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CAGR Insights – 22 Dec 2023

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

Index22-Dec-2315-Dec-23Change
Nifty 5021,33121,457-0.58%
Nifty 50019,03819,145-0.56%
Nifty Midcap 50 12,82713,029-1.55%
Nifty Smallcap 10014,82714,886-0.40%

Chart Ki Baat

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Courtesy DSP

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.

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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.

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CAGR Insights – 15 Dec 2023

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

Index15-Dec-2308-Dec-23Change
Nifty 5021,45720,9692.32%
Nifty 50019,14518,7042.36%
Nifty Midcap 50 13,02912,6243.21%
Nifty Smallcap 10014,88614,4043.35%
Chart Ki Baat
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Gyaan Ki Baat

7 rules for a happy life from Berkshire’s Charlie Munger:
1. Manage expectations: If you have unrealistic expectations, you’re going to be unsatisfied which will make your life miserable.
2. Avoid envy: Envy makes people’s life Miserable. We should be grateful for the things we have.
3. Eliminate resentment: Resentment leads to misery. We should think of good things that have happened in our life.
4. Stay cheerful despite adversity: Life is not like a bed of roses. But with a cheerful heart, we can bloom amidst any situation.
5. Be reliable and surround yourself with reliable people: Reliability is about doing what you say you will do. It’s about being somewhat predictable and reasonable.
6. Follow your natural drift towards something that excites you: If you do something that excites you, Success often becomes an eager companion in your journey.
7. Read and study constantly: Learn from past mistakes and become more educated every day by reading more.
Source: Valueresearch

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

Personal Finance

·  The Art of Averaging Down – This article discusses business characteristics which help decide whether or not you should average down on certain stocks. Read here.
 
·   Important Factors for analysing mutual funds – Morningstar describes different factors (like fund performance, fund strategy) and how they should be assessed while selecting a mutual fund. Read here.
 
·   SEBI Proposes Lower Face Value to Boost Retail Participation in Corporate Bonds – The move aims to make corporate bonds more accessible, potentially boosting India’s corporate bond market and enabling companies to raise capital for infrastructure expansion. Read here.
 
·   Fintech Solutions for India’s Elderly – The blog explores the emerging opportunities and challenges in India’s fintech landscape concerning the elderly population, discussing demographic shifts, financial characteristics, and proposing tailored solutions for their unique needs. Read here.
 
·   The rise of AI poses a threat – Nikhil Kamath discusses the challenge posed by the increasing sophistication of AI and deepfake technology for the financial services industry, particularly in verifying the authenticity of individuals during digital onboarding. Read here.

Investing

·   Naval Ravikant on Navigating Tech’s Regulatory Landscape – Insights and Advice from CEO and Founder of AngelList, emphasizing the importance of pursuing intellectually passionate and knowledge-driven innovations over trend-chasing. Watch here.
 
·    Trend of FII inflows into Emerging markets – The table depicts that India has received the highest number of FII equity flows compared to other emerging markets over the last year. Read here.
 
·    Analysis of IRFC: the systemically important NBFC – The article examines the robust and unique business model of IRFC. It explores the company’s riskless lending to the government, its over-capitalization, potential implications of breaching self-imposed leverage limits post-IPO, and the extremely low valuation of its stock. Read here.
 
·    Indian Hospital Industry Booms Post-Covid – The Indian hospital sector exhibits robust growth with a projected 12% CAGR over the next three years, driven by increased health insurance penetration, post-Covid recovery, and strategic industry shifts. Read here.
 
Economy

·    India’s Economic Rise Surpasses China– With projections indicating India’s GDP could become the world’s third-largest by 2030, driven by factors like manufacturing gains, infrastructure upgrades, and optimistic growth forecasts, while China faces challenges of a slowing economy and declining global influence. Read here.
 
·    Global Economic Outlook for 2024: Soft Landing Amid Uncertainties? – Despite uncertainties stemming from the Federal Reserve’s rate hikes and challenges in China, the global economy is predicted to experience a soft landing in 2024. Read here.
 
·   Fed rate-cut favors emerging markets– Data from HSBC Asset Management suggests that emerging markets may outperform in 2024 as the Fed is expected to initiate a rate-cutting cycle in the second half, favouring assets like Indian bonds. Read here.
 
·   The Significant Power Dilemma in India – The Central Electricity Authority (CEA) data reveals India’s ongoing dependence on fossil fuels for power generation despite significant growth in renewable capacity, posing challenges for the country’s transition to clean energy. Read here.
 
·   Mapping Global Interest in Generative AI Tools – The article explores global interest in generative AI tools, revealing the Philippines as the country with the highest search volume, and highlights preferences in text, image, audio, and video generation, emphasizing the evolving landscape of generative AI worldwide. Read here.
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Check out CAGRwealth smallcase portfolios here.

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CAGR Insights – 08 Dec 2023

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

Index08-Dec-2301-Dec-23Change
Nifty 5020,96920,2683.46%
Nifty 50018,70418,1153.25%
Nifty Midcap 50 12,62412,3352.35%
Nifty Smallcap 10014,40414,2391.16%

Chart Ki Baat
The Tale of US and Indian markets


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Courtesy: DSP AMC

Gyaan Ki Baat

The Crown Jewel Defense is a takeover defense strategy where a target company seeks to prevent a hostile takeover by divesting itself of its most valuable assets, known as the “crown jewels.” The target company makes itself less attractive to the acquiring company.

This defensive manoeuvre is designed to protect shareholder value and retain control over critical elements that contribute significantly to the company’s financial strength and competitive advantage. The success of the Crown Jewel Defense depends upon the significance of the divested assets.

