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There is a lot to unpack about this new digital currency RBI is talking about. Deepak and Shray built up the discussion by pondering over successive questions. Deepak takes us through how cryptocurrencies currently work. This sets up the context to the current ways of handling digital currencies and we move on to discuss the RBI-backed digital currency - Central Bank Digital Currency (CBDC).

Key Points 

• How CBDCs are not cryptocurrencies? And how are they different?
• Is CBDCs actually required or is it a response to the popularity of cryptocurrency? So basically, why now?
• Is the CBDC likely to be anonymous like cryptocurrencies?
• Can CBDCs be an alternative to the SWIFT system given how Russia has been isolated by the world right now?
• Impact of CBDC on Monetary and Fiscal policies?

As Indians, we discuss Inflation only during elections which makes it less of transient and more of seasonal!

But, as investors, we discuss inflation a little more. The latest reason for it is the hammering of growth stocks across markets which is blamed squarely on inflation.

In this podcast, we understand the practical concept of Inflation with examples, its impact on your investments, its impact on our daily lives, and how it impacts different people differently.

We promise, thinking of inflation in this podcast will be much more interesting than what you experienced in your economics class.

On today's show, Shray asks Deepak about how to make sense of the past two years in the markets, macroeconomics, and the seeming irrationality of it all. They also talk about how to look at the year ahead. 

Highlights

• 2021 bad year with all the lives lost, but it happened to be good for markets with the number of IPOs at an all-time high
• NIFTY returned approximately 23% and has been positive for the 6th consecutive year
• India being top-heavy, from the income distribution standpoint caused the kid of market outcomes we saw
• Small firms got hit the most, and that may not be sustainable in the long run
• Markets don't care about death and destruction for sure. But what moves the market?
• We've normalized, letting go of our freedoms, and irrationality could be the new normal.
• Inflation could actually be a function of supply than demand
• If the market didn't go down in these pandemic years. How can we make any event-based predictions?
• The boom in startup funding. Has equity become cheaper than debt?

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How does P2P lending work in India? How safe is P2P lending? Deepak and Shray explore how the industry works, the risks involved and whether the returns are enough to justify the risks.

Summary

• Banks keep a considerable spread between the interest they offer on a deposit and the interest they charge a borrower. So, some people think, why is the spread so big? Why can't I deal with the borrower directly and receive more interest on my money?
• The problem is you don't know the person you are going to be lending money to. In comes the P2P lending company, which acts as a sort of intermediary between the lender and borrower.
• When you give your money to a bank (as a deposit), the bank will guarantee that you will get your money back. But in the case of P2P lending, there is no such guarantee that you will get your money back.
• Another problem with P2P lending is, no one outside knows the actual default rates, and they are often much higher than what these companies report, even though the whole operation is legal.
• In P2P lending, you don’t see one of the three Cs of lending – you don't have collateral; you have capacity and creditworthiness.
• One of the reasons why P2P companies have flourished is that banks, which should ideally lend money to people whose credit might be questionable, don't lend to them. But the answer is not to 'lend' them money. You can consider it as a form of charity, in which case, even if you don't get the money back, you don't mind losing it. And there are companies that work on this model.
• An alternative could be microfinance. But there are problems there too. Often, multiple microfinance companies want to lend to the same borrower, who uses the money for purposes other than what they were intended for, with the result that they are not able to repay.
• But microfinance companies can take this pressure because they are a company. A P2P lending firm is just an intermediary. They have no way to recover the money if a borrower refuses to pay, except send legal notices (because there is no collateral), which may not work.
• So, the gist is, if you want to give loans through a P2P lending firm, only lend so much that you won't mind even if you lose the money. Give it for charitable purposes. Give it to people who are in such bad shape, they can't afford anything else.

Read the full transcript.

Episode 41 - Deepak sits down with returning guest Ruchir Kanakia, the founder of the insurance distribution company OneAssure to discuss our favorite insurance product - term insurance.

Summary:

• How term insurance works for you and the company that sells it to you
• Debt or Dependents – the two reasons to buy term insurance
• How Covid and the fact that a handful of reinsurers control everything has made your office insurance a bit less reliable – consider buying a personal one too
• How much coverage is enough and how much the insurance company will give you
• Why you should opt for the in person medical test
• You’re tech or finance savvy but consider getting an agent or distributor if your dependents might not be
• Common riders and why you should ignore them
• How the claims process works and benefits of selecting a monthly or yearly premium payment

Click here for the full transcript.

