Capitalmind Podcast

In this episode of the Capitalmind podcast, Deepak and Shray dive into SEBI's recent report analyzing the profits and losses of F&O traders. The report reveals a staggering statistic, showing that over 90% of individual traders have lost money in F&O trading in the past few years. They explore the reasons behind these losses, the demographic impacts, and whether F&O trading is more akin to gambling than investment. They also discuss SEBI's new rules aimed at curbing losses and what these changes mean for both novice and seasoned traders. Tune in to understand the full implications of SEBI's analysis and what it means for the future of F&O trading in India.

00:00 Introduction  00:42 SEBI's Report on F&O Traders 01:41 Deep Dive into SEBI's Findings 02:32 Analyzing the Losses 06:00 Demographics of Losing Traders 07:57 Potential Misinterpretations of Data 18:06 The Appeal of F&O Trading 29:30 Speculation vs. Investment 30:39 The Role of Speculators in the Market 40:44 Comparing Trading to Performance Sports 43:11 The Discipline of Trading 43:42 Challenges of Undercapitalization 44:28 Intrinsic Value of Activities 45:10 Learning from Trading 49:08 Capital Requirements and Market Dynamics 52:18 Sophistication and Risk Management 57:20 Regulatory Impact and Market Participation 01:15:25 The Role of Speculation and Regulation 01:20:38 SEBI's New Rules and Their Impact 01:25:35 Conclusion and Final Thoughts

In this episode, recorded in early October 2024, we’re diving into a topic that’s on everyone’s mind: Is holding cash a smart move in these unpredictable markets?

We’re in what some are calling one of the most “unloved” bull markets—stocks keep rising, but investors (ourselves included) are uneasy, waiting for the other shoe to drop. To help us unpack whether cash can actually give your portfolio an edge during uncertain times, we brought in none other than Deepak Shenoy.

Together, we explore whether holding cash can protect you from potential downturns or even help you outperform the benchmarks. We also dig into the challenges fund managers face with cash calls, why getting back into the market can be harder than it seems, and how strategies like STPs (Systematic Transfer Plans) play out in real life.

Deepak shares some great insights, comparing today’s market to historical events like the 2020 Crash, Russia-Ukraine war, Brexit, and the 2008 financial crisis. Plus, we look at what Warren Buffett has done with cash during past downturns—and why even he hasn’t always gotten it right.

This episode is packed with practical takeaways including:

1) When holding cash makes sense—and when it doesn’t

2) Why fund managers sometimes get cash calls wrong

3) The emotional side of staying invested vs. going to cash

4) How IPOs and market liquidity can impact your cash strategy

If you’ve ever felt that itch to “do something” with your portfolio when markets are shaky, this conversation is for you. We break down the mental tug-of-war between holding cash and riding out the market, with Deepak sharing actionable advice that will help you stay prepared, no matter what happens next. 

In this episode, Deepak and Shray dive into the intricacies of mutual funds, Portfolio Management Services (PMS), and Alternative Investment Funds (AIF). We analyze the tax benefits of mutual funds, highlight the liquidity advantages, and compare them with PMS and AIF in terms of fees, transparency, and investment flexibility. We also discusses why different products cater to different investors based on their income levels, asset sizes, and risk appetites. The conversation covers the psychological and practical reasons investors might choose one investment vehicle over another, the role of fund managers, and the impact of regulations on investment returns.   00:00 Introduction and Overview 00:13 Comparing Mutual Funds, PMS, and AIFs 00:55 Tax Efficiency of Mutual Funds 01:28 Challenges with Mutual Funds 01:41 The All Weather Equity Portfolio 02:23 Why Mutual Funds Aren't the Default Choice 02:46 Understanding Different Investment Products 04:13 Tax Implications for Different Investors 18:33 The Complexity of Mutual Fund Selection 24:06 Liquidity and Size Issues in Mutual Funds 27:18 PMS vs Mutual Funds: Key Differences 27:29 Large Investors' Preferences 28:46 Challenges for US Investors 31:09 Systematic Transfer Plans in PMS 33:22 The Importance of Fund Managers 35:31 Process vs Personality in Investing 46:42 Choosing Between PMS and AIF 52:21 Conclusion: Tailoring Investments to Individual Needs

In this episode of the Capitalmind Podcast, we take a deep dive into the world of unlisted and private securities. We’ll cover key topics such as:

• What exactly are unlisted and private securities?
• How do you value them, and what complexities should you watch for, like liquidation preferences and ratchets?
• Who can you sell these securities to, and what about corporate governance risks? Are these investments or just consumption in disguise?
• We also explore opportunities in the SME segment and how much of your net worth you should allocate to private investments.
• Whether you're considering investing in a friend's business or a pre-IPO startup like Swiggy, this episode will help you navigate the complex world of private markets.

