Capitalmind with Deepak & Shray

Welcome back to the Capitalmind Podcast – a place where we dissect the nuances of finance and investing, in a world that never stops changing. Your hosts, Deepak & Shray, are here to de-clutter yet another topic in their lucid and candid style.

In today's episode, we're zooming in on Portfolio Management Services (PMSes), a vehicle for your long-term wealth management. Here's a glimpse of what's on our financial canvas today:

1. PMS Demystified: We're going to peel back the layers on Portfolio Management Services – both the legalese and the real-world implications – to answer the quintessential question: "Does it make sense for you to invest?"
2. The Art of Timing: We'll delve into the art and science of choosing the right time horizon for your investments and why it's the secret sauce behind successful wealth building.
3. The 50 Lakh Question: At point of your investment journey should you consider investing in a PMS?
4. What's the PMS magic?: What can it do that traditional investment avenues can't? Specifically, does it offer any edge against Mutual Funds? (Spoiler alert: It does)
5. The Ideal PMS Investor: We'll introduce you to different archetypes of investors who stand to gain the most from embracing PMS offerings from our experience of managing 1200+ crores.

Time Stamps:

00:00 Introduction and Disclaimer

01:30 What is a Portfolio Management Service and what's it good for or what's the point?

05:05 Who should invest in a PMS? And what should be the tenure of your investment?

08:53 Where to invest for short term needs?

13:27 The issues with investing in a mutual fund.

27:53 What does a PMS offer? What are the benefits of a PMS?

36:23 Once you cross a 50 Lakh mark, should you move from MFs to PMS?

42:36 What can a PMS do differently?

46:51 What about the returns of PMS and is it worth it vs Nifty?

52:15 Who shouldn't invest in a PMS?

58:27 Who should invest in a PMS?

If what you hear today intrigues you, head over to Capitalmind Wealth to explore how our PMS services might align seamlessly with your financial aspirations. Our fee structure, ranging from 0.25% to 1%, keeps it straightforward, with no hidden performance fees.

Schedule a call

Alternatively, shoot us an email at [email protected], and we'll be more than happy to provide you with additional insights about our PMS offerings.

You've tuned in to another episode of The Capitalmind Podcast, where we tackle a question that's been on your mind: "There's a lumpsum in hand, what's your next move?"

In a world where SIPs are all the rage, we're steering the ship towards understanding how to strategically deploy a substantial lumpsum amount.

Deepak & Shray walk you through these aspects of managing, deploying and even spending that lumpsum gain. They discuss:

• Deciphering tax implications: The financial realm is fraught with complexities, especially when it comes to taxes. We delve into the intricacies, figuring out how you can harness the power of tax efficiency to maximise returns.
• Debt management strategies: From housing loans to high-interest obligations, every debt carries a unique weight. We share insights that empower you to navigate this terrain with finesse and help you to make informed choices
• Securing education and retirement: As the custodian of your financial future, you'll need strategies to earmark funds for your children's education and seamlessly transition into a well-funded retirement. Planning is key, and Deepak has you covered.
• The art of consumption and experience: Beyond investments, the episode delves into the delicate balance between material consumption and meaningful experiences. The discussion prompts you to curate a life that blends financial prudence with personal fulfilment.

Lastly, for those who've experienced an ESOP exit or find themselves grappling with a lump sum, our website capitalmindwealth.com offers tailored services designed to cater to portfolios exceeding 50 lakhs. For feedback and podcast ideas, write to us at [email protected].

00:00 Introduction

01:30 ESOPs taxation and Whats the right way to allocate large lumpsum amount?

18:43 Which option is more preferable: Paying off housing loans sooner or investing in the market.

29:50 How to plan for your kids education?

34:57 Whats the simple rule of thumb for retirement planning?

40:21 If you have a large sum to invest should invest it via SIP or Lumpsum?

49:45 Don't fall for the products that assures you low risk and high returns.

59:36 Say no to angel investing

01:04:04 Consumption - all the things you wanted to do, make that list and do these

01:12:24 Types of windfalls: End year bonus vs exit from some ESOPs or synthetic ESOPs

01:20:43 Charity and Philanthropy

Liked the episode? Just tweet to us at @capitalmind_in and let us know. That's all we need to keep going!

