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Devina Mehra

@devinamehra

Jul 15, 2023

Let me tell you a real life story, something that happened last week.

Settle down and read

There is this older promoter with a family office I met last week and he said, "Devinaji, 2-3 years ago when PMS fund managers used to meet me they used to tell me that the main
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benefit of investing in a PMS scheme came from a concentrated portfolio of 15-20 stocks.

Ab vahi log aakar mujhe kahte Hain ki 45-50 stock ka portfolio hona chahiye.

Aap bataiye: kya badal gaya in do saloon mein?"

And I told him, "Only one thing has changed...
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which is that we launched our PMS scheme little over 3 years ago and our consistent top notch performance has been noticed by our competitors who are now wanting to jump on to the 'diversification' bandwagon"

Am I surprised? No

The reason is simple:

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Read 9 tweets

Devina Mehra

@devinamehra

Apr 22, 2023

Everyone wants to emulate RJ...or at least his results😊

One line that stood out from the book
"Not every year I make money. I make money in spurts, like 1989-92, 2003-07, 2009-11

In 1994-99 I would'nt have made any trading income"
- Rakesh Jhunjhunwala

If you...
Thread 🧵
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...internalise one RJ superpower, this is it!

To understand & act on the fact that stock market returns are lumpy

If you remain disciplined through downturns, or frustrating sideways moves which can go on a long time when you're living through them, you'll be way way ahead

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Instead the way most investors behave is to get struck by FOMO & jump unto a theme just when it is peaking

Case in point: all the Nasdaq ETFs in 2021 that were heavily subscribed (although I kept warning against those 😊)

And then to panic sell on the other side...

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Read 11 tweets

Devina Mehra

@devinamehra

Apr 4, 2023

Finally finished 'Noise' by Daniel Kahneman's, Cass R. Sunstein and Olivier Sibony...Yoo Hoo

It goes right beside his earlier 'Thinking Fast and Slow' as being among the best books I have ever read.

Each chapter is almost as good as a normal non fiction book...

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...which is the reason it took time to finish.

One key takeaway:
A well designed algorithm/ rule-based system will almost always beat a so-called experienced expert in any area of human enterprise that requires judgement.

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The reason is simple - human beings are prone not just to biases, but also to noise.

Equally experienced experts in areas like judicial sentencing, insurance or investing, will differ dramatically in making a judgement on the same issue and with the same facts/ information

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Read 12 tweets

Devina Mehra

@devinamehra

Mar 14, 2023

The questions I get asked on SVB are:
What really happened?
How did US regulators react & why?
Does it have any implications for the Fed rate & markets?

I'll try to explain it in very simple language with no tables, graphs & as little jargon as possible.

Settle down to read
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The beginning of the end for SVB started with an old-fashioned bank run - something I learnt about literally at my mother's knee.

I remember my mother explaining a bank run to me when I was way down in school (For context, she's a postgraduate in Economics)

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That while a bank promises to give you the money you have deposited on demand, in actual fact no bank can pay back its depositors all at once.

Banking is a confidence game and even the most solid Bank in the world will collapse if most depositers ask for their money back.

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Read 22 tweets

Devina Mehra

@devinamehra

Feb 21, 2023

@firstglobalsec

Since we're in the Budget month, the research team @firstglobalsec looked at historical patterns in Indian govt finances

Why's it important?
Interest (& salaries) are the inflexible parts of expenditure

Only what's left can be used for social spending or capex

Let's dive in
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First the big picture on the government debt

As a percentage of GDP, govt debt which used to be in the low 40s in 1982/82 rose up to 64.5% in 1991(the economic crisis)
Slowly came down to ~57% in 99 when it started to rise again

Reached another peak of 67-68% in FY03 & FY04
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Then came the big decline:
Govt debt again began to go down as percentage of GDP: from 67-68% in FY04, it dropped to 59.8% in FY09

This was, of course, at a time when the world economy was booming

More remarkably, the debt burden kept reducing even as ...

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Read 10 tweets

Devina Mehra

@devinamehra

Feb 14, 2023

Seen investing principles that're supposed to make investing simple & profitable?

One of the favourites:"Buy monopoly businesses. Buy the largest company in the sector - the strongest brand. You can't go wrong."

But is it really the truth?

A thread to explain
Read carefully
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What does history show?

Remember Nokia, Kodak, BlackBerry (RIM) - dominant businesses where magazine covers used to be about whether anyone could ever catch up with them. Where are they now?

You may say that this is the nature of tech businesses. But it isn't that simple.

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In any case when Kodak was running its film based business, nobody thought this was a fast moving high tech area.

The issue is far more fundamental.

One, when a company is the dominant player, any new entrant in the business will end up taking share & sales away from it.
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Read 16 tweets

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