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

Personal Finance

  • Interview with Prashant Jain – This interview discusses Prashant Jaini’s views on balancing conviction and rigidity, his evolution as a money manager and a small event that changed his life. .Read here.

  • Interview with Mohnish Pabrai – This interview revolves around Monish Pabrai’s views on success, how he dealt with the Global Financial crisis and what role does money play in his idea of a successful human being. Read here.

  • CRISIL’s monthly indicator of food plate cost – The average cost of preparing a thali at home is calculated based on input prices prevailing in north, south, east and west India.Read here.

  • Case for a higher debt allocation over the next 12-18 months – Although bonds are typically thought of as an asset class that offers stability over a longer time horizon, debt has actually outperformed other asset classes throughout the era of extreme/long interest rate rises and tight financial conditions. Read here.

Investing

  • The tale of two markets – In US, the stock market has become increasingly concentrated in the hands of the top 7 firms accounting for a substantial portion of the overall market capitalization. In India, the situation is opposite. The broader small and midcap stocks have outperformed the Large caps by a huge margin. Read here.

  • Indian banks have emerged as a global beacon of stability and growth – A recent report from Moody’s has also highlighted the strength of the Indian Banks amid a negative outlook for the global banking sector in 2024. Read here.

  • US examined Hindenburg allegations before giving loan to Adani – The US government extended Indian billionaire Gautam Adani’s company as much as $553 million for a container facility in Sri Lanka after concluding that short-seller Hindenburg Research’s accusations of corporate fraud against him were unfounded .Read here.

  • Indian Central Bank keeps rate unchanged – The repo rate was kept unchanged at 6.5%, as widely expected. Read here.

  • India Inc.’s corporate landscape in Q2-FY24 – India Inc. demonstrated increased profitability even as sales growth slowed. The main driving factor for this increase in margin was the decline in commodity prices. Read here.

Economy

  • Bollywood’s Resurrection -The tremendous success of Paathan and Jaawan has revived considerable optimism for Bollywood films that has had a string of dismal years.. Read here.

  • Story of Namma Yatri – For a single day, Uber and Ola were prohibited from operating in Bangalore while the courts worked to control their pricing strategies – this was the official launch of the Namma Yatri app. This article goes into depth of the journey for creating such an app. Read here.

  • Trends in general government subsidies – Over the past ten years, there have been significant shifts in the pattern, with the phase-out of petroleum subsidies and the increased prominence of food and fertilizer subsidies. Read here.

  • US public debt concerns – Downgrades of US credit ratings underscore another consequence of the sharp increase in interest rates: apprehension over the government’s capacity to sustain sustainable public finances over the long haul.Read here.

  • Nigeria is taking a gamble on solar power – This video delves into the bet Nigeria is taking on solar power since the sudden end of its fuel subsidies. If it works in their favour, it will become the first example of a distributed off grid solar at a great scale level. Watch 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.

Posted on

CAGR Insights – 1 Dec 2023

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

Index1-Dec-2324-Nov-23Change
Nifty 5020,26819,7952.39%
Nifty 50018,11517,6442.67%
Nifty Midcap 50 12,33511,9553.17%
Nifty Smallcap 10014,23913,8282.98%

Chart Ki Baat

Image

Gyaan Ki Baat

Investment styles, reflecting individual preferences and financial goals, include value, growth, and income investing. Indexing replicates market performance, contrarian strategies challenge sentiments, and technical analysis uses historical charts.

Quantitative methods rely on mathematical models. Socially responsible investing incorporates ESG factors, and dividend growth investing prioritizes increasing dividends. Successful investors blend styles for a diversified approach, aligning with risk tolerance and financial objectives, stressing the need to understand one’s goals.

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

Personal Finance

  • Anti-Personal Finance Expert Beliefs – The article reveals that achieving contentment is essentially elusive. Irrespective of one’s earnings, the desire for more persists. The benchmark for satisfaction continually shifts upward. Read here.

  • An ode for Charlie Munger – Charlie Munger embodied three characteristics – rationality, sound judgment, and straightforwardness. Read here.

  • How You Earn Is As Important As What You Earn – Becoming wealthy is straightforward – spending less than earning and investing the surplus – but the real challenge lies in patience, discipline, and emotional resilience over the long term. Read here.

Investing

  • Power Laws in the Stock Market – The article outlines that diversification is crucial because it’s impossible to forecast which stocks will deliver substantial returns. Read here.

  • Ramesh Damani on success and regrets – This interview discusses Ramesh Damani’s views on coping with losses, red flags in investing, stock bets that went wrong for him and personality traits of successful investors. Read here.

  • SEBI’s investigation into misuse of proprietary trading – Prop trades involve brokers trading on their own behalf rather than for clients. There have been concerns about brokers misusing this practice. Read here.

  • The enduring myth of Great Companies – Believing that historically successful companies will invariably remain solid, buy-and-hold investments in the future is a persistent misconception in investing. Read here.

Economy

  • The Full Reset – The article conveys the effectiveness of starting clean by explaining how the German military achieved significant strength during the 1930s. Read here.

  • Prime Time for Bonds – The article outlines a strategic investment outlook that favors fixed income over equities based on the global economic landscape, market valuations, and asset class fundamentals. Read here.

  • Foxconn’s struggle to make iPhones in India – Foxconn, investing heavily in its iPhone factory in Sunguvarchatram, faces challenges with higher material costs and more defective phones, leading to lower profitability compared to its Chinese counterparts. Read here.

  • Did copy-paste really cost TCS $200 million? – The case involves TCS allegedly obtaining and sharing confidential information about CSC’s software “Vantage” while working with US-based life insurance company Transamerica. 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.