Capitalmind with Deepak & Shray

RBI released a discussion paper that said: We've let you good people live all this time with "free" payment systems, so should we allow banks to start charging now? Specifically for UPI, which has reached volumes of 10 lakh crore rupees per month? And should we charge merchants? Deepak's answer is a big NO. He firmly believes that the payments ecosystem (and the economy as a whole) will gain much more than any fees on UPI transactions will. As always, Deepak has a context to his argument and covers a wide range of nuances. Listen to this podcast to understand his view on different aspects of the UPI payments system, its evolution, and the ways in which it can drive innovation. Also, this podcast covers many different aspects than Deepak's earlier post on the same topic. Show Quotes & Time stamps 02:00 - Deepak and Shray trade fascinating stories about payment systems before UPI. 07:00 - The interoperability of UPI is a game changer 10:30 - How much do we pay for other payment systems? "RBI spends 4,824 crores per year printing cash. None of that cost is borne by anybody except the government itself" 14:30 - The evolution of ATMs, Cheques, NEFT, RTGS, and the big role that RBI played in making these systems affordable for users. 21:30 - Has UPI always been free? Or has it also evolved over time to be free? "The government went to parliament and passed a resolution to make UPI free… That's the extent we went to keep this payment mechanism free" "1,00,000 Crore is now available to banks to make money by parking it RBI and earning interest…. This is because people want to keep money with banks to make UPI payments" 31:00 - How much does it actually cost to run the UPI payments system? "NPCI spends just ~680 crores per year maintaining the UPI infrastructure. Compare that against the float income that banks make on the additional 1 lac crore float" 34:00 - The argument that UPI is a toll road so you should charge for this "public infra" "Credit cards transact about 100k crore a month, debit cards 60k crore per month, ATM withdrawals are at 300k crore per month…. So even now, after all these years, credit + debit card transactions are not more than cash" 41:00 - If you don't let players charge for UPI, who will fund innovation? "Internet protocols were free and they disrupted the world through innovation" "Interestingly, in the payments ecosystem, all innovation has come from the regulator and not private players" 43:40 - Counter arguments from Deepak's Twitter on why UPI shouldn't be free. 44:00 - Google and PhonePe did all the handwork to make UPI popular. Now you're telling me I can't make money on it? "You're building a road and they tell you... you can never charge a toll. But you still keep building that road… that's the payment apps for you" 50:00 - Let's say that the biggest private players leave because you won't let them make a profit. The top 2 guys control ~75% of all transactions. What happens to the ecosystem now? 1:02:00 - Why regulators have enforced limits on incentives and fees? "Financial regulation is not like tech where if you're too big, rules change for you. Here, if you are too big, and you disturb the system, the regulator first makes you small and then beats you" 1:05:30 - Government responses to the UPI monetization paper were very harsh. Why so? "Hoarding cash is ok. Spending that cash on the economy creates a whole new economic system that's outside the view of the government. That's not ok" "From Jan 2020 to now, the total ATM withdrawals are flat. UPI has gone from 120k crore to 1000k crore. The fact that UPI transactions are free has reduced cash transactions" 1:09:30 - The number of UPI transactions has drastically increased. But, is that all? The UPI tech reached its full maturity? What do we have to look forward to wrt UPI? 1:14:00 - UPI as a credit check for lenders and a game-changer for quick small loans There's a lot more interesting stuff ahead with UPI. We're just getting started!

Recently, as of 7th September 2022, total Demat accounts in India touched the 10 crore mark. This is a staggering increase from 4 crore Demat accounts in Mach 2020. This alone is a testimony of increased participation and inclusion of individuals in Indian markets. More and more Indians, especially youngsters, are taking to investing in equities enabled by their smartphones - digital broking, increased information access, and social media influence. The whole securities (stock) market ecosystem has evolved immensely over the past decade and deserves a lot of credit for the recent growth in the participation of new investors. At the helm of the ecosystem sits our regulators who are responsible to enable, guide, protect and watch the market participants to ensure that we have a fair and thriving market. In this episode, Deepak and Shray talk about the role SEBI can play in shaping the future of the markets. They talk about data warehousing, data accessibility, regulatory enhancements, bond markets, disclosures & reporting, and a lot more that would make our markets more accessible. 02:00 - As low as only 3% of household income is directed towards stock markets. Why are people so scared of investing in stocks? 04:00 - Game changers - Digital public goods in our financial system 09:00 - Data warehousing framework at RBI and its US counterpart 16:00 - Does an average investor even use the granular data that we're expecting the regulators to build for? 24:00 - What company data should a centralized database ideally have? 32:00 - The way Indian companies play with stock tickers 34:30 - How will this organized information make things better for all participants? 39:30 - Better information access makes our markets more accessible to FIIs 43:00 - Crazy things that mutual funds & companies do with disclosures 48:00 - PMS & AIF returns should be cross-verified and shouldn't be based on self disclosures "The more developed you are, the more signages you see on the road" 55:00 - SEBI is a far better regulator than many western counterparts. What do you still wish they should improve 59:00 - Would information disclosures will be a hassle for smaller companies? 1:03:30 - AMFI - the Self Regulatory Organization (SRO) recognized by SEBI 1:11:00 - What can SEBI do less to make space for things you wish it should do? 1:15:00 - How much impact can SEBI have on increasing household participation in the markets?

