Ok, those are a lot of questions. But in the age of fifteen seconds Instagram reels those are still a lot of questions. Let’s answer them one by one.
You can Google the above query to understand what is RSS feed. But in the age of generative AI who wants to do that. So let me dump the explanation that ChatGPT gave right here.
(more…)Over last couple of years the chatter around passive funds have grown and so have the AUM. I also jumped in this bandwagon with investment in Nifty 500 and Sensex 30 fund. The reason was their simplicity.
But this article by Finshots team looks into tracking error of passive funds and how closing price affects it. Apparently, it’s not that simple.
Passive funds base their trades on the closing price of stocks. And since closing prices are determined using VWAP, it can sometimes deviate the fund’s performance from the main index. And the result of this is something called a tracking error or a small difference between the fund’s returns and the index’s performance.
An insightful podcast from Capitalmind discusses the recent FII selloff, which also personally affected me. Got to learn quite a few things from it.
On FIIs.
The reason they are called institutions is because they are not principles themselves. They have investors behind them.
Indian investor, apparently, has it easy! At least easier than their US counterparts.
Now, this is interesting because only registered financial institutions can buy in India, which means that your friend who is an American citizen who lives in America and is not an Indian, cannot buy Indian stocks directly. Why is this interesting? Because you as an Indian can buy American stocks living in India.
FII is not the same as FDI.
Now, if you come back to what FII is, we actually got two concepts. One is FDI and one is FII. The concept of an FDI is essentially something where you say, a foreign direct investor is a person who comes in strategically…
…It was like I am directly investing and participating in the story of an Indian company who I strategically control. This was Coke, was Nestle, was Pepsi, was a bunch of other people. They invested under the FDI route…
…But we have to consider that FII is what is called an FPI, Foreign Portfolio Investor. This is a mutual fund that comes in West India. They expect to invest in India and take money out, but they don’t own the company meaningfully, in the sense of controlling the company.
And apparently what is happening now is that both FII/FPI and FDI are selling rather than just the FII/FPI selling.
By the way, HDFC Bank is probably majority owned by foreign entities. ICICI Bank is probably majority owned by foreign entities, so as a bunch of other banks
What?
*checks notes*, I mean *checks moneycontrol*
FIIs own 48% of HDFC Bank. FIIs own 46% of ICICI Bank. 1
…the fact is that the foreign ownership was quite high, why should it have ever happened in the first place? There are very interesting sinister reasons.
Listen on to hear some interesting stories from the past and how they affect the present.
Footnotes
A very astute observation by Dr Dang on how in all the news about AI thinking like humans, we humans have started thinking like AI! I wouldn’t paste the snippet over here as it is already a small article.
I have never been a fan of crypto investing (if I change my mind later, don’t hold me to it) so this article resonated with me.
Crypto investing, much like amateur tennis, often feels like a game of skill and precision. But most, if not all, gains and losses in the crypto market can be attributed to the market more than the skill of the trader. If SBF didn’t blow up FTX during the 2022 bear market, he would have been worth $100B+ with Bitcoin trading at $100K.
My favourite one.
It’s not enough to make time for your children. There are certain stages in their lives when you have to give them the time when they want it. You can’t run your family like a company. It doesn’t work.
I read this thought provoking excerpt from the paid FT article Silicon Valley billionaires remain in thrall to the cult of the geek on The Overspill.
…Microsoft’s co-founder Bill Gates was asked what painful lessons he had learnt when building his software company. His answer startled the audience back then and is all the more resonant today.
Gates replied that in his early twenties, he was convinced that “IQ was fungible” and that he was wrong. His aim had been to hire the smartest people he could find and build a corporate “IQ hierarchy” with the most intelligent employees at the top. His assumption was that no one would want to work for a boss who was not smarter than them. “Well, that didn’t work for very long,” he confessed. “By the age of 25, I knew that IQ seems to come in different forms.”
Those employees who understood sales and management, for example, appeared to be smart in ways that were negatively correlated with writing good code or mastering physics equations, Gates said. Microsoft has since worked on blending different types of intelligence to create effective teams.
Anil Dash talking in metaphor of burning fire. My favourite paragraph is about how the most important thing is invisible to our eyes and often the most ignored.
It’s very obvious that you need fuel and a spark to start a fire. But the most important enabling aspect is oxygen, and it’s the part you can’t see. So many struggling fires are lacking only oxygen to enable them to become a true conflagration, but people often fall back to reshuffling the things they can see, rather than considering the vital parts that are invisible to them.
Ashish Shanker, MD & CEO of Motilal Oswal Wealth, discussing with Anupam Gupta.
People get carried away, because making money becomes so easy. I mean, it’s like a dartboard, right? You just throw darts at any company out there, and you suddenly see after a year, your portfolio is up 40-50% and you tend to get carried away.
So, it is extremely important at this point in time1, at this juncture for us to keep reminding clients not to forget their core risk appetite and asset allocation. So, I always keep telling clients, you know, your risk appetite is how you felt when markets fell 40% during COVID.
March 2020.
Right. Your risk appetite is not what you are feeling today. What you are feeling at the worst is actually your risk appetite.
Daniel Susskind explaining the pitfalls of relentless pursuit of growth and how we can sustainably grow without causing an ecological disaster.
Growth does not come from using more and more finite resources, but from discovering more and more productive ways of using those finite resources. In other words, it comes not from the tangible world of objects, but from the intangible world of ideas. And the universe of those intangible ideas is unimaginably vast: as good as infinite. In other words, our finite planet is not the constraint that matters when thinking about the future of economic growth.