Our latest podcast episode is here, and it's all about exploring the different ways investors make money in the market.

From thrilling arbitrage strategies to the art of short-term trading, we'll cover it all in a language that even your neighbour's fish could understand (well, almost!).

But that's not all—our experts will take you on a journey through long-term fundamental investing and quantitative approaches too.

Expect some fascinating stories, like the infamous LTCM blow-up, and how best investors (& trades) made their fortunes. We'll also unravel the logic behind the elusive VC's hunt for 50x returns and how even "value stocks" need a dash of momentum.

So, whether you're an investing enthusiast or just curious about the market's mysterious ways, you won't want to miss this one.

00:38 What do you think about the new all-time high? How do you view different types of investing strategies in the market and how to make money from these strategies?

24:27 The problem with peoples expectations: When I say stock markets do 12%, people expect this to be linear.

27:00 Concept of Expectancy

33:29 Problem in arbitrage is competition, so you need to lever yourself up

38:21 Option volatility trading - sell options expiring in 2 days and make the decay

46:32 When VC wins they need to win huge

49:50 Nifty monthly returns - how do quant strategies do?

56:52 We have just hit all time high. Based on the past data, how long can this good time potentially last? Which one is your favourite investing strategy?

Liked the episode?

Just tweet to us at @capitalmind_in and let us know. That's all we need to keep going!

Welcome back to another episode of our podcast, where we dive deep into the world of finance and investment. In today's episode, we will be exploring the fascinating realm of mutual fund costs and SEBI's recent proposals to bring them down.

As the saying goes, "The devil is in the details," and when it comes to investing, understanding the various expenses involved is crucial for making informed decisions.

In this captivating episode, we will dissect SEBI's latest discussion paper on Mutual Fund TER (Total Expense Ratio), which shed light on the inner workings of mutual fund costs and the need for change. We'll embark on a journey led by our expert hosts, Deepak & Shray, who will unravel the complexities of the system and explore the potential implications of SEBI's proposals.

Get ready to gain valuable insights and answers to burning questions.

1. What is the Total Expense Ratio (TER) of a mutual fund, and what does it include and exclude?
2. Why does SEBI propose changes in TER, and how will it affect mutual fund investors?
3. How do large distributors exploit the system, and what measures can be taken to address this issue?
4. Can tweaking TERs alone make the mutual fund industry 10x bigger, or are there other critical factors to consider?
5. What innovative avenues could mutual funds explore to earn higher TER while providing value to investors?

Tell us on twitter @capitalmind_in on how did you like this episode. Your feedback means the world to us!

02:00 Thoughts on the recent discussion paper by SEBI on Mutual Fund TERs

10:30 SEBI is saying "You are making too much money", reduce fees

19:25 Largest India equity scheme is charging the maximum fees possible

31:30 Limited Purpose Trading membership for AMCs to trade directly on the exchange

43:00 Why should a big fund house have the ability to charge more on a new scheme?

48:00 Performance based AUM through sandbox

53:00 How do you make the mutual fund industry 10X bigger?

"If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck", goes the saying. Arbitrage mutual funds are actually taxed as equity funds but they actually behave as debt funds.

And this tax arbitrage of arbitrage funds is what the regulators may be looking to fix.

In light of this, we have our latest episode of the Capitalmind Podcast, where we dive into the intriguing world of arbitrage mutual funds, also known as arb funds.

In this shorter episode, our hosts, Deepak and Shray, explores the role these funds play in your investment portfolio and delves into the impact of recent changes in debt mutual fund taxation on arbitrage funds.

Here's a sneak peek of what you can expect from this episode

• The Role of Arbitrage Funds: Discover the peculiar position these funds hold, being described as equity funds but offering debt-like returns.
• Taxation Changes and Their Effects: Explore how the recent changes in the income tax code could potentially affect arbitrage funds.
• Deepak shares his insights on the first and second-order effects of these tax changes and highlights the potential short-term buying opportunities that may arise.
• Risk-Free and Low-Risk Investment Options: Understand the investment landscape going forward in the likely new tax environment. Discover what alternative options exist for risk-free or low-risk investments in light of these changes.