Don’t miss out! Send your ideas for future episodes to [email protected], and if you're ready to invest with us, visit capitalmind.in to learn more about our PMS service.

  00:00 Welcome to the Capital Mind Podcast   00:37 Introduction to Unlisted and Private Securities   04:27 Private vs Public Limited Companies   07:32 Valuing Unlisted Companies   09:26 Complexities of Cap Tables   21:31 Exit Strategies for Unlisted Securities   41:19 The Impact of Swiggy and Zomato on Restaurants   42:57 Investment Opportunities in Unlisted Companies   44:01 Shenanigans in Private and Public Markets   44:49 Case Studies: Byju's and FarmEasy   49:22 The Role of Venture Capitalists   01:05:00 Strategic Investments and Their Impact   01:07:30 Challenges of Investing in Unlisted Companies   01:24:03 The Future of Private Investments   01:24:49 Conclusion and Final Thoughts

In this episode of the Capitalmind Podcast, Deepak and Shray dissect the surge in New Fund Offerings (NFOs) by mutual funds, dissecting why fund houses are launching new schemes and who truly benefits from them—whether it’s the AMC, the customer, or intermediaries like distributors. We also discuss the economics of fund distribution, the role of intermediaries, and how to identify the best options for your investments. 

The episode also ventures into the often not talked about side of financial advisory, the unrealistic expectations of managing wealth independently, and the vital role of professional advisors. Additionally, they explore the cyclic nature of NFOs, investor hype in bull markets, and the risks of market oversaturation, concluding with advice on navigating financial products during booming market conditions.

Whether you’re a seasoned investor or just getting started, this episode is packed with insights that can help you make informed decisions.

Timestamps

00:00 Introduction to the Capitalmind Podcast and disclaimer

00:43 Overview of New Fund Offerings (NFOs)

02:29 Historical Context and SEBI Regulations

03:24 Fund Categories and Flexibility

05:00 The Role of Fund Managers and Themes

08:50 Marketing and Distribution Economics

12:04 Impact on Customers and Fund Houses

29:47 Advertising and Expense Management

33:33 The Role of SEBI in Fund Innovation

34:29 The Impact of Fund Variety on Investors

35:30 The Importance of Innovation in the Mutual Fund Industry

36:59 Challenges of Fund Categorization

42:43 The Role of Financial Advisors and RIAs

49:55 Mutual Fund Distributors vs. Bank RMs

55:27 When to Go Direct with Your Investments

01:05:50 The Cycle of NFOs in Bull Markets

01:09:01 Conclusion and Final Thoughts

Picture this: You’re at your favourite bakery, and you overhear that a celebrity is about to place a massive order for your favourite pastries. You rush to buy them all up before the celeb can, hoping to sell them back at a premium. That, in essence, is front running in the financial world. 

We discuss how people pull off this trick and, more importantly, how they get caught. 

(Spoiler alert: it’s not as glamorous as a Hollywood heist)

Axis Mutual Fund had their share of front running drama not too long ago. Traders making big bucks, splurging on luxury pads and flashy cars—sounds like a plot from "The Wolf of Wall Street”. We’ll break down the fallout and the lessons learned.

Currently, Quant Mutual Fund is going through allegations about front running. 

How do you, as an investor, make sense of these allegations and decide on your next move? 

Should you hold onto your Quant Mutual Fund investments or start thinking about an exit strategy?

We talk about all this and more in our latest episode of Capitalmind Podcast.

 

Recently, the mere hint of an inheritance tax proposal sparked a mini-political crisis? Thanks to a quick government rebuttal, it’s off the table—at least for now. But that’s not where the story ends.

As always, Deepak and Shray go head-to-head, weighing the merits and pitfalls of this hot-button issue. 

We’re not just looking at the problem from 30,000 feet; we’re getting into the weeds, examining real-life scenarios and potential solutions that could impact you and your future.

