Stock market returns are lumpy. Get used to it!

Ever wondered why circuits are in place? 

It all started on Black Monday in 1987, where a 25% market correction prompted the introduction of market-wide circuit breakers in the US. These limits aimed to ensure market maker solvency and prevent panic-induced trading.

Fast forward to 2001, and India also introduced circuits to handle intraday market volatility. From the Nifty's inception to the imposition of index-level circuit filters, the Indian market landscape has witnessed a steady evolution in its approach to market regulation.

In this episode, we delve deeper into the concept of circuits, with real life stories and understand how they help the market. 

We also discuss, should circuits continue to exist in their current form? or is it time to explore alternatives that foster greater transparency and resilience?

Show Notes & References 

00:00 Introduction and Disclaimer

01:24 Background on limits or circuit breakers.

06:38 When did India implement the circuit breaker?

09:20 What are the current rules for circuits in India?

15:58 Why are circuits interesting in the first place?

19:07 What would happen if circuits weren’t there?

24:38 Some interesting stories on circuits in the stock market

36:34 What is a better way to manage circuits?

40:47 Will circuits continue to exit?

In today's episode, we delve deep into the recent actions taken by the Reserve Bank of India (RBI) towards the end of 2023 and the ensuing ripple effects they've set off.

The RBI, often the silent architect of our financial landscape, has made strategic manoeuvres that reshape the terrain for banks, non-banking financial companies (NBFCs), and borrowers.

Discover how these regulatory shifts could impact financial decisions and the broader economic landscape. From the nuances of risk weights to the implications for personal loan growth, this episode promises to demystify the complex world of financial regulations in a digestible and engaging format.

Here is a quick overview of what we talk about:

• We unpack the RBI's directives regarding risk weights and the restrictions placed on simultaneous lending and investing activities by financial institutions.
• Dive into how startups offering digital lending products, like CRED and Paytm, are affected and the challenges they face under the new regulations.
• Explore why your credit card limits might be scrutinised and how conflict of interest rules reshape lending dynamics.
• Understand why the RBI's focus on Alternative Investment Funds (AIFs) matters and how it impacts investors' portfolios.
• Debate whether these measures reflect a proportionate response from the RBI and what they suggest about the current state of our economy.

Timestamps

00:00 Introduction and Disclaimer
01:34 Deepak demystifies the two new regulations by RBI on Banks and NBFC
05:37 What’s the impact of these new regulations? Why should we care?
16:05 Why is RBI more concerned about personal loans?
24:54 Why aren’t you positive about the RBI action here? What’s wrong with the slowing loan growth?
32:20 If Startups are ready to take the risk, why is RBI stopping them?
45:14 Even after this bull run, why isn’t there lending against securities?
52:11 RBI has a new rule prohibiting Banks and NBFCs from evergreening loans through AIFs.
01:03:51 Is this a warning, a sign that the economy is over-heating?

Join us on Capitalmind Podcast, where we demystify the world of finance without the jargon. In today’s episode, talk about the asset management industry in India and what’s in store for the future.

Now get this - Mutual Funds own only 8% of Indian companies, while retail investors own 9%.

Let’s rewind. In 2005, despite impressive returns, MFs didn’t gain much attention due to high fees and the lack of tax advantages. Fast forward to 2018, capital gains and dividend tax changes sparked a surge in MF investments, increasing their ownership to 8%.

Explore the shift in India’s financial landscape – changing disposable incomes and tax adjustments have made MFs more attractive. The “MF Sahi Hai” mantra and the success of Systematic Investment Plans (SIPs) further contribute to their rise.

Regulatory improvements play a role, but we also discuss other investment vehicles – MFs, Portfolio Management Services (PMS), Alternative Investment Funds (AIFs), and more. Understand the evolving dynamics and where your money might fit best.

We dive into comparing investment vehicles and their equivalents in the US. Spoiler alert: India’s investment culture is rising, embracing the expertise needed to manage money with relatively low costs and instant liquidity.

Is passive investing becoming the norm? Not quite yet. We need more institutional capital for that shift.

We end the episode trying to connect the dots and see what the future of this industry may look like.