Here are five key questions that will be answered in this episode

• What role do arbitrage funds play in your investment portfolio?
• How will recent changes in debt mutual fund taxation impact arbitrage funds?
• What are the first and second-order effects of tax changes on arb funds?
• What risk-free or low-risk investment options are available in the likely new tax environment?
• How significant is the presence of arbitrage funds in the stock market, and what does it mean for overall market volumes?

Join us as we unravel the complexities of arbitrage mutual funds and gain a deeper understanding of their implications for your investment strategy.

01:00 What do arbitrage funds (arb funds) do and where they fit in your investment portfolio?

08:30 Why didn't arb funds become the FD replacement?

12:30 How big are arbitrage funds and what does that mean as a percentage of total volumes/positions on the stock market?

18:45 Arbitrage Funds are a huge part of our market and it's a problem. Why?

21:30 First and Second order effects of taxing arb funds like debt

34:00 What are the advice or takeaways?

If you have any feedback, ideas for future topics, or questions, we'd love to hear from you. Send us an email at podcast[at]capitalmind[dot]in.

For those seeking professional wealth management services for portfolios exceeding 50 lakh, visit Capitalmind Wealth.

"Taxation is the price we pay for civilisation," as the saying goes. But what happens when the price tag keeps going up?

You may have thought you understood the friendly taxation system, until a new rule comes up that leaves you feeling like you've been sucker-punched. That's what recently happened when the government took away the tax efficiency of debt mutual funds and increased taxation. Suddenly, investors were left wondering how this would impact their investments and whether they needed to change their strategies.

In this episode of our podcast, Deepak and Shray delve into the conversation around the new taxation rules for debt funds. They ask the tough questions that many investors are likely asking themselves such as:

• whether taxation should be a factor when investing in equities,
• what to do with existing debt funds,
• whether foreign investing is still exciting after all the taxes.

But it's not all doom and gloom. They also explore other investment options such as MLDs, Gold, Real Estate, Startups, AIFs, and ETFs.

Taxes are indeed taxing. But who knows, maybe someday Pink Floyd will come up with a new hit single titled "We don't need no TAXES." Until then, tune in to our podcast to stay informed and keep your investing game strong.

Don't miss out on the show notes and references for this episode, where you'll find timestamps for each topic covered. So grab a drink, relax, and join us as we explore the fascinating and ever-changing world of investing and taxation.

Click here for the Google Sheet

8:50 Now all debt instruments are taxed similarly, isn't it now a fair system?

18:45 What should I do with my existing debt funds?

27:00 Should taxation be a factor while investing in equities?

33:00 In stocks, should you sell underperforming stocks and move to other stocks?

36:00 What about MLDs, Gold & Real Estate.

53:00 How investments in startups are taxed?

56:00 What about AIFs and ETFs?

1:05:30 Is foreign investing still exciting after all the taxes?

1:09:00 Final thoughts

"A market without bears would be like a nation without a free press. There would be no one to criticize and restrain the false optimism that always leads to disaster"

- Bernard Baruch

Short selling is mostly misunderstood and often demonized. Quite understandable, it's difficult to put your head around a concept that involves selling something that you don't already own. But, it's not as sinister as it is made out to be. Markets have enough checks and balances to accommodate short sellers and maintain their balance.

Recently, we saw Adani group stocks come under attack by a US-based short seller which resulted in the marketcap of the group falling more than 50% within a month.

This sparked a discussion on the concept of short selling. We're not going to talk about the specifics of this short by Hindebug. Instead, in this episode, we will talk about the nuances of short selling, their impact on the market, and dive deeper into how the whole thing works.

Join, Deepak & Shray, as they talk about:

• How does short selling work?
• Is short selling always to bring down a stock?
• The operational aspects of short selling in India and the US?
• Examples of different short trades & how they played out
• Which market players, except short sellers, also short stocks?

1:10 What is short selling

5:15 Why people would do short selling?

11:30 Are HFTs also market makers? Or speculators?

13:30 Paul Tudor Jones and the 80s crash

19:30 How do Indians short a stock?