Markets are slaves of earnings and liquidity. Liquidity has taken prominence after the coronavirus outbreak. At first, central banks across the world increased liquidity by cutting rates and helping their populace to live through the pandemic. Then the after effects of increasing liquidity hit – increased inflation. Now, the same banks are sucking out liquidity by increasing interest rates to counter inflation. The looming after effect of increasing rates is the "r" word that is too pious to speak loudly. In this podcast, Deepak & Shray discuss the two central banks that impact us the most – RBI and Fed (Federal Reserve System, USA). What makes this podcast interesting is that we are looking at everything from the lens of who does better – Fed or RBI? Refer to the show notes to see the wide range of things discussed and start listening. . Show notes & references: 02:00 - Why RBI will buy dollars to keep the rupee from appreciating?! Refer: What the Fed's Big Balance Sheet Unwind Means for Markets 05:00 - What happens when RBI sells dollars? 07:00 - How does it control the liquidity of the markets? 14:00 - How have banks run out of liquidity? 17:30 - If banks need money, why don't they increase their FD rates? "Government is now a better bank than all banks. It's also safer" 19:30 - RBI has taken out liquidity, you want to protect the status quo now. How does RBI do it? What are the consequences? "RBI owns 3X more of US government bonds than it holds Indian government bonds. But things are changing." 25:00 - But is the Fed doing now? 26:30 - The interplay of treasury and Fed in the US government monetary environment "RBI hates to buy government bonds because it knows the government is fiscally irresponsible. The US would buy their govt bonds knowing that their government is even more fiscally irresponsible." 28:30 - Mortgage backed securities and agency guaranteed debt. "Fed reduced their balance sheet by ~0.5% while RBI has already reduced the balance sheet by almost 10% in the same period" 35:00 - How increasing interest rates will impact different sectors & industries? 37:00 - If US interest rates go to 4% it will impact India and the world 38:15 - What makes India be in a bright spot as compared to the west? 43:30 - UPI is 10X the size of credit cards in terms of transactions. It's massive. 47:00 - We have screwed up much earlier and recovered. West is starting to experience the fruit of its irresponsible policies. "We might just be the single largest self dependent economy that's worth investing in right now. With a local market which we have mostly given away to foreign players." 53:00 - Domestic investments in equities by Indian investors have absorbed the highest ever FII selling spree. 56:00 - Our neighboring nations are falling apart mostly due to foreign dept - isn't that a concern for us to open foreign investment? "If you don't have the freedom to fire people, you won't hire them at all. That's how human psychology works" 01:02:30 - Summarising Where India is right now in the economic scene "If we don't screw up, we will do really well. Because the world seems to have screwed up."

Crytocurrencies were all the rage in past few years on account of rising asset prices and volatility. Now, they are going through a bear market that has witnessed some popular currencies going totally bust. This pehnomemnon of an "asset class" going from hot to untouchable is not new. We've seen this again and again in different forms and proportions. The current bear market in cryptos certainly impacts the investors, start-ups, promoters, and VCs who are directly involved in the crypto business. But, this bear market has second-order effects that may impact you as well. Listen in, as Deepak and Shray discuss the nuances of how the crpto bear market inpacts you. Show notes & references: 01:40 -How does the crypto bear market have an impact on stock markets & economy? 08:30 - The indirect knockdown effects of crypto bear markets 10:00 - Digging deeper which other segments of the economy will face a slowdown due to crypto? 15:30 - The trickling effect of hot money going away from crypto startups 16:30 - Misunderstanding of risk by crypto investors 20:30 - The debacle of fancy virtual assets - Luna & Terra Refer: Terra's stablecoin UST collapses, LUNA falls 99% 24:50 - Learnings from Zee TV & Dish TV saga of taking loans from Mutual Funds via bonds Refer - Capitalmind post on Zee FMP Saga 34:00 - New investors moving to crypto with leverage and family savings basis TV marketing 39:00 - Why VCs don't let failed crypto companies die? - No, it's not for the right reasons. 48:00 - By Now Pay Later - bad small loans of small ticket size are a similar problem. 50:00 - Promotor fraud is now called Rug Pull. Refer - What is a rug pull? 51:30 - The case for printing more money 54:30 - The commingling problem that stock exchanges have already solved. Crypto exchanges still fight that problem. Refer: Deepak Shenoy tweets about these issues in Dec 2021 56:40 - Will Deepak one day invest in crypto someday in the future? 58:30 - One great thing that has come out of crypto markets If you loved listening to Deepak talk about money and finance. You'll also find his book quite interesting - You can buy the book here – Money Wise.

In this episode, Deepak and Shray unravel different aspects related to investing in gold. Gold has been around as a store of value for a couple of millennia, probably longer, because of how little there is and how difficult it is to get out of the earth. Now get this - all the Gold mined would fit in a crate with sides of 21 meters. That's roughly the length of three and a half standard containers. Yet, in the last decade, this scarce and loved asset class has done just enough to match inflation. This means, adjusted for inflation, gold has returned nothing! Now, after putting returns of gold into perspective, we get on to the theme of our podcast - Does it make sense to invest in Gold? We look at gold from different lenses while we determine - If gold is a hedge against inflation? Can gold protect you in a crisis like war? Is gold investment to create long-term wealth? Is there an efficient way to invest in gold? Show notes and references: 01:30 - Is gold the safe heaven when everything else falters? 05:00 - Today all assets classes act alike and correlated Refer - How Gold has performed over years? 08:00 - Gold hasn't outperformed inflation in 2011! 12:30 - Times when gold did outperform the Nifty 15:30 - The second-order effects of gold smuggling 17:30 - Buying gold for emotional and goal-based reasons 20:00 - Should you buy gold to hedge against a crisis like war? 23:55 - Is buying digital better than physical gold? Refer - What is digital gold? 36:30 - Is gold as an ETF a good option? Refer - What are Gold ETFs? 38:30 - Sovereign gold bonds as an avenue for investing in Gold? Refer - What is the Sovereign Gold Bonds (SGB) scheme by Govt of India? 43:00 - What is the best way to buy gold? If you loved listening to Deepak talk about money and finance. You'll also find his book quite interesting - You can buy the book here – Money Wise.

Two engineers get together to discuss two life essentials - food and money! Our food expert is Krish Ashok. Ashok is Global Head, Digital Workplace at TCS. He is a techie, a musician and an author. He talks about the science behind food, the history of food and offers a lot of food for thought for us to explore further. If you are interested, a good starting point is his famous book - Masala Lab. Our money expert is Deepak Shenoy. Deepak talks about the importance of managing your finances, the myths about investing, the fallacies that investors should avoid, and his take on cryptocurrencies. It is quite a treat to listen when he shares food metaphors to explain financial concepts. So listen in! Topics & References: 02:00 - Science of Indian food & cooking Refer - The parable of turkey and how things are done13:30 - Do modern food habits cause lifestyle diseases? 21:45 - Wait, it's the opposite? Butter is ok but the Naan is not? 25:30 - Basics of food everyone should follow Refer: Michael Pollan: Three Simple Rules for Eating37:00 - The play of sugar & salt 40:00 - People hate changing food habits 45:00 - Each of us processes the same flavor differently 49:00 - We don't like something because its unfamiliar, not necessarily bad 52:00 - Misconceptions about Food Refer: Why the Tomato Was Feared in Europe for More Than 200 Years56:00 - The myths of Genetic Modification Refer - The Story of Norman Borlaug, the American Scientist Who Helped Engineer India's Green Revolution01:01:00 - How do we make more people cook? (especially, the men) Refer - Apple Cider Vinegar Rasam01:07:00 - Does the online food delivery phenomenon change things for food and our food habits? 01:11:00 - Switching roles - Ashok Asks Deepak about Money 01:13:00 - Building a relationship with money Refer: Book: The Lexus and the Olive Tree01:17:30 - What money can do for you? 01:23:00 - How an adult should learn the basics of Finance? Refer: Book: An Economist Gets Lunch01:43:00 - How should salaried professionals think about Income Tax? 01:50:00 - Working as an employee Vs working as a businesses 01:54:00 - Understanding Inflation first before learning about investment returns Refer: What you know about inflation might be wrong02:01:00 - How do you make money work for you? 02:09:00 - How to allocate between Equity & Fixed Income? 02:11:00 - Ways for your money to make more money? 02:16:00 - Importance of diversification in Finance & Food 02:19:00 - How should one think about their own risk appetite? Refer: Harry Markowitz and Modern Portfolio TheoryRefer: How Not to Be Wrong: The Power of Mathematical Thinking02:28:00 - Is there a tool that helps track personal financial growth? 02:37:00 - Deepak's thoughts on cryptocurrencies Refer: Blockchains Are a Bad Idea (James Mickens)Refer: Selling Shovels in the New Startup Gold Rush You can buy Krish Ashok's book on the science of Food - Masala lab. You can buy Deepak Shenoy's book on investing - Money Wise. Check out our wealth management service - Capitalmind Wealth (PMS)