What is a Portfolio Management Service? How does it really work? Do they actually benefit their clients? In this episode, Vashistha and Deepak explore PMS' through their experience of running one at Capitalmind. They explain how the operations work, the pros and cons of different fee structures, quantitative strategies and how PMS' are different from AIFs, Mutual Funds and Smallcases.

In this episode, Shray and Anoop discuss momentum investing and how we implement it as portfolios at Capitalmind.

In this episode, Deepak and Shray invite Ruchir, co-founder of OneAssure, to walk us through how to get started with health insurance. 

In this episode, Shray and Sandeep discuss how adding a trend following layer to a long-only portfolio can help enhance returns and lower drawdowns, in the context of Capitalmind Chase - our own such strategy.

In this episode Deepak takes on the Reliance Jio story. Is the stock in a bubble, is there any danger of it becoming a monopoly and why is there only one Reliance in India.

Preview

"Dhirubhai Ambani himself is responsible for a lot of the shareholder culture in India. Till the early 80s minority Shareholders were considered like second class citizens - there were institutions and promoters - that was all that people cared about. In Dalal street, the “Operators” would consider retail shareholders the pits, they would con people all the time. People would lose money, no one would care. Reliance was one of the few companies that would care about the shareholders. People from his village, from Gujarat would come in and buy shares of Reliance - those people are now probably multi multi millionaires. He built that culture."

Deepak Shenoy of Capitalmind hosts Kunal Shah of CRED as they analyze the affluent - their spending patterns, usage of credit and habits that help them succeed. They talk about high trust groups, creating wealth and incentivizing good behavior.

Preview

Less than 1% will know what their income per hour is. Therefore, if you find somebody who is making Rs 5,000 per hour (and there are many ways to calculate this). But let’s say you spend 30 mins to get a Rs 1,000 discount on your flight ticket - was it worth your time?

On today’s show, Shray asks Deepak about the recent downgrade of India by Moody’s. Should we care? Are rating agencies more or less relevant after the 2008 debacle and what does the downgrade mean for India.

Preview

"There’s an internal class system they have developed. Whether it is between companies or across countries. The developed countries get a different framework to work with and what they call the non-developed is held to a different standard."

On today's show, Shray and Deepak discuss debt mutual funds. How do they really work? What do they invest in? And how do you evaluate these funds before investing in them?

Preview

"The whole money supply in India is about 150 lakh crores. Half of that is in Fixed Deposits with banks. Around 30-40 lakh crores is sitting with government bonds/funds issued by the government. The rest in retail deposits. Debt Mutual funds are nascent in comparison... we’ve calculated that you can pay 80% less tax if you hold a debt fund giving roughly the same interest as an FD if you hold it for 3+ years, even if you take out money from time to time. The tax advantage is huge for individuals who are in higher tax brackets."

On today's show, Shray and Deepak discuss FIIs (Foreign Institutional Investors). Who are they, how big are they, and what role do they play in our markets?

Read the transcript here.

On today’s show, we discuss the extreme volatility in financial markets and the Covid-19 pandemic affecting our daily lives. Is this a panic? How to we invest through this storm?

Read the transcript here.

On today’s show, Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) try to understand the ₹30 trillion behemoth, the Life Insurance Corporation of India (LIC).

Transcript: https://www.capitalmind.in/2020/02/podcast-how-big-is-lic-anyway/

On today's show, Deepak Shenoy (CEO) and Sahil Kini (Co-founder and CEO, Setu) talk about the problems ailing the Indian financial infrastructure and how APIs are shaping the way digital businesses are built.

Transcript: https://www.capitalmind.in/2020/02/indias-new-financial-infrastructure-will-enable-better-more-inclusive-bharat-ux/

On today's show, Deepak Shenoy (CEO) and Aditya Jaiswal discuss the impact of the union budget on our savings and investments- would you be better off moving on to the new tax regime? how does the budget impact your mutual funds (dividend options)? Are the Arb fund dividend reinvestment plans dead?

Transcripts: https://www.capitalmind.in/2020/02/podcast-22-how-budget-2020-impacts-the-way-you-save-and-invest/

Is passive investing making investors insensitive to price and valuations? Is this distorting the capital flows to the market? In U.S, the market share for passively managed funds has risen to about 51 percent, but what is the number for India? Where do we stand?

Transcripts: https://www.capitalmind.in/2020/01/the-amazing-rise-of-passive-and-what-you-need-to-do-about-it

Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) answer these and a lot more questions on today’s show.