Gold has rallied 50% in the last year and at a CAGR of 29% in the last 3 years.Many clients asked if it is still a good time to buy Gold. And my answer is a strong Yes.In my opinion, Gold is a mega investment theme for the next decade.Before I share my reasons for the same, I’d like to tell a little backstory.We started allocating to Gold funds in all our clients’ portfolios from…
One of my friends recently invested 100% in equity, targeting annualized returns of 18-20% over 10 years. Is it possible?I told him straightaway that the possibility of achieving these returns is extremely low when you are investing in an expensive market. Past data indicate that any investment made in expensive markets (PE > 22x) has generated low single-digit returns at best over the next 10 years. Even if you invest in small/mid-caps, the probability falls further…
I met a promoter of an established large wealth management company recently and asked him about his thoughts on the fee-based advisory model. He was frank enough to tell me that he sees a sharp dip in his company’s revenue if they move to an advisory model. For managing a single portfolio size of INR 100 Cr, he gets commission in the range of INR 1-1.5 Cr per annum without the client exactly knowing about it. Whereas,…
Gordon Gekko popularised the phrase Greed is Good when he said, “greed, for lack of a better word, is good” in the 1987 film Wall Street.Many people have lapped on this phrase, and a few justify their greed for money by giving this example. Human beings naturally get affected by greed and fear. Depending on person to person, the degree matters. Some people are extremely blatantly greedy on one extreme, and a minuscule number don’t get influenced by greed for…
The world order started changing in 2008 when significant quantitative easing (QE) – money printing and near-zero interest rates, was announced by major central banks led by the US Fed during the subprime crisis.Although, that provided stability to the financial markets and the economy, the US economy never recovered from the debt trap. Any attempts to reduce quantitative easing lead to stock market tantrums and economic slowdown.Actions taken during Covid accelerated the debt burden. 20%…
Recently, I engaged with an AI team of experts to help them build AI-enabled software products for wealth management firms.When I was approached for suggestions, I was intrigued by what AI could do to wealth management. It helped me learn about the possibilities of AI use in wealth management.Many wealth management outfits in the US have started using AI in their operations and basic level of advice.Even in India, many firms use algorithms to suggest investment options and…
Equity markets are giving mixed signals. Many people are wondering whether the markets will go up or down from here.Here is my take.Below are the factors which could lead to further market decline:1. Tariff wars leading to retaliatory actions from different countries. In such wars, everyone suffers. It leads to inefficiency, unpredictability, and distrust in the system, leading to higher inflation and a slowdown.2. Disappointing corporate profitability: Uncertainty results in delayed decisions and outcomes. A correction in…
We live in an uncertain world that is rapidly changing. The winners of yesterday will not be winners of tomorrow.Mega themes like de-dollarization, deglobalization, climate change, and reshoring/friendshoring are shaping the world differently from what we have seen over the last few decades.Excessive money supply with falling interest rates reaching zero in 2020 boosted asset prices worldwide, leading to a widening gap between haves and have-nots. This dissonance has been one of the catalysts driving major fundamental…