Today's episode is a crossover with The Seen and the Unseen podcast, hosted by Amit Varma. Amit and Deepak discuss how their careers - as creators - have evolved with the digital age. And their journey of discovering their own authentic voices. They take a first hand look at the creator economy and how it's shaping the media today. 2:32:00 onwards, they discuss key lessons in Deepak's new book, Money Wise, along with some behind-the-book stories.

What happens when a company goes bankrupt? Why do investors buy their stocks that are headed to zero? In this episode, we explore how the Insolvency and Bankruptcy Code (IBC) has changed the game. Deepak explains the many nuances of current regulations and how they've evolved. We dive into examples such as Bhushan Steel, Sintex and Ruchi Soya - which we hope will give you clarity. Listen in and decide. Would you stay the hell away from such stocks, or start hunting for bargains? --- Understanding Bankruptcy Businesses are tough and the best ones survive. There are ample failure points for a business that can drive it to bankruptcy. One or a combination of factors such as economical, social, regulatory, political, geographical, etc can drive a business suddenly to the ground or induce a slow death. Such companies eventually stare at bankruptcy. We discuss - - What is bankruptcy? - Does everyone lose money when companies go bankrupt? - Who gets what when the company is sold for parts? --- Learnings from the Sintex saga Sintex Industries, the Ahmedabad-based company, that boasts of tanks covering the skyline of most cities of India, was dragged to bankruptcy courts after it defaulted on a meager payment of ~15.4 crores towards principal and interest on its NCDs. This was the final nail in the coffin for the firm that had mismanaged its finances for too long. We discuss - - What Sintex does as a business - How the company was re-structured (through demerger) - How its issues snowballed to lead the company into IBC Eventually, the IBC ( Insolvency and Bankruptcy Code) tribunal was able to keep the company running and also got a successful bidder to buy out the stressed company. That's good news for almost all of its stakeholders. Except for its shareholders who will lose all of their equity in the company. So they get nothing. Zero. --- So How does IBC work? Why do existing shareholders lose everything? The short answer: Because existing shareholders contribute nothing to the upcoming growth of the company, they get nothing. The company that these existing shareholders bought into eventually went bankrupt. So the story for existing shareholders ends here with a big zero in their hands. Sounds unfair but that's how it is. We discuss - - How does the IBC process work? - Every existing stakeholder (debtors, employees, vendors) gets some part of the new entity. The current shareholders should also get a piece no? - What actually happened to Sintex shares? - How did things use to happen before the IBC? There are a lot of examples discussed in this section that explain different aspects of the bankruptcy process and also highlight how each bankruptcy case is different. --- But, existing shares of Ruchi Soya went up "to the moon" while it was going through bankruptcy All bankruptcies are different and unique. Ruchi Soya was trending on social media recently because the company came back strongly from bankruptcy and its investor (Patanjali) seems to have made a killing on its investment. There's lots more to the whole revival story. Deepak explains - - How regulatory rules change impacted the Ruchi Soya bankruptcy process - The bidding by Adani and Patanjali - Interestingly, they kept 1% of the company listed. Why? - How does Patanjali make Ruchi Soya operating cash flow positive? - The positive impact of Covid - Why is a company that makes only 800 Crores has a market cap of 31000 crores? --- Does investing in distressed companies work? We all love investing at its theoretical best - buy extremely low and sell high. We also keep repeating Buffett's quotes like "Buy when there is blood on the street". Distressed companies feel like a value buy all time but they are almost always value traps or falling knives or whatever. We briefly touch upon this before we wind up the podcast - - A quick reference to Buffett's investing in the Salomon brothers - Brookfield & Hotel Leela deal - distress investing Let us know if you enjoyed our podcasts on Twitter or write to us at premium [at] capitalmind [dot] in!

There is a lot to unpack about this new digital currency RBI is talking about. Deepak and Shray built up the discussion by pondering over successive questions. Deepak takes us through how cryptocurrencies currently work. This sets up the context to the current ways of handling digital currencies and we move on to discuss the RBI-backed digital currency - Central Bank Digital Currency (CBDC). Key Points How CBDCs are not cryptocurrencies? And how are they different? Is CBDCs actually required or is it a response to the popularity of cryptocurrency? So basically, why now? Is the CBDC likely to be anonymous like cryptocurrencies? Can CBDCs be an alternative to the SWIFT system given how Russia has been isolated by the world right now? Impact of CBDC on Monetary and Fiscal policies?

As Indians, we discuss Inflation only during elections which makes it less of transient and more of seasonal! But, as investors, we discuss inflation a little more. The latest reason for it is the hammering of growth stocks across markets which is blamed squarely on inflation. In this podcast, we understand the practical concept of Inflation with examples, its impact on your investments, its impact on our daily lives, and how it impacts different people differently. We promise, thinking of inflation in this podcast will be much more interesting than what you experienced in your economics class.