References

00:00 Introduction and Disclaimer
01:15 How is the money divided among different vehicles in the asset management industry?
06:36 Why do Mutual Funds have a lower ownership in Indian companies (8%) compared to retail investors who own 9%?
20:21 What are the downsides of investing in Gold and Real Estate?
27:40 Are we just one crash away from everyone turning away from equity?
34:38 Given that we have a savings culture, will investing grow faster in the future?
40:42 Which type of investment is good for whom?
44:53 Mutual Fund Vs Direct Stock Investing: How are things different in India and the US?
01:02:46 The future of the Asset Management industry in India.

Ever wondered about the whole money thing – how it's made, where it comes from? Well, in this podcast episode, we're breaking it all down, and without using any jargons.

We also promise that this podcast will not remind you about an economics class. Because, it's not a lecture on economic theories. Nope. It's more like your friend explaining things in a way that just clicks. You'll walk away with a bunch of useful insights to help understand the concept of money a little better.

Make sense of those tricky concepts you read about in newspapers or on business channels. You know, the stuff that usually leaves you feeling a bit puzzled.

Write to us at podcast@capitalmind.in if you have feedback or ideas. We read and reply to all emails.

References

If you are even a little active on social media, especially Twitter, you would have witnessed the exponential increase in tweets related to options trading. Today, we are are going to talk about that - Indian's going gaga over options trading.

Deepak & Shray, take a detailed look at this fascinating phenomenon and tell you all that you need to know - except telling you about an options strategy that always makes money no matter where the market goes.

In this episode, we delve into the history of options, the factors driving their growth, and the potential risks and rewards.

From the earlier days of Badla to the scaling of options trading post-2006, we witness a significant shift in the landscape. What was once a predominantly institutional activity has evolved into a market dominated by retail and proprietary investors.

Several factors contribute to the surge in options trading, including simplified Securities Transaction Tax (STT) structures, technological advancements, flat-rate brokerages, and increased retail participation. The introduction of weekly options has especially transformed the game, turning it into a more accessible yet speculative arena.

But, all this is not without risks of ruin. Deepak raises valid concerns about the potential downsides of increased options trading. He shares real stories and lessons, through real-life examples, about the impact of options trading on individuals.

We realise that this is the time when the fine line between responsible investing and excessive risk-taking becomes apparent, emphasising the need for education and awareness.

While options trading has its drawbacks, Deepak acknowledges its positive aspects, such as providing liquidity and offering potential returns for those well-versed in risk management. He emphasises the importance of using options wisely and understanding the odds.

_________________

Timestamps

00:00 Introduction and Disclaimer

01:26 History and growth of Options trading in India

07:55 What has contributed to this massive growth in Options trading?

27:17 Is there a problem with increasing Options volume? Will the government come in and do what it did to all those gaming firms?

35:16 How do people lose money in options?

48:33 Isn’t SEBI systematically reducing leverage?

50:30 How to not get suckered while trading Options in India?

1:02:11 What are the good uses of Options?

1:14:15 Where do you think Options trading will go from here?

Welcome back to the Capitalmind Podcast – a place where we dissect the nuances of finance and investing, in a world that never stops changing. Your hosts, Deepak & Shray, are here to de-clutter yet another topic in their lucid and candid style.

In today's episode, we're zooming in on Portfolio Management Services (PMSes), a vehicle for your long-term wealth management. Here's a glimpse of what's on our financial canvas today:

1. PMS Demystified: We're going to peel back the layers on Portfolio Management Services – both the legalese and the real-world implications – to answer the quintessential question: "Does it make sense for you to invest?"
2. The Art of Timing: We'll delve into the art and science of choosing the right time horizon for your investments and why it's the secret sauce behind successful wealth building.
3. The 50 Lakh Question: At point of your investment journey should you consider investing in a PMS?
4. What's the PMS magic?: What can it do that traditional investment avenues can't? Specifically, does it offer any edge against Mutual Funds? (Spoiler alert: It does)
5. The Ideal PMS Investor: We'll introduce you to different archetypes of investors who stand to gain the most from embracing PMS offerings from our experience of managing 1200+ crores.

Time Stamps:

00:00 Introduction and Disclaimer

01:30 What is a Portfolio Management Service and what’s it good for or what’s the point?

