of income. If you have anything which is dependent on your earning capacity and your income, you need to protect the risk of going missing in case you pass away due to an untimely event. And hence, we find it very silly to buy 100-year term policies.

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

Personal Finance

• Needs, Wants and why We Always Feel Unfulfilled – 100+ years ago you would have been happy just to have abundant food, shelter and clothing. But our wants slowly turned into needs. Good healthcare and education were relatively rare for older generations, but today they’re necessities. And so the hamster wheel keeps spinning and we keep putting more and more needs on the wheel. Read here.

• It’s difficult to outperform the market– Just 17% of listed companies in India had market capitalization greater than 2500 Crores. Small companies, while attractive to investors for the chance to get onto the train before the long journey starts have a very high failure rate. The attraction towards these smallcaps though is massive like in a lottery, there will always be a few winners and stories of how someone made it rich keep others in the fray. Read here.

• Where Zerodha invests its cash – With our own funds, we invest in bank FDs, Government bonds, and have a long-term stock portfolio. We neither leverage (borrow to trade more) nor trade any leveraged products like F&O, which can lose more money than the capital at stake. This is to ensure there is no risk due to our treasury operations to the business. Our portfolio currently has exposure of 33 percent to bank FDs, 32% to stocks, 13% to Government Securities, 9% to tax-free bonds, and 13% to Gold bonds. Read here.

Investing

• Stocks ki Baat – Caplin Point Laboratories– In the 1st edition of Stocks Ki Baat, we talk about a Pharma company engaged in manufacturing and sourcing of APIs, finished formulations, R&D, and clinical research. The company has a unique business model, with above 80% of the sales being generated from LATAM countries. Read here.

• Analysis of Godfrey Phillips– Makes for an engaging read on the complexities of the Cigarette industry in India. Read here.

• How often is the market down in consecutive years– The last time the US stock market posted a string of bad years was in the 2000-2002 bear market when each year it fell more than the previous year. From an investor psychology standpoint, a prolonged bear market is probably more difficult to stomach than a severe crash that ends in short order. Read here.

Economy

• Grim situation of COVID in China- Dozens of hearses queued outside a Beijing crematorium on Wednesday, even as China reported no new COVID-19 deaths in its growing outbreak, sparking criticism of its virus accounting as the capital braces for a surge of cases. Read here.

• Bank of Japan shocks global markets with bond yield shift – The Bank of Japan caught markets off guard by tweaking its yield curve control policy to allow the yield on the 10-year Japanese government bond to move 50 basis points either side of its 0% target. Read here.

• Additional spending unlikely to strain fiscal math – In spite of the supplementary demands for grants, the government seems to be in a sound position on the fiscal deficit front in the current fiscal because of tax buoyancy. Read here.

• India cenbank cannot prematurely pause rate tightening cycle – MPC minutes – “A premature pause in monetary policy action would be a costly policy error at this juncture,” Governor Shaktikanta Das wrote in the minutes of the policy meeting released by the Reserve Bank of India on Wednesday. Read here

CAGR Speak

• Shruti shares her experience of being invited to judge a competition at her alma mater. Difference was, I was on the other side of the table this time. Judging 20 teams for an interesting simulation that they had been a part of. Read the linkedin post here.

• We talk about the benefits of Gold Bonds. We believe that SGB is a great way to take gold exposure. And gold can be an effective diversification tool in your portfolio. Read the linkedin post 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’d 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	16-Dec-22	09-Dec-22	Change (%)
Nifty 50	18,269	18,496	-1.22
Nifty 500	15,636	15,812	-1.13
Nifty Midcap 50	8,831	8,917	-0.96
Nifty Smallcap 100	10,017	9,969	0.48

Gyaan of the week

State Development Loans (SDLs) are debt securities issued by State Governments. Generally, SDLs are issued for 10-year maturity and offer higher returns than central government securities. SDLs have lesser risk than AAA corporate bonds as it is backed by Sovereign Guarantee. Please see our recommendation for SDLs if you are investing for more than 2 years.

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

Personal Finance

• When to bet big and when not to – In essence, you don’t have to be right a lot, you just have to be right about your big bets at the right time. Here, while the probabilities matter a lot, so do the consequences i.e., the amount of possible gain/loss. It is important to get that equation right. Read here.

• Moneycontrol Mutual Fund Summit. How will actively managed funds generate alpha – The entire panel said they were Overweight on financials at the moment, on the back of good earnings visibility and strong asset quality. Read here.

• Crypto: Financial Hazard or Diversification Tool? – With all the negativity generated by the crypto market’s volatility and the FTX collapse, cryptocurrencies have a serious image problem, to put it mildly. But they might be worth a closer look, according to an Enterprising Investor blog post. Their conclusion: Crypto’s low positive correlation with mutual funds and ETFs and weak correlation with traditional assets might prove useful for certain investors. Read here.

• Bonds and Fixed Income: Where’s the Hedge? – Of course, bonds and other fixed-income assets are supposed to offer diversification benefits and provide something of a cushion for when the equity component of a portfolio runs into rough times. Clearly, they are not performing these functions especially well of late. Read here.