How do High Net Worth Investors invest SO much in IPOs? Nykaa's IPO saw Rs. 1,00,000 crores invested by the well heeled Indian investors. But not much of it is their own money - they borrow it. In this episode, Deepak and Shray unravel the dynamics of an IPO application for HNIs. From the rules of allocation, the big business of IPO funding, how HNIs can borrow 100X their money, systemic risks, how grey market premium (GMP) works, the role of regulators and the road ahead. Read more here

On today's show, Shray asks Deepak about how to make sense of the past two years in the markets, macroeconomics, and the seeming irrationality of it all. They also talk about how to look at the year ahead. Highlights 2021 bad year with all the lives lost, but it happened to be good for markets with the number of IPOs at an all-time high NIFTY returned approximately 23% and has been positive for the 6th consecutive year India being top-heavy, from the income distribution standpoint caused the kid of market outcomes we saw Small firms got hit the most, and that may not be sustainable in the long run Markets don't care about death and destruction for sure. But what moves the market? We've normalized, letting go of our freedoms, and irrationality could be the new normal. Inflation could actually be a function of supply than demand If the market didn't go down in these pandemic years. How can we make any event-based predictions? The boom in startup funding. Has equity become cheaper than debt? Read more at https://capitalmind.in

With technology comes great responsibility, says SEBI, as it attempts to regulate the algorithmic trading markets that have just started to evolve in India. The concept of "API" trading, through Application Programming Interfaces is the standard in the web and app-based world, but SEBI doesn't want you to manage your own money programmatically. Or, worse, to give it to someone else who is "unregulated" to manage your money through an algorithm either. In this episode we discuss SEBI's recent consultation paper on algorithmic trading and how it impacts you. What roles do algorithms play in managing your money and will a program be investing on your behalf in the near future. SEBI published a consultation paper on algorithmic trading by retail investors on Thu Dec 9 2021 The paper impacts any form of "automated" trading: through a broker provided API in general as well as Algo Trading An example of an Algorithm that already exists - Good Till Traded orders offered by your broker. They place an order automatically every single day through a program. Algorithms that would help retail investors- "Buy/Sell this stock if it falls 10%", or manage the extreme risk on my portfolio (insurance, of sorts). The motivation for this paper is the emergence of 3rd Party platforms that make use of APIs through algorithms, where you share your API keys etc and they automatically trade on your account. The Algorithm behaves like a proxy fund manager or money manager. They can trade your account whenever they want. Concern: What if they make big losses and you have no idea of how much they can hurt you? Concern: Can't these platforms get a lot of customers and then auto-manipulate a stock, in the name of algo trading? Concern: APIs + Algorithms could be used to overwhelm/stuff the exchange or be used to manipulate a security's price. Rate limiting and cool off periods could help address this. Consultation paper currently bans all APIs and places onus on brokers to regulate them and suggests that brokers take responsibility to run the algorithms on their system The paper would enable the Broker to empanel someone (and do the checks/risk assessment/quality control) but would prevent an individual from setting up something themselves - but this seems unenforceable. Stopping APIs altogether is like using a sledgehammer to kill a mosquito. We could achieve many of the objectives by having the algorithm pop up an approve/reject screen that the user has to click on. If you have say more than 50 lakhs or something in your account then you could potentially have fully automatic execution. This would be a useful middle ground to protect the smaller retail customers. When I click a buy button on Zerodha Kite it triggers an API, when you click a buy button on Smallcase to buy on say zerodha it also triggers a bunch of API, when you place an order through a program that also triggers an API - how do you differentiate between the three? And you can't build an app without APIs Even fund managers are found guilty of say front running or offloading - SEBI can come after them since they are regulated. If you're trading other people's money and earning from it - you have to be treated with the same level of compliance as a fund manager (PMS/AIF etc) There aren't any fund manager rules that allow you to run strategies with the kind of leverage that these algorithms allow you to. According to Nithin's twitter space only 0.5% of zerodha users use algos.If you're running your own algorithm that really should be allowed Future of fund management (especially at scale) will require some levels of automation and APIs so we can't take a regressive or overly harsh stand. Read more at https://capitalmind.in!

How does P2P lending work in India? How safe is P2P lending? Deepak and Shray explore how the industry works, the risks involved and whether the returns are enough to justify the risks. Summary Banks keep a considerable spread between the interest they offer on a deposit and the interest they charge a borrower. So, some people think, why is the spread so big? Why can't I deal with the borrower directly and receive more interest on my money? The problem is you don't know the person you are going to be lending money to. In comes the P2P lending company, which acts as a sort of intermediary between the lender and borrower. When you give your money to a bank (as a deposit), the bank will guarantee that you will get your money back. But in the case of P2P lending, there is no such guarantee that you will get your money back. Another problem with P2P lending is, no one outside knows the actual default rates, and they are often much higher than what these companies report, even though the whole operation is legal. In P2P lending, you don't see one of the three Cs of lending – you don't have collateral; you have capacity and creditworthiness. One of the reasons why P2P companies have flourished is that banks, which should ideally lend money to people whose credit might be questionable, don't lend to them. But the answer is not to 'lend' them money. You can consider it as a form of charity, in which case, even if you don't get the money back, you don't mind losing it. And there are companies that work on this model. An alternative could be microfinance. But there are problems there too. Often, multiple microfinance companies want to lend to the same borrower, who uses the money for purposes other than what they were intended for, with the result that they are not able to repay. But microfinance companies can take this pressure because they are a company. A P2P lending firm is just an intermediary. They have no way to recover the money if a borrower refuses to pay, except send legal notices (because there is no collateral), which may not work. So, the gist is, if you want to give loans through a P2P lending firm, only lend so much that you won't mind even if you lose the money. Give it for charitable purposes. Give it to people who are in such bad shape, they can't afford anything else. Read the full transcript.

Episode 41 - Deepak sits down with returning guest Ruchir Kanakia, the founder of the insurance distribution company OneAssure to discuss our favorite insurance product - term insurance. Summary: How term insurance works for you and the company that sells it to you Debt or Dependents – the two reasons to buy term insurance How Covid and the fact that a handful of reinsurers control everything has made your office insurance a bit less reliable – consider buying a personal one too How much coverage is enough and how much the insurance company will give you Why you should opt for the in person medical test You're tech or finance savvy but consider getting an agent or distributor if your dependents might not be Common riders and why you should ignore them How the claims process works and benefits of selecting a monthly or yearly premium payment Click here for the full transcript.

Episode 40 and we're speaking to the fintech firm that just raised 40 Million dollars last week - Smallcase! Deepak sits down with co-founders Vasanth and Anugrah to talk about creating a new way to invest in stocks, investment lessons from the pandemic and what's up next from the Smallcase team.

What is a Portfolio Management Service? How does it really work? Do they actually benefit their clients? In this episode, Vashistha and Deepak explore PMS' through their experience of running one at Capitalmind. They explain how the operations work, the pros and cons of different fee structures, quantitative strategies and how PMS' are different from AIFs, Mutual Funds and Smallcases.