05:05 Who should invest in a PMS? And what should be the tenure of your investment?

08:53 Where to invest for short term needs?

13:27 The issues with investing in a mutual fund.

27:53 What does a PMS offer? What are the benefits of a PMS?

36:23 Once you cross a 50 Lakh mark, should you move from MFs to PMS?

42:36 What can a PMS do differently?

46:51 What about the returns of PMS and is it worth it vs Nifty?

52:15 Who shouldn’t invest in a PMS?

58:27 Who should invest in a PMS?

If what you hear today intrigues you, head over to Capitalmind Wealth to explore how our PMS services might align seamlessly with your financial aspirations. Our fee structure, ranging from 0.25% to 1%, keeps it straightforward, with no hidden performance fees.

Schedule a call

Alternatively, shoot us an email at connect@capitalmindwealth.com, and we'll be more than happy to provide you with additional insights about our PMS offerings.

You've tuned in to another episode of The Capitalmind Podcast, where we tackle a question that's been on your mind: "There's a lumpsum in hand, what's your next move?"

In a world where SIPs are all the rage, we're steering the ship towards understanding how to strategically deploy a substantial lumpsum amount.

Deepak & Shray walk you through these aspects of managing, deploying and even spending that lumpsum gain. They discuss:

• Deciphering tax implications: The financial realm is fraught with complexities, especially when it comes to taxes. We delve into the intricacies, figuring out how you can harness the power of tax efficiency to maximise returns.
• Debt management strategies: From housing loans to high-interest obligations, every debt carries a unique weight. We share insights that empower you to navigate this terrain with finesse and help you to make informed choices
• Securing education and retirement: As the custodian of your financial future, you'll need strategies to earmark funds for your children's education and seamlessly transition into a well-funded retirement. Planning is key, and Deepak has you covered.
• The art of consumption and experience: Beyond investments, the episode delves into the delicate balance between material consumption and meaningful experiences. The discussion prompts you to curate a life that blends financial prudence with personal fulfilment.

Lastly, for those who've experienced an ESOP exit or find themselves grappling with a lump sum, our website capitalmindwealth.com offers tailored services designed to cater to portfolios exceeding 50 lakhs. For feedback and podcast ideas, write to us at podcast@capitalmind.in.

References

00:00 Introduction

01:30 ESOPs taxation and Whats the right way to allocate large lumpsum amount?

18:43 Which option is more preferable: Paying off housing loans sooner or investing in the market.

29:50 How to plan for your kids education?

34:57 Whats the simple rule of thumb for retirement planning?

40:21 If you have a large sum to invest should invest it via SIP or Lumpsum?

49:45 Don't fall for the products that assures you low risk and high returns.

59:36 Say no to angel investing

01:04:04 Consumption - all the things you wanted to do, make that list and do these

01:12:24 Types of windfalls: End year bonus  vs exit from some ESOPs or synthetic ESOPs

01:20:43 Charity and Philanthropy

Liked the episode? Just tweet to us at @capitalmind_in and let us know. That's all we need to keep going!

Our latest podcast episode is here, and it's all about exploring the different ways investors make money in the market.

From thrilling arbitrage strategies to the art of short-term trading, we'll cover it all in a language that even your neighbour's fish could understand (well, almost!).

But that's not all—our experts will take you on a journey through long-term fundamental investing and quantitative approaches too.

Expect some fascinating stories, like the infamous LTCM blow-up, and how best investors (& trades) made their fortunes. We'll also unravel the logic behind the elusive VC's hunt for 50x returns and how even "value stocks" need a dash of momentum.

So, whether you're an investing enthusiast or just curious about the market's mysterious ways, you won't want to miss this one.

References

00:38 What do you think about the new all-time high? How do you view different types of investing strategies in the market and how to make money from these strategies?

24:27 The problem with peoples expectations: When I say stock markets do 12%, people expect this to be linear.

27:00 Concept of Expectancy

33:29 Problem in arbitrage is competition, so you need to lever yourself up

38:21 Option volatility trading - sell options expiring in 2 days and make the decay

46:32 When VC wins they need to win huge

49:50 Nifty monthly returns - how do quant strategies do?