Investing

• How to do Business Analysis of Construction Companies– Dr. Vijay Malik writes about the factors that impact the business of construction companies and the characteristics that differentiate a fundamentally strong construction company from a weak one. Read here.

• Anant Goenka’s CEAT-Zensar balancing act– Interesting read on the two RPG group companies CEAT and Zensar. Read more here.

• The case for NASDAQ Index fund investment – Nasdaq 100 is one of the most recommended and preferred destinations for Indian equity investors because they offer geographical diversification. Read here.

Economy

• India Headline inflation falls sharply, but core inflation persists- Given that monetary policy primarily tackles core inflation, the latest data shows it may be premature to say that the rate hikes delivered by the RBI so far have started having an impact. Nor is it safe to rule out a resurgence of inflation if food prices were to rise again, as they typically do during summers. Read here.

• Big enterprises are better employers – Broadly, it is evident that the wage rate is directly proportionate to the size of the company. Apparently, it would thus be much better if India has many more large companies than small-sized companies. Read here.

• Fed’s Powell says inflation battle not won, more rate hikes coming. – The Federal Reserve will deliver more interest rate hikes next year even as the economy slips towards a possible recession, Fed Chair Jerome Powell said on Wednesday, arguing that a higher cost would be paid if the U.S. central bank does not get a firmer grip on inflation. Read here

CAGR Speak

• Shruti talks about sessions for the leap.club members last week. It was enlightening to see women take time out over a weekend to learn more about their own personal finance. Read the linkedin post 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’d 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	09-Dec-22	02-Dec-22	Change (%)
Nifty 50	18,496	18,696	-1.06
Nifty 500	15,812	15,963	-0.94
Nifty Midcap 50	8,917	8,994	-0.85
Nifty Smallcap 100	9,969	10,079	-1.09

Bazaar Ki Baat – Nov 2022

In this month’s edition of “Bazaar Ki Baat”, our founders discuss in brief about what moved the market in November, how the corporates fare in Q2, the case for Target Maturity funds, and many more such interesting topics. Watch here.

Gyaan of the week

A total return Index is an index created to track capital appreciation as well as dividends. The total return index reinvests all the dividends within the company as retained earnings. The total return Index is a way to include every part of the return and not just the price index. Total return indices help show an investor’s complete return by including dividends in an investor’s return. For example, if we buy 1 unit of total return index at Rs 100 and it offers Rs 8 as a dividend. The stock has increased by 20% to Rs 120. The nominal return is 20%. By reinvesting the dividend, assuming we gained an additional Rs 2 in value. The investment is worth Rs 130. The total return is 30%.

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

Personal Finance

• FinMin allows PSUs to invest surplus cash in debt schemes of private MFs – India’s finance ministry has liberalised investment norms governing the deployment of surplus cash at state-owned companies, expanding the universe of approved debt plans beyond the current bailiwick of fixed-income investment schemes run exclusively by public-sector mutual funds. Read here.

• What is ChatGPT? – Artificial Intelligence (AI) research company OpenAI on Wednesday announced ChatGPT, a prototype dialogue-based AI chatbot capable of understanding natural language and responding in natural language. It has since taken the internet by storm and already crossed more than a million users in less than a week. Read here.

• ESIC to invest up to 15% surplus funds in stock market via ETFs – Employees’ State Insurance Corporation (ESIC) accorded approval for investments of surplus funds in equity, however, restricted to Exchanged Traded Funds (ETFs).  Read here.

• Anyone who has become rich twice is dumb–Why would you risk what you need and have for what you don’t need? If you are already rich, there is no upside to taking on a lot more risk, but there is disgrace on the downside said Warren Buffet. Read here.

Investing

• Common Critiques of Bitcoin and rebuttals to each– Bitcoin faces plenty of criticism, some justified, some easily refuted. Here we catalogue common criticisms of bitcoin, and rebuttals to each. Read here.

• Investor Safir Anand says 2023 will be a better year than 2022 – Safir’s portfolio is almost in equities and I intend to keep it that way for now. Read more here.

Economy

• India central bank says inflation battle not over, raises rates again- While there have been signs recently that price pressures may be moderating, Reserve Bank of India (RBI) Governor Shaktikanta Das said the main risk was that inflation could remain pervasive and elevated, reinforcing market views the central bank could hike rates again in coming months. Read here.

• Zerodha founder talks about UPI block money features impact on the broking industry – RBI’s announcement of allowing single block and multiple debits on UPI can potentially have some interesting outcomes for the broking industry.Read the Twitter thread here.

• RBI Governor explains the difference between UPI & CBDC. – Reserve Bank of India (RBI) governor Shaktikanta Das clarified the key differences between the Central Bank Digital Currency (CBDC) and Unified Payments Interface (UPI), saying e-rupee transactions will not have any intermediary, unlike UPI transactions. Watch here

CAGR Speak

• There is a fundamental difference between how a domestic investor views India equity returns and how a Foreign Investor looks at it. Read the linkedin post 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 enjoyed reading this issue, please consider following us here, here, and here for encouragement to keep writing this weekly newsletter.

If you have any feedback that you’d 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.