How do you plan for a smooth transfer of your wealth after you die? And how do you help someone whose loved one has passed on? In this episode, Shray and Deepak explore what you must do in an unfortunate circumstance of a loved one's death, and for an easy transition in case of your own. We also invite Harshavardhan Ganesan, a practicing lawyer, to give us the legal perspective. Listen in for real life anecdotes from covid, succession certificates, legal wills, and some counter-intuitive learnings.

Are the recent problems - GME, Greensill and Archegos - signs of a damaged financial system that is so terribly fragile that a slightly bigger disaster can easily crush it? Like what Covid has done to the world's health system, are there more hidden risks in our financial system that can trigger a repeat of 2008? In this episode, Deepak and Shray explore what's happened in the US over the past few months, and examples of hidden leverage within India - from Harshad Mehta to Karvy, Zee, DHFL and more.

On today's show, Deepak invites Vivek Subramanyam of LiveAltLife to discuss the one thing without which wealth means very little - health. Vivek breaks down the foundations of health to help avoid or even reverse lifestyle diseases as Deepak draws paralells on human behavior from the world of investing.

On today's show, Shray asks Deepak about government borrowing and debt, how the RBI can help bring down borrowing costs, the new rules that make your provident fund much less attractive and how we can now invest directly in Government bonds instead of Fixed Deposits.

In this episode, Shray and Deepak discuss the evaporating returns from safe investments such as FDs, what it means for lending, and how should you invest in this new (to India) low interest-rate world.

In this episode, Shray and Anoop discuss momentum investing and how we implement it as portfolios at Capitalmind.

In this episode, Deepak and Shray invite Ruchir, co-founder of OneAssure, to walk us through how to get started with health insurance.

In this episode, Shray and Sandeep discuss how adding a trend following layer to a long-only portfolio can help enhance returns and lower drawdowns, in the context of Capitalmind Chase - our own such strategy.

In this episode Deepak takes on the Reliance Jio story. Is the stock in a bubble, is there any danger of it becoming a monopoly and why is there only one Reliance in India. Preview "Dhirubhai Ambani himself is responsible for a lot of the shareholder culture in India. Till the early 80s minority Shareholders were considered like second class citizens - there were institutions and promoters - that was all that people cared about. In Dalal street, the "Operators" would consider retail shareholders the pits, they would con people all the time. People would lose money, no one would care. Reliance was one of the few companies that would care about the shareholders. People from his village, from Gujarat would come in and buy shares of Reliance - those people are now probably multi multi millionaires. He built that culture."

Deepak Shenoy of Capitalmind hosts Kunal Shah of CRED as they analyze the affluent - their spending patterns, usage of credit and habits that help them succeed. They talk about high trust groups, creating wealth and incentivizing good behavior. Preview Less than 1% will know what their income per hour is. Therefore, if you find somebody who is making Rs 5,000 per hour (and there are many ways to calculate this). But let's say you spend 30 mins to get a Rs 1,000 discount on your flight ticket - was it worth your time?

On today's show, Shray asks Deepak about the recent downgrade of India by Moody's. Should we care? Are rating agencies more or less relevant after the 2008 debacle and what does the downgrade mean for India. Preview "There's an internal class system they have developed. Whether it is between companies or across countries. The developed countries get a different framework to work with and what they call the non-developed is held to a different standard."

On today's show, Shray and Deepak discuss debt mutual funds. How do they really work? What do they invest in? And how do you evaluate these funds before investing in them? Preview "The whole money supply in India is about 150 lakh crores. Half of that is in Fixed Deposits with banks. Around 30-40 lakh crores is sitting with government bonds/funds issued by the government. The rest in retail deposits. Debt Mutual funds are nascent in comparison... we've calculated that you can pay 80% less tax if you hold a debt fund giving roughly the same interest as an FD if you hold it for 3+ years, even if you take out money from time to time. The tax advantage is huge for individuals who are in higher tax brackets."

On today's show, Shray and Deepak discuss FIIs (Foreign Institutional Investors). Who are they, how big are they, and what role do they play in our markets? Read the transcript here.

On today's show, we discuss the extreme volatility in financial markets and the Covid-19 pandemic affecting our daily lives. Is this a panic? How to we invest through this storm? Read the transcript here.

On today's show, Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) try to understand the ₹30 trillion behemoth, the Life Insurance Corporation of India (LIC). Transcript: https://www.capitalmind.in/2020/02/podcast-how-big-is-lic-anyway/

On today's show, Deepak Shenoy (CEO) and Sahil Kini (Co-founder and CEO, Setu) talk about the problems ailing the Indian financial infrastructure and how APIs are shaping the way digital businesses are built. Transcript: https://www.capitalmind.in/2020/02/indias-new-financial-infrastructure-will-enable-better-more-inclusive-bharat-ux/

On today's show, Deepak Shenoy (CEO) and Aditya Jaiswal discuss the impact of the union budget on our savings and investments- would you be better off moving on to the new tax regime? how does the budget impact your mutual funds (dividend options)? Are the Arb fund dividend reinvestment plans dead? Transcripts: https://www.capitalmind.in/2020/02/podcast-22-how-budget-2020-impacts-the-way-you-save-and-invest/

Is passive investing making investors insensitive to price and valuations? Is this distorting the capital flows to the market? In U.S, the market share for passively managed funds has risen to about 51 percent, but what is the number for India? Where do we stand? Transcripts: https://www.capitalmind.in/2020/01/the-amazing-rise-of-passive-and-what-you-need-to-do-about-it Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) answer these and a lot more questions on today's show.

On today's show, Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) take you back to the 80s, when the Indian stock market was all wild wild west. It's the April of 1982, a powerful bear cartel has raided the shares of Reliance, they short sell Reliance shares so heavily that it plummets from Rs131 to Rs121 in a short span of time. They have done it in the past and they have done it to many, but this time they have messed up with Dhirubhai Ambani- a businessman who was known for his astute business acumen. Will the bears succeed? or will the tables be turned? Transcript: https://www.capitalmind.in/2020/01/podcast-surviving-a-bear-attack-how-dhirubhai-did-it/

On today's show, Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) discuss the New Pension Scheme in detail. Transcript: https://www.capitalmind.in/2020/01/podcast-19-understanding-the-new-pension-scheme/ We discuss the NPS from the perspective of a 30 year old who opts for NPS and contributes INR50,000 every year. How much will he accumulate at retirement? What happens if he loses his job after 5 years? How will the forced annuity impact him at retirement? If he doesn't wants to opt for NPS, how much should his investments earn to beat the NPS returns plus the associated tax benefits of NPS?