56:52 We have just hit all time high. Based on the past data, how long can this good time potentially last? Which one is your favourite investing strategy?

Liked the episode?

Just tweet to us at @capitalmind_in and let us know. That's all we need to keep going!

Welcome back to another episode of our podcast, where we dive deep into the world of finance and investment. In today's episode, we will be exploring the fascinating realm of mutual fund costs and SEBI's recent proposals to bring them down.

As the saying goes, "The devil is in the details," and when it comes to investing, understanding the various expenses involved is crucial for making informed decisions.

In this captivating episode, we will dissect SEBI's latest discussion paper on Mutual Fund TER (Total Expense Ratio), which shed light on the inner workings of mutual fund costs and the need for change. We'll embark on a journey led by our expert hosts, Deepak & Shray, who will unravel the complexities of the system and explore the potential implications of SEBI's proposals.

Get ready to gain valuable insights and answers to burning questions.

1. What is the Total Expense Ratio (TER) of a mutual fund, and what does it include and exclude?
2. Why does SEBI propose changes in TER, and how will it affect mutual fund investors?
3. How do large distributors exploit the system, and what measures can be taken to address this issue?
4. Can tweaking TERs alone make the mutual fund industry 10x bigger, or are there other critical factors to consider?
5. What innovative avenues could mutual funds explore to earn higher TER while providing value to investors?

Tell us on twitter @capitalmind_in on how did you like this episode. Your feedback means the world to us!

Show Notes & References

02:00 Thoughts on the recent discussion paper by SEBI on Mutual Fund TERs

10:30 SEBI is saying "You are making too much money", reduce fees

19:25 Largest India equity scheme is charging the maximum fees possible

31:30 Limited Purpose Trading membership for AMCs to trade directly on the exchange

43:00 Why should a big fund house have the ability to charge more on a new scheme?

48:00 Performance based AUM through sandbox

53:00 How do you make the mutual fund industry 10X bigger?

"If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck", goes the saying. Arbitrage mutual funds are actually taxed as equity funds but they actually behave as debt funds.

And this tax arbitrage of arbitrage funds is what the regulators may be looking to fix.

In light of this, we have our latest episode of the Capitalmind Podcast, where we dive into the intriguing world of arbitrage mutual funds, also known as arb funds.

In this shorter episode, our hosts, Deepak and Shray, explores the role these funds play in your investment portfolio and delves into the impact of recent changes in debt mutual fund taxation on arbitrage funds.

Here's a sneak peek of what you can expect from this episode

• The Role of Arbitrage Funds: Discover the peculiar position these funds hold, being described as equity funds but offering debt-like returns. 
• Taxation Changes and Their Effects: Explore how the recent changes in the income tax code could potentially affect arbitrage funds.
• Deepak shares his insights on the first and second-order effects of these tax changes and highlights the potential short-term buying opportunities that may arise.
• Risk-Free and Low-Risk Investment Options: Understand the investment landscape going forward in the likely new tax environment. Discover what alternative options exist for risk-free or low-risk investments in light of these changes.

Here are five key questions that will be answered in this episode

• What role do arbitrage funds play in your investment portfolio?
• How will recent changes in debt mutual fund taxation impact arbitrage funds?
• What are the first and second-order effects of tax changes on arb funds?
• What risk-free or low-risk investment options are available in the likely new tax environment?
• How significant is the presence of arbitrage funds in the stock market, and what does it mean for overall market volumes?

Join us as we unravel the complexities of arbitrage mutual funds and gain a deeper understanding of their implications for your investment strategy.

Show Notes & References

01:00 What do arbitrage funds (arb funds) do and where they fit in your investment portfolio?

08:30 Why didn’t arb funds become the FD replacement?

12:30 How big are arbitrage funds and what does that mean as a percentage of total volumes/positions on the stock market?

18:45 Arbitrage Funds are a huge part of our market and it's a problem. Why?

21:30 First and Second order effects of taxing arb funds like debt

34:00 What are the advice or takeaways?

If you have any feedback, ideas for future topics, or questions, we'd love to hear from you. Send us an email at podcast[at]capitalmind[dot]in.

For those seeking professional wealth management services for portfolios exceeding 50 lakh, visit Capitalmind Wealth.