23:00 How do US traders generally short a stock?

33:00 NSEL fiasco

42:00 Do arbitrage mutual funds also short sells stocks?

45:00 How does a foreign fund short an Indian stock?

47:00 Should short selling be illegal?

49:00 Can a PMS (like us) go short and benefit from such trades?

54:30 The thing called "short squeeze" and stories from far & recent past

Things escalate and hit the fan very quickly in banking. It's fascinating to see how banks go belly-up for the same fundamental reasons but in an entirely unique way each time.

It's like being served the same romantic comedy story again and again with different actors, locations, and songs. But, these banking crisis stories are not as enjoyable and they hurt real people financially and emotionally.

In this episode, we discuss the crisis at Silicon Valley Bank.

How this seemingly robust, conservative, bank with $180 billion in deposits tumbled down in just a couple of days. All was good with the Silicon Valley Bank until, one day, it wasn't.

NO, there was no accounting scam. This isn't like Enron.

NO, there wasn't any irresponsible speculative betting. This isn't like Lehman.

This time it's a different story. But, with the same result.

Listen in as Deepak and Shray tell you everything you need to know about the Silicon Valley Bank crisis:

• What actually happened?
• What could SVB have done differently starting a year ago?
• Understand how rising interest rates affect the business of banking
• What is going to happen next?
• Lessons for the future

If you enjoy Capitalmind Podcast, tweet to us @capitalmind_in and let us know. It doesn't take more than 2 minutes and is the fuel that keeps us going.

Anyone who thinks financial accounting is boring hasn't seen the creativity in some of the financial statements. Not just in India but across the world.

In this podcast, Deepak and Shray discuss the shenanigans of financial accounting while referencing various case studies from the business world. This discussion is important because "new age" businesses in India have started reporting "adjusted" accounting statements along with standard reports.

While we do understand the need for "adjusted" metrics to gauge the health of a business. Especially when the nature of business is unconventional and may not be represented well by the existing reporting system. But more often than not, such adjustments are used for misguiding investors.

Listen in to figure out:

• Why do businesses need to report adjusted earnings?
• How cheques, affiliates, GMVs, and ESOPs are used for creative accounting?
• If such reporting is legal, why should investors care?
• How do you recognize whether adjustments are real or not?

Show notes and time stamps

1:50 - What's the big issue with showing adjusted revenues?

10:20 - Shenanigans of adjusting revenues go back to the days of AOL (1990s)

13:45 - Argument of using the contribution margin

23:00 - How do "adjusted" numbers mislead stakeholders?

27:30 - Examples of creatively using metrics to manipulate numbers?

52:40 - VCs & Investors want "adjusted" metrics to understand business performance

1:00:00 - How to recognize if adjustments are real or not?

Stockbroking is a unique business enabling millions of people to trade billions of dollars of stocks with unknown counterparties. All trades, in this highly regulated ecosystem, are executed seamlessly, settled correctly, and recorded meticulously.

It's fascinating to see how far India has come in making this ecosystem world-class and in some cases, the best in the world.

In this podcast, Deepak and Shray discuss the nuances of stock broking and how proposed regulations will impact the stock broking industry. They discuss, in detail, the role of stock brokers, regulators (SEBI), clearing corporations, exchanges, and investors.

As an investor, how brokers are regulated doesn't impact you directly. Yet, it is important to figure out what happens to your money when you click that buy/sell button on your app.

Listen in as we talk about:

• How does stock broking work in its present form?
• What are the new regulations proposed?
• How will these regulations impact the stock brokers?
• How will it benefit the investors?

Timestamps:

02:10 - How trades are settled by your broker and exchange? Earlier and Now?

14:15 - Moving from t+2 to t+1 in settling share transactions

16:20 - Now clearing corporation holds the transactions before settlement. Is it safe?

21:15 - The practice of commingling (shares & money) and regulations around it

40:00 - Drying up float income and the new role of a broker?

44:00 - How much does "no float income" hurt the broker?

52:30 - Will these regulations, meant to protect investors, actually lead to an increase in brokerage charges?

55:10 - Can these regulations prove to be counterproductive?

1:03:00 - Closing remarks