On today's show, Deepak Shenoy (CEO) and Vashistha Iyer (COO) discuss effective ways to make life simpler by managing cash flows using credit cards and bank overdrafts. Transcripts: https://www.capitalmind.in/2019/12/how-to-master-your-cash-flows-with-credit-cards-and-overdrafts/ Heads-up: 1. Is parking money in bank accounts a risky proposition? 2. If you earn 1 lakh a month and you get a 1 lakh credit card bill, what do you do? Do you not invest that month? 3. Do 'No-cost EMIs' really cost nothing? 4. If you consistently use more than 60-80% of your credit card's limit, does it affect your credit score? 5. Is it better to have multiple credit cards? 6. Is it safer to swipe your credit card more often than your debit card?

On today's show, Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) discuss the Bharat Bond ETF in detail. Transcript: https://www.capitalmind.in/2019/12/bharat-bond-etf/ Q) Will it provide the much needed liquidity to the debt market? Who are going to be the market makers? Q) Is it a zero credit risk option? and what about the interest rate risk? Q) Is it a good deal for the fixed income investors? Q) Which option will suit you better, the 3-year variant or the 5-year variant? Grab your popcorn and stay tuned, you are going to enjoy this one!

Deepak Shenoy (@deepakshenoy) speaks with Nithin Kamath (@Nithin0dha), CEO of Zerodha about the Karvy mess- does it reflect a systemic failure? do brokers like Karvy have legacy issues? how differently does Zerodha operate? and most importantly, what should investors do to protect themselves from such scandals in the future. Transcripts: https://www.capitalmind.in/2019/12/podcast-16-what-broke-karvy-and-how-is-zerodha-shaping-the-future-of-broking/

The year 2019 has been quite eventful for the Indian markets! Right from corporate governance issues popping up almost every month, the collapse of NBFCs such IL&FS and DHFL, then the shady practices in scheduled banks such as the PMC Bank and now comes the Karvy fiasco. Read transcripts here: https://www.capitalmind.in/2019/11/podcast-the-strange-happenings-at-karvy-ep-15/ Deepak Shenoy (CEO) and Aditya Jaiswal (Analyst) discuss in detail how the Karvy fiasco unraveled followed by series of questions such as: What is a pool account and are brokers using it as means to fund themselves? Can brokers misuse the power of attorney signed by their clients? Is it safer to have demat accounts with banks? What should the existing clients of Karvy do? What happens to the banks/NBFCs who have lent money to Karvy?

We often hear that "Mutual Funds Sahi Hai". But none of the experts answer, "Konsa Mutual Fund Sahi Hai?" Host Deepak Shenoy (CEO) and Aditya Jaiswal bring you another Podcast where they simplify mutual funds, allocation (debt-equity), SIP vs lump sum debate, the myth regarding Star ratings, ELSS funds, expense ratios, Sectoral funds and a lot more! Transcripts: capitalmind.in/2019/11/how-to-buy-a-mutual-fund-ep-14/

Host Deepak Shenoy (CEO) and Aditya Jaiswal discuss a bunch of interesting things in this podcast including, whether it makes sense to buy a house in the Uber economy, the mother-in-law economics, the financial implications of having a portfolio of properties, and the outlook for the property prices in the near term. Read full transcript: https://www.capitalmind.in/2019/10/podcast-should-you-buy-a-house-ep-13/

Host Deepak Shenoy (CEO) and Aditya Jaiswal discuss about Yes Bank – The "Kohinoor" of Rana Kapoor, pledging of shares by ZEE and deferred tax assets (DTAs) in the books of private and public sector banks. Deepak's thoughts on Yes Bank (1:35) Cockroaches in Zee's Books? (5:45) Deferred tax assets in the books of private and public sector banks (10:00) Read full transcript: https://www.capitalmind.in/2019/10/yes-banks-fall-zees-fall-and-deferred-tax-assets-ep-12/ Excerpts: 1. Deepak's thoughts on Yes Bank: Why should people continue to retain deposits with the Yes bank? The answer to this is two things First of all, the bank accounts itself don't show us the kind of panic that people seem to have in their heads the deposits seem relatively safe. And to that extent, you know, if you look at the numbers that they have their INR 58,000 crores in government bonds are the 2 lakh Crore in govt deposits, that's 25% straightaway or 30% early and then they have loans worth INR 2,30,000 crores, they have another you know 10,000 crores of cash with RBI they have another INR 5000 somewhere else. So, there is essentially about 75,000 crores of very, very liquid assets that they have. They have also told us that, you know we've still seeing certain amount of rationalization in their in their loans. Even if all the BB loans were to go to zero and their current NPAs are all supposed to go to zero, they would lose roughly 20-25,000 crores this would take you know eight quarters because RBI way gives them already quarters write them down, in those eight quarters they will generate INR12-13,000 crores of profits because they have other loans which are good, there is a potential another fund raise that will come up so, at max I think even if they were to take this extreme step of where all these loans go bad, the capital ratios will still be okay... "I don't think it's a great time for anybody to buy Yes bank stock, it's a lottery! But the chances of winning substantial amounts are very low. So I'm not really interested in the stock. I am, however, of the opinion that the deposits are safe." 2. Cockroaches in Zee's Books? (5:45) If you look at the FII holding of ZEE, about 47% of ZEE is held by FIIs, out of which the big guys that is anybody who owns more than 1% of Zee add up to only only 19%. So, the remaining 30% of ZEE holding (held by FIIs), is held by a lot of FIIs who have less than 1% shares. Who are these FIIs? Why are there so many of them? And how come they all own these tiny little percentages of ZEE? We don't know the answer to that... 3. Deferred tax assets in the books of private and public sector banks If you take the 22% tax regime, you can't use the deferred tax assets. Whenever you take an asset and say that as it is worthless now, because I'm going to the 22% tax regime and that tax regime does not allow me to take the deferred tax asset, I am immediately going to lose that amount...

