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%…
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…
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…
I met a client whose father passed away recently. He had no idea of where the investments were made by his father.After a lot of trouble, he could access a few details from his father’s email inbox and WhatsApp messages. The investments were all over the place and he was not even sure if all the assets were accounted for.Check out these mind-boggling numbers from India:- Despite tech initiatives and public awareness campaigns, the unclaimed monies held by…
India’s 1-year G-Sec is trading at 6.75% and 10-year G-sec yields 6.85%. The difference is only 0.10%.5-year G-sec is trading at 6.76%—almost at the same level as 1-year G-sec. This indicates that the yield curve is flat.There is a peculiar situation here. Usually, as the duration of any debt security increases (from the same issuer, in this case, it is GOI), the yield also goes up. Because an investor would want a premium for an investment that…
Real Estate investment never leads to losses. I have heard this from many investors. Is it true?Generally, people look at losses with reference to their initial purchase price. If the investment is sold below the purchase price, it is a loss. If the investment is sold above the purchase price, it is a gain.So, when real estate prices go down, people tend to hold on to their investments and don’t sell them. This gives them…
Here is what we are doing to efficiently manage investments after accounting for the budget changes.The Positive impacts: – Investments in Gold funds qualify for LTCG (Long Term Capital Gain) at 12.5% after 2 years of holding. Gold is an important asset class in a globally uncertain environment and should have a 10-15% portfolio allocation.- International investments through mutual funds also qualify for LTCG at 12.5% after 2 years of holding. This is a big relief for…