When US / China's GDP increased from $2.5 to $5 trillion, their stock market growth rates were between 17% - 28% annually during this journey (from @MotilalOswalAMC).
For India, it could be a similar story. Our Compounding story is about to be on hyperdrive. Sounds fundamental.
The scale of corrections in MidCap & Small Caps is hugeeee. Midcaps still 30% lower compared to 2018 start and Small caps, still 50% lower.
When they bounce back, its to ones guess how much they will catchup to.
Magic of Compounding and right asset class. The longer you are invested in an investment, the more you get. E.g. even at 10% growth, in 5 yrs, your money becomes 1.6 times, but in 20 years, it becomes 6.7 Times and in 30 yrs, it becomes 17 times. @MotilalOswalAMC
Timing the market is difficult. If you stay invested for long, you won't have to find those best 10-30 best days when most of the returns would ahve been made in last 30 yrs. If you stayed invested, the % would have been 31x. But missing out 10 best days, it would drop to 11x
Investor returns were lesser than the underlying assets in the past by trying to time the market. E.g. In last 5 yrs, investors earned 10.93% vs S&P at 15.79%. All periods of time prove the same point. By moving in & out of the markets, investors loose best days of great returns
Too much of comparision of Equities vs other assets. Long term returns out of Equities vs Gold & FDs is clear in the chart below.
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If you are a NRI who hasnt filed returns in India for years & who hasn't linked PAN with Adhaar, then please by 31 March 2022 do atleast one of the two tasks :
Please RT for further share this thread
1. If you have an Adhaar, you must link it to your PAN. You can check the PAN Adhaar link status via the easy link below. It works via a desktop pan.utiitsl.com/panaadhaarlink…
2. You may have an inhibition on not linking your PAN with Adhaar. There isnt much happening via the linking. All of your key info is already with the Govt. Your biometrics are with them already via Adhaar. What else could you hide. Hence I recommend strongly to link
Having data scientist is a common thing for all data centric businesses. You will be killed if you dont have it. I won't just run behind HDFC Life because for this fact. On the contrary, their tech sucks ! Ask their sales teams. They don't even hv a decent proposal capture app.
To know about tech, learn from any of the ICICI group companies. Miles ahead. Compared to ICICI Pru, HDFC Life is in stone age. Marcellus may say channel checks, but I am a part of the channel and their customer too. If Tech is the reason, then they got it wrong.
When it comes to investing in Life insurance companies, I don't always see the point. Their major part of the product is sulking investment portfolios of traditional and ULIPs. No sane investor would invest in them. Their agents won't love to sell Term Covers, which is the core
Big spread between India vs US 10 year rate curve. US is
0.25% vs India at 6.117%
Longer term rates have yet to come down meaningfully. Shorter duration rates have come down materially. Orange line is for Aug 2020 vs the blue line of Jan 2020.
A dividend policy of a Company is a vital piece of info which should be considered for an investment decision. Generally a Co in high growth path would like to retain max earnings into the business to fund it's expansion plans. This sounds reasonable provided growth can be seen
If a Co doesn't have much of an expansion requirement or churns free cashflow in excess of its expansion, it should distribute the surplus to the shareholders. This is again okay, provided, one is not investing in a Co which has sub par growth and no future capex
A Co may retain its earning to bail it out of debts or excessive working capital needs. A not so happy situation to be in. This could at times be confused with high growth requirements & needs to be studied by lifting the lid of the can. Nothing much can be done here and
Tale of two PMS managers. First is one of the largest in India and avoids punter giri. Good stocks and strong track records. It didn't buy Reliance earlier citing Aggressive Accounting. Bought it in May post International stake sales. Perhaps, will help to align to benchmarks.
Another one is a recent entrant and its founder enjoys immense respect. Sticks to quality. By its Investment process, I believe that it won't buy Reliance till the business is a compounder and it gets free cashflow. Cites it's recent underperformance to not holding Reliance.
Hard to say if the recent entrant will succumb to the pressure of buying Reliance (like the first PMS). Fund manager job is hard. If they stick to their process, the investors would strangle them for recent underperformance. If they go to beat the benchmark, inv will challenge..