Host Deepak Shenoy (CEO) and Aditya Jaiswal discuss the corporate tax cut and it's impact on the economy and most importantly, on our portfolios. Read full transcript: https://www.capitalmind.in/2019/10/podcast-will-corporate-tax-cuts-fix-indias-bruised-economy-ep-11/ We discussed seven questions: Corporate tax cuts are fine but why aren't we talking about the consumption demand? (1:26) Why corporate tax cuts why not cut personal taxes? (9:15) How will the government bell the fiscal Cat? (13:00) Will India finally become the factory to the world? (16:58) Will the improving profitability lead to re-rating of the Indian market? (21:26) Why are the Megacaps rallying? (28:30) Are the good times back for the portfolios? (32:33)

Deepak Shenoy and Shray Chandra discuss in detail about the troubles at the Punjab and Maharashtra Cooperative (PMC) Bank, the role of RBI and what options do PMC bank's depositors have. Read full transcript: https://www.capitalmind.in/2019/09/podcast-the-pmc-bank-debacle-episode-10/

We discussed five broad questions: 1) Should India borrow abroad, if yes, then why? (10 mins) 2) Domestic liquidity issues and crowding out effect (8 minutes) 3) Why are experts (Ex- RBI governors) against this move? (3 mins) 4) What are risks o going overboard with overseas borrowing? (4 mins) 5) Risks of borrowing abroad (15 mins) Below is an excerpt of the podcast with time stamps of important sections! Read full transcript: https://www.capitalmind.in/2019/09/podcast-should-the-indian-government-borrow-from-abroad-episode-9/ 1.Should India borrow abroad, if yes, then why? (2:00) The government borrows roughly INR5 lakh crores net per year. In the next year, the estimate of revenue that we want to collect just taxes, Indians will collect about 16 lakh gross, the government will pay 6.5 lakh crores in debt interest payment. About 40% percent of all of money that you're paying as a tax, is going not to build infrastructure, not to feed the hungry, not to pay farmers for food. It's going towards interest payments on the debt they borrowed in the past. Why would this be a problem? because we borrow debt at extremely high rates part. And here's the important thing, India's own companies that borrow abroad (ONGC for an example) has a bond issued in euros and euro denominated debt... 2. Domestic liquidity issues and crowding out effect (10:40) You know, this is interesting, because what some of the economists have put across is or you know, what Indian Government is borrowing 3.3% and 2.2% is by states and some 4% is something else. And therefore, India's gross financial savings, which is about 10% of GDP out of which about 8% of GDP is borrowed by the government, my answer to that is that's not true! 3. Why are experts (Ex- RBI governors) against this move? (18:00) About 1% of GDP is about 2 lakh crores. I think it's too small. I think in any given year, you can say don't borrow more than 1% of GDP. That's fine. I don't think India will see appetite for more than 10 billion euros at this point, which is about 70-75,000 crores thousand crores. I don't think any more appetite exists right now because everybody wants to wait and watch. And I think this is a good start. If there is an appetite, of course, we can look at more, I think you know, go and give more and buy a bottle more, especially if they're going to give it to you at negative rates, just go and borrow as much as you can, up to say 10% of the total debt... 4. What are risks o going overboard with overseas borrowing? (21:00) The problem is that, what if another government is in power, right?. What if the same government is in power? Your problem is this, you're creating debt, it could be a poison- poisoning the well phenomenon. And the idea is that poisoning the well is like, you know, when, when people used to attack another country, these two are another place which will which had a fort, the idea was to throw poisoned frogs, rags, with darts and arrows. Some of them could fall inside a well which would then get poisoned, then nobody would have any source of water and everybody would die. Poisoning the well is to say to the next person that comes here, he will not enjoy that place because the water will be poisoned, they won't be able to drink the water. If you poison a well, you too can't come back! 5. Risks of borrowing abroad (24:50) I think the point is if we borrow $100 at 70 rupees, we get 7,000. We may get it at 0.45%, but three years later rupees or 100. And then we return the hundred dollars and we return 10,000 rupees.

"Under normal circumstances, merging PSUs would have been impossible, had the government tried it 5 years ago, there would been riot on the street, today there is not even a murmur. They were able to do that because the slowdown is obvious!" - Deepak Shenoy Host Deepak Shenoy (CEO) and Aditya Jaiswal discuss about the economic slowdown witnessed in the Indian economy. Read Full transcript: https://www.capitalmind.in/2019/09/podcast-how-slow-is-the-indian-economy-episode-8/ The Podcast was divided into three broad sections: a) Macro indicators (20 mins) b) Recent federal regulations (8 minutes) c) Few sectors which are currently facing a slowdown (30 mins) Below is an excerpt of the podcast with time stamps of important sections! 1) Macro-indicators 1:40- GDP growth: We have had 5 consecutive quarters of decelerating GDP numbers, right from 8.2% in Q1 18 to 5% in Q1 19, this was the slowest growth in 25 quarters. How bad the situation is and is the worst behind us? Or should we expect a couple of more tepid quarters? 3:20- Inflation: Inflation has been under control, it has been consistently falling for 6 straight months since Jan 2019, when inflation is under control, why is the GDP falling?, does this reflect weakening demand ultimately cooling off growth? Weakening of demand is concerning because we recently heard two big biscuit manufacturers going on record to say that people are not buying even 5-rupee packet biscuits. 8:07- Unemployment: Unemployment in FY18 stood at 6.1%, a 45 year high, now with big manufacturing units announcing massive job cuts, auto alone has seen 2.3 lakh people losing jobs, where do you see unemployment situation going in the near term? 11:02- Private consumption: Private consumption which constitutes about 58-59% of the GDP has been slowing down. Urban wage growth has stagnated, white collar wages have been slowing and rural consumption has also fallen on back of collapse on food prices and job cuts by manufacturing units, where do you see this going? 15:00- Investments: We looked at the GDP growth, inflation, unemployment and consumption, let's talk about investments. The gross capital formation has fallen from 34% in 2011 to 29% in 2018. Do you believe that we are stuck in a low growth cycle (Falling wages- falling savings, falling investments and low GDP growth)? 2) Recent federal regulations 20:30- Impact of GST and Demonetization on the economy About 30% of the Indian economy is completely informal and employs a chunk of the population. In 2014-15, late Arun Jaitley had made a statement, the informal sector doesn't want to operate in shadows, neither they are corrupt, rather it was a failure on the part of the federal governments that even after six decades of independence, we couldn't integrate them with the formal economy" In the pursuit of this integration, the government went ahead with the vision of cashless economy, demonetization and GST. Do you believe that demonetization and GST have actually hit the informal sector really hard? Do you think, somewhere, it turned out to be a shock therapy for the unorganized sector? 3) Sectors 28:18- Real Estate Residential real estate which was mostly fueled by black money is really not moving except the affordable housing part. Now that black money is hiding in may be gold! How will that come back into the economy? Where do you see the sector going? 33:09- Automobiles Now, we all know that there is a crisis in the Indian auto industry, all big manufacturers are reporting double digit falls in volumes. TVS chairman made a big statement, that this slowdown is the worst in 3 decades and spread across sectors. Auto stocks recently witnessed buying interest in the anticipation of a GST cut, do you believe that a GST cut can change the fortunes of the sector? 41:28- Automobile replacement cycle A lot of existing car owners have started using Ola/Uber/Quick ride and this has led to postponement new car purchase, where do you see the replacement cycle going forward? 45:23- FMCG Parle-G and Britannia went on record to say that people are not buying even INR5 rupee packet biscuits. But FMCG stocks still command relatively high premium, why is that? Do you see optimism in investors, that among autos, infra, discretionary, real estate, financials, FMCG will be resilient. 50:50- Final thoughts! You can also listen to our podcasts on our app: www.capitalmind.in/podcast