Government Finances: Can an inheritance tax significantly boost government coffers? Or is it just another drop in the ocean of fiscal needs?

Societal Impact: Will taxing inheritances create a more industrious society, or will it just penalise those who’ve worked hard to create wealth for their children?

Implementation: What if we set the bar high, say at 100 crores or even 1000 crores? Would this make the tax more palatable and targeted?

Practical Hurdles: Imagine inheriting a house or a business. Sounds dreamy until you hit the wall of unrealised gains and logistical nightmares. We’re peeling back the layers on these challenges.

Future Planning: If you’re expecting a windfall 5 or 10 years down the road, how should you plan your finances today? Spoiler alert: It’s not as straightforward as you might think.

So, grab your headphones and tune in. Whether you’re a financial novice or a seasoned investor, this episode promises to challenge your thinking and maybe even make you laugh along the way.

Timestamps:

00:00 Introduction and Disclaimer

01:25 Should we have an inheritance tax?

07:36 What if inheritance tax is imposed solely on the wealthy?

15:42 Creating a Trust to offset tax

25:04 Are there significant practical difficulties associated with inheritance tax?

35:08 Doesn't implementing an inheritance or wealth tax help reduce asset prices or control inflation?

42:58 How should one prepare for potential inheritance taxes in the future?

In this comprehensive discussion, Fund Manager and Head of Research Anoop Vijaykumar and Shray Chandra distil the key lessons from over five years of managing the Capitalmind Adaptive Momentum portfolio.

Get a concise overview of the principles of momentum investing driving the portfolio’s success.

Learn from our real-world lessons on why momentum investing works for long-term wealth creation

 

00:36 Introduction

01:54 Momentum strategy in the last 5 years

03:30 Difference between the fundamental and quantitive styles

08:00 Random correlations when backtesting a quantitive strategy

10:30 Capitalmind Adaptive Momentum strategy

15:05 Why does momentum investing work?

18:54 Lessons learned from 5 years of managing momentum strategy

26:00 Will momentum stop working

29:30 How can we get more out of the momentum strategy?

Have you ever wondered why finance seems to have a forgiving nature?

From the sins of the past being easily forgotten to the belief in second chances, we'll explore the nuances of forgiveness in the financial realm.

We'll dissect the tactics some "for education purposes only" players use to enrich themselves at the expense of their students. It's a sobering reminder to always question the motives behind the message.

We uncover the darker side of startup culture, where founders blur the lines between innovation and exploitation. It’s a cautionary tale for aspiring entrepreneurs and investors alike.

Deepak & Shray, in their quintessential style, discuss nuances of investing and finance in this latest episode of Capitalmind Podcast.

 

Show Notes & References

00:00 Introduction and Disclaimer 01:35 Why is finance a uniquely forgiving industry? 19:37 Deepak’s views on AT 1 Instrument 28:23 How do customers react to their fund managers' pros and cons? 57:57 Critical look at how some financial educators profit heavily from courses that may not benefit students as promised. 01:05:40 A look into the darker side of startup culture where founders misappropriate funds and then start new enterprises. 01:12:00 Delving into the challenges faced by companies when customers misuse their power.

The idea that finance companies want to do everything from payments to lending to broking to investments is strange - why not just be good at one thing?

It’s a simple explanation, it turns out. Find out more about the business of money in a language you can easily understand, through the words of Deepak Shenoy and Shray Chandra. 

Capitalmind manages Rs. 1700+ cr. as a SEBI-registered PMS, and has quantitative investing strategies that use extensively tested factor data to invest into stocks. Our flagship Adaptive Momentum strategy has outperformed the market indices over 5+ years.

References: 

00:00 Introduction

00:17 Why does every company do everything in financial services?

12:41 Why aren’t banks more aggressive in growing and pricing things lower?

26:40 Discussion on the success of Bajaj Finance and arbitrage between Banks and NBFCs

36:46 Why aren't banks aggressive on lending ? What's the issue with lending?

56:49 Deepak explains the Indian Bankruptcy code

01:07:13 What can we do to fix this?

 

More about us: https://cm.social/pms

Schedule a call with us: https://cm.social/pms-connect

 

Deepak’s Twitter: @deepakshenoy

Shray’s Twitter: @shraychandra

Capitalmind Twitter: @capitalmind_in

Deepak's first book: http://amzn.to/3CgkGea