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On Slack: Beware of the DUD, Containers, Downside of Momentum, Flash Storage, Market Dynamics, Mindless Investing, Penny Stocks, Smart Beta and more….


On Slack: Beware of the DUD, Containers, Downside of Momentum, Flash Storage, Market Dynamics, Mindless Investing, Penny Stocks, Smart Beta and more….
Slack is where the daily action happens. We take pride in our diverse and always helpful member community which includes value investors, fund managers, and professional traders. Here is a brief summary of some of the interesting things discussed there in the last few days. Find all older ones here.

#general: GST going to present Rs 20 trln opportunity over next 5-10 years: Manoj Bahety, Edelweiss Securities

Economic Times

#general: Containers

Containers is an 8-part audio documentary about how global trade has transformed the economy and ourselves. Host and correspondent Alexis Madrigal leads you through the world of ships and sailors, technology and tugboats, warehouses and cranes. Podtail

#stocks: Wockhardt gets Irish regulatory nod for certificate renewal

Drug firm Wockhardt today said the Health Products Regulatory Authority of Ireland has given nod to the renewal of certificate for its Aurangabad facility. Business Standard

#general: HP Enterprise spends $1 billion to add flash storage company

Hewlett Packard Enterprise Co.  will buy Nimble Storage in a deal valued at about $1 billion to expand the corporate-technology provider’s hardware lineup, adding another acquisition to its recent flurry of purchases aimed at bolstering growth. Dallas News

#general: P/E Ratio Analysis of Nifty Returns – 2017 Update

This is the detailed annual analysis – comparing Nifty P/E with Investment Returns. It compares returns earned (during various periods ranging from 3 to 10 years) when investments have been made at various PE levels of the Nifty-50. Stable Investor

#general: First-ever prosecution for illegal profits via penny stocks

Shell companies, stock brokers, beneficiaries and operators allegedly laundered more than Rs 10,000 crore in Mumbai alone by manipulating listed penny stocks to claim bogus long term capital gain, according to a report in The Indian Express. Money Control

#general: Swedroe: The Downside Of Momentum

Momentum has had the worst crashes, making the strategy unappealing to investors with strong risk aversion. ETF

#commodities: One trading firm in Singapore is buying mind-boggling amounts of the world’s sugar supply

Wilmar International agreed to buy more than $500 million in sugar at the expiration of a contract on the ICE futures exchange. (Futures are agreements to buy or sell assets at a fixed price at a later date.) In 2016 alone, the company handled a whopping 8% of the world’s sugar production, according to the Wall Street Journal. Quartz

#stocks: D-Mart IPO: Retail must wait till HNIs’ leverage trade plays out

The IPO of Avenue Supermarts, which runs the D-Mart supermarket chain, is likely to see significant oversubscription. However, if the so-called GMP (grey market premium) is any indicator, the blockbuster listing might ensure healthy gains for HNIs if the oversubscription doesn’t cross historic highs. Money Control

#general: Market Dynamics are changing

3 products are changing the market dynamics in the non-debt segment in India, and they cannot be ignored: Subra Money

#general: I am not a free enterprise, customers must pay me for my services: Aditya Puri, HDFC Bank

HDFC Bank MD Aditya Puri doesn’t mince words, be it opposing freebies even if it is from the government or praising drastic steps like demonetisation. In an interview with ET, he says the future of Indian economy as well as his bank, is brighter than it was in the past. Economic Times

#general: Delhi slashes jet fuel tax to 1% for regional connectivity

Analysts believe an overall 10-15 percent cuts in costs is likely for all take-offs from Delhi. This may be followed by similar news in Mumbai and Chennai. Money Control

#bonds: Reliance MF’s CPSE ETF to open on Mar 14; to raise Rs 2,500-cr

The government will next week launch the third tranche of CPSE Exchange Traded Fund, managed by Reliance Mutual Fund, to garner about Rs 2,500 crore. Times of India

#stocks: Uday Kotak Sells 1.5% Stake In Kotak Mahindra Bank To Canadian Pension Funds

India’s richest banker Uday Kotak sold a part of his stake in Kotak Mahindra Bank to Canadian pension fund manager Caisse de Depot et Placement du Quebec (CPDQ) and Canada Pension Plan Investment Board on Wednesday. Bloomberg Quint

#general: Uber Should Beware the DUD Behind Indian Expansion

It’s great that Travis Kalanick is seeking leadership help, though the Uber Technologies Inc. CEO might need advice in another area. Let’s call it DUD — distressed Uber debt. Bloomberg Quint

#general: How Long Will This Bull Market Last?

You’ve probably already heard that this week marks the eighth anniversary of the bull market. Some would argue, myself included, that bull markets don’t start at the depths of a bear, but whatever, let’s just go with it for the purposes of moving past a dead and beaten horse. The Irrelevant Investor

#general: A clinical test of the 5 most popular Smart Beta factors

If treated like new drugs, most would never be cleared for sale to the public. Financial Times

#general: Modi govt may soon pay rent for urban poor in 100 smart cities

The government would also monetise the confiscated benami properties for construction of affordable homes to address the housing shortage. Economic Times Realty

#general: Domestic equity inflows could double to $ 55 billion due to Demonetisation, says Citi

Even this could be an implication of demonetisation. Global research house Citi believes the flow of domestic money into India’s equity markets may double during the next financial year (FY) to $ 55 billion compared to the $ 28 billion during FY 2016-17.  Economic Times

#general: Do Not Shift Your EPF Corpus to NPS: It is a Trap!


#bonds: Indian banks at risk of skipping coupon payments on bonds, says Fitch

In August 2016, Dhanlaxmi Bank had skipped interest payments on its Upper Tier-2 bonds as it didn’t meet its minimum capital requirement in the March quarter. Livemint

#general: ‘But what about the railways …?’ ​​The myth of Britain’s gifts to India

Apologists for empire like to claim that the British brought democracy, the rule of law and trains to India. Isn’t it a bit rich to oppress, torture and imprison a people for 200 years, then take credit for benefits that were entirely accidental? The Guardian

#bonds: Did Taurus MF Conceal the BILT December Downgrades?

MF Critic

#bonds: Mutual funds: How to take advantage of ‘March phenomenon’

In the money market, which is the market for very short maturity instruments, interest rates move up due to higher demand for money. The peaking of interest rates happen typically around the third week of March, since corporates and banks do not wait for the last moment to manage their balance sheets. Financial Express

#general: Have public issues begun treading their own path?

Gone are the days when companies would time their IPOs to the sentiments in the secondary market. Over the last few years, companies are going for fund-raising through public floats irrespective of the performance of the secondary market at that point in time. For example, in FY16, capital raising witnessed growth of 15.5 per cent in FY16 even as benchmark indices and the broader market gave negative return of 8-10 per cent. The Hindu Business Line

#general: Is mindless investing dangerous?


#general: Does Warren Buffett Not Understand Risk-Adjusted Returns?

Berkshire Hathaway is simply a sine wave with a bigger amplitude. It has higher returns but with more volatility over the same time period as the hedge fund bet. Somewhere, a hedge fund manager is getting the return of a high yield bond with the volatility of a certificate of deposit. That is the guy who is a sorcerer.  Bloomberg

#general: Forget today’s strike, future tense for Ola, Uber

With the initiation of CNG and comeback of radio cabs, the road seems tough for aggregator cab drivers. DNA India

#general: Explaining a Paradox: Why Good (Bad) Companies can be Bad (Good) Investments!

In nine posts, stretched out over almost two months, I have tried to describe how companies around the world make investments, finance them and decide how much cash to return to shareholders. Aswath Damodaran
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