Host Deepak Shenoy (CEO) and Aditya Jaiswal discuss investor queries in a new show - The Investor Wants to Know. Topics discussed include passive investing, current NBFC scenario, slowdown in the auto sector, cooking up of books by companies, fundamental analysis, global recession, surge in gold prices, aviation industry. Read Full transcript: https://www.capitalmind.in/2019/09/podcast-the-investor-wants-to-know-episode-7/ Notes: How do you see the investment horizon for different categories of MFs? If you are looking for a horizon for investing, then it's not investing, it's a trade! Asset allocation metrics (large, mid and small caps) can shift, but horizon should be long term. Stay invested as long as you don't need the money! What are your views on passive investing? Is it advisable to invest in small cap index funds as most of good performing stocks will become midcaps and non-performing midcaps will become large caps which might pull the returns down? In India, one should look at the large caps because that is where the index funds will benefit the most. If you invest in small cap index, your best stocks are going to move out. Rather, one may look at the stocks which are actually leaving the small cap index. How bad is the NBFC scenario? Many of the NBFC's may lose their current structure- few will be taken over, few will be cut up into pieces and sold. Global P/E players are also keen on buying assets on discounts. None of NBFCs will go bust, since they have valuable assets. It will take another year for clarity to emerge. How to find out if a company is cooking up it's books? It is very difficult for a retail investor to dig up gold plated numbers, there is no one way. Retail investors should diversify, do not put more than 5-10% in one stock. It's not worth losing sleep over your investments! What are your views on auto sector? We are going through a time when people are not buying cars, at the same time, India is not at a stage where people who aspire to buy cars or bikes, have bought enough of them. China sells 16x more vehicles than India. This is not an unending cycle or death of auto industry. You can also listen to our podcasts on our app: www.capitalmind.in/podcast

Detailed Notes from Episode 6 Episode 6 - Momentum: The Anomaly that Persist Fri Aug 23, 2019 Host Deepak Shenoy (CEO) interviewing Prashanth Krishna (Trading, Momentum Portfolio) on the Momentum Strategy and why it's the anomaly that persists. Capitalmind offers the Momentum Portfolio as part of Capitalmind Premium (subscription service) in Wealth and as part of our Wealth Management Service. Read full transcript: https://www.capitalmind.in/2019/08/podcast-momentum-the-anomaly-that-persists/ What's the Definition of Momentum Stocks moving in one direction continue to do so. Speculation? No, Momentum is a factor identifying a stock that is going up and that continues to do so. As part of Momentum, we are not asking why - we're just identifying when this trend is happening and when it's stopped. Same exercise on the way down as well. We are betting on the trend of the market, not taking a contrarian view. Why does Momentum work? We have research going back decades (generally in the US and other developed markets) that clearly shows that momentum works. We can show the persistence and impact of momentum but the reasons aren't very convincing (Rory Sutherland anecdote on knowing something works but not having the exact reason why). One of the best reasons I've come across attributes this to behavioral factors. Investors underestimate at beginning and over-estimate at the end. Another is asymmetric information - if you know or have figured out something about a stock you will start to acquire more and more shares. As information trickles in, people will jump on the bandwagon and others will replicate. The stock goes from under-information to over-participation driven by FOMO and greed. Isaac Newton story about the South Sea Company, He got in, made 100%, got out, but jumped in once again on peer pressure and then eventually lost everything. Momentum has an end too How Long do you hold a stock for and what are the Portfolio Construction Strategy, Diversification criteria: We don't buy for life like Buffett. The average holding period is a couple of months. We know something about the stock but simply not enough to make long term hold decisions Price is the key, price action is the trigger for our investment and exit choices. We don't want a low liquidity stock We would rather not have a high volatility stock either that keeps hitting upper and/or lower circuits. The best fit is a stock that goes up steadily without making waves So avoid the parabolic rise? Yes, HEG is an example that after it hit all time highs it was subject to indefinite growth style justifications. You can't start with momentum and then transition to fundamentals. 25-30 stocks is an optimal choice. Even a 50% fall in Vakrangee where couldn't get out.only caused a drop of 1-2% of your overall capital which is still manageable. How do you Rebalance? Rebalancing is meaningful - selling and buying has costs, taxes and slippage. Monthly is a sensible level. Let it ride for a month unless there is extreme news. At the next month, re-visit is the stock still worth holding. What do you do in times like these (months leading up to Aug 2019) when there's not enough momentum In Bear runs like the current environment, we stay in cash if we can't find 30 stocks. If we only find 20 stocks (instead of 30), we have 33% in cash. Momentum is often viewed as a negative because of the dangers of manipulation (promoters and operators driving prices). Since you don't have filters that can track manipulation - how do you deal with this? Manipulation happens at every level, at accounting, price, balance sheet - even an analysis of fundamentals have risk from misleading or false financial statements. Manipulation is easier in a low volume stock. If you filter on high volume, it's tougher to get caught in a pump and dump. Between filters and diversification, we avoid mistakes or avoid mistakes that we can't recover from. In Vakrangee - we rode the stock on the way up and then down as well! Once the lower circuit hits, you can't exit no matter what your back test claims. Do you get time to exit? We're scared of parabolic charts - they become waterfall when the stock comes down. The lower circuits often kick in (unless it's an F&O stock) so it's not easy to get out. Fortunately, momentum normally exhausts over time so it gives you down to exit. It's the series of small waterfalls kills an investor in a stock. Pitfalls or Things to Watch out for How will you build your version of Momentum? If you're not looking at volume filters - that's a big risk. What's the universe? Momentum today would be say 50% in large and 50% mid cap. Outside of a wholesale fraud, you should have regular market risk. When there's a drawdown, will you have the conviction to exit the stock like your model tells you to or will you be loss averse? Alpha comes from behavior rather than the genius of the strategy. Have faith in the strategy. The biggest failure point is us. What are the returns like?