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…
There has been a raging debate about active versus passive funds for many years.John Bogle, the father of index investing, has popularized the concept of passive funds. His idea was simple – most active funds underperform the index in the USA after costs (including taxes) and therefore one should invest in low-cost funds that mimic holdings of an index.These passive funds are also traded on stock exchanges and are known as exchange-traded funds (ETFs).The concept has…
To create wealth from investments, you need to let your investments compound.To let compounding work and create exponential gains, you must stay in the game for a long period of time.To stay in the game for long, you must not panic and withdraw during market downturns.To ensure you do not panic during market crashes, you need to set the right expectations for your investments.To set the right expectations, you must determine your risk appetite first.To determine your…
How to differentiate if you are getting genuine investment advice or being sold products that benefit the advisor more than you?Many of our clients come to us after dealing with traditional wealth management setups. At the time of taking over their portfolios under our advisory, we do a portfolio audit to understand their current portfolio structure and what changes need to be done to align the investments with their risk profile and market conditions. What we…
In the recent market correction, I observed many finfluencers and mutual fund distributors cajoling their over-concerned audience & customers by giving them reasons regarding why the markets will bounce back soon and why they should think of the long term and not worry too much.And this is when the markets didn’t even correct much – just around 10%. In the past, markets have corrected by more than 50%, a usual occurrence every decade. I am…