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Sahil Kapoor

@SahilKapoor

Apr 5

Over the past few editions #DSPNetra has highlighted a number of indicators which depict an 'unsettling calm' in stock markets.

Here is a thread 🧵putting all the indicators together.
Read on:

1. Eight Years of Calm Rivals 1980s Low Volatility Era

BSE Sensex Index has now gone for almost 8 years without a bear market.

Defining a bear market:
One of the ways to define a bear markets is a decline of more than 20% and a time period of more than one year to regain previous highs. COVID decline was much deeper but the markets recovered in about 9 months to reclaim all time highs. This made sure that participants avoided the long-drawn periods of pain when stocks don’t deliver returns.

The previous period of such a stable and smooth market was way back in 1980s. Volatility moves in clusters and current cluster of low volatility would likely give way to higher volatility. We don’t know when or why, though. But history tends to rhyme more often.

2. Recent Readings In SMID Indicate Unsettling Calm
The number of days the Small & Midcap indices have risen by 1% or more neared previous best years in 2023. Such broad, ‘all boats sailing’ uptrend years are rare. In the past, such years have been followed by more than average drawdowns in the following year.

On average, calendar year drawdowns for largecap, midcap and smallcap are 19%, 23% & 26%, respectively. But the year following a bullish ‘unsettling calm’ year, the average drawdowns for top 5 of such years are 27%, 32% & 37% for largecap, midcap and smallcap indices respectively. This indicates that these calm years are followed by heightened volatility and drawdowns. Means, expect markets to become volatile in 2024.

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Sahil Kapoor

@SahilKapoor

Dec 27, 2023

I read a bunch of books in 2023.
Here is a thread 🧵 on 'Book Bundles.

Book Bundles?
These collections, if read together, can help build a broader view on the topic.

This is my current understanding and there is a vast ocean that I would have definitely missed.

Take a read

The workings of the brain

A few key lessons:
1. Your brain does not react—it predicts. Contrary to how we think about the brain as a reactive machine, it is actually a prediction machine. Our world view is because we make our own reality, literally, in our own brain.

2. It takes more than one human brain to create a human mind. Our brains are incomplete for a reason. Infants come with an incomplete brain and complete it by learning from the society. The age bracket of 5 to 8 years is the best time for brain plasticity ( debatable, but broaderly accepted).

3. Words can have a powerful effect on your body. Many species, including humans, regulate one other’s nervous systems. Ants, bees, and other insects do this using chemicals such as pheromones. Humans are unique in the animal kingdom, however, because we also regulate each other with words. A kind word may calm you, as when a friend gives you a compliment at the end of a hard day.

These books can help you learn a great deal about the 3 pound magic called the 'Brain'.

Book list

1. "Seven and a Half Lessons About the Brain" by Lisa Feldman Barrett.

2. SELF COMES TO MIND: Constructing the conscious Brain by Antonio Damasio

3. "Livewired: The Inside Story of the Ever-Changing Brain" by David Eagleman

4. "How Emotions Are Made: The Secret Life of the Brain" by Lisa Feldman Barrett.

Understanding Our Mind by Thich Nhat Hahn is another great read which I read years ago and presents a different angle.

Evolution: How did humans and other species evolve.

It was a mistake not reading Charles Darwin and other authors on evolution early in my life. It is absolutely important to learn evolution. It opens ones mind to the biological equivalent of compouding.

One lesson that most peoeple (including me) has it wrong is the true meaning of 'the survival of the fittest'.

Most of us interpret it as the strongest or the fittest surviving versus those who aren’t. It’s not.

Darwin was saying something very different. He said those who adapt, survive. They may not be the fittest at the time, in the sense of agility, size, or reproductivity. They may also not be the strongest in terms of strength, both physical and mental. So, what does adaptability mean?

Charles Darwin showed that each organism and species undergo random, natural variations. These variations may or may not be influenced by factors such as climate, human interference in selection, or availability of food, among others. But the biggest overriding factor for adaptability is randomness.

Randomly occuring kinks, which seem meaningless at the time, may hold key to survival. Some of them can be generated (artificial selection). Some of these variations allow you to thrive when unfavourable conditions emerge. Those who get/evolve these kinks survive. This lesson is an absolute crunch for me.

My takeaway: How do you ensure your own survivial (financial, professional, in relationships ...)? These books may hold some important insights that you may like.

1. "The Origin of Species" by Charles Darwin

2.. "The Greatest Show on Earth: The Evidence for Evolution" by Richard Dawkins.

3&4. Sapiens: A Brief History of Humankind; Homo Deus: A Brief History of Tomorrow
by Yuval Noah Harari

To link these lessons to investing, Pulak Prasad's book is a good start.
5. "What I Learned About Investing from Darwin" by Pulak Prasad.

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Sahil Kapoor

@SahilKapoor

Apr 26, 2023

I have used the ICE BofAML Move Index across various publications. It has been one of the most important indicators, especailly in 2023.

Here is short thread 🧵on what it is:

MOVE is widely used as a benchmark for measuring the level of risk in the US Treasury market. Higher MOVE readings generally indicate higher levels of market uncertainty or volatility, while lower readings indicate lower levels of market volatility.

How is it calculated? Read on

MOVE (Merrill Lynch Option Volatility Estimate) is a measure of the implied volatility of US Treasuries. It is calculated using the prices of OTC options on US Treasuries.

It is expressed in basis points (bps), which represent hundredths of a percentage point.

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Sahil Kapoor

@SahilKapoor

Mar 30, 2023

"I believe that learning how to think about how to eat, learning to understand what makes us fat and diabetic, means implicitly learning what to cook, how to order in a restaurant, and how to shop at the supermarket."

"The Case for Keto" by Gary Taubes

Protein consumption stimulates secretion of two other hormones, glucagon and growth hormone, the former of which will work to limit fat storage, while the latter will help promote growth and repair.

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Sahil Kapoor

@SahilKapoor

Jan 20, 2023

US Crude Oil inventory rebuild has begun. Stocks now well within the historical range.

US Oil production also now at post COVID peak of 12.2mbpd. Sitll 900,00 bpd below the peak achieved in March 2020.

Distillate stocks continue to remain the key source of stress and of high GRMs. This is likely to normalize in the next few months.

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Sahil Kapoor

@SahilKapoor

Nov 21, 2022

5 'Health Hacks' I use

Lift weights for keeping your body fit and to age slower; eat high protein, high fat diet or the one that suits your lifestyle; run/cardio for endurance and longetivity

1/5

Try to sleep and wake up at the same time everyday. Identify your circadian rhythm and synch with it. Don't allow yourself a casual miss and extra '10 mins' of sleep. Find a day everyweek to sleep 10 hours at a stretch.

2/5

Try to time your meals at the same time. Have atleast one meal alone, quietly. What you eat is more important than when you eat.

3/5

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