In 2008, just when the global financial crisis was taking a toll on banks and businesses, Sequoia cap, one of the largest venture capital firms in the world, sent an advisory presentation to all the start-ups they’d invested in. It was called, “R.I.P. Good Times” and you can find it here.
It is a presentation worth being saved and revisited often, whether you are a business or an individual. And if there is only one slide you are going to look at in that pack, head to slide 53 which is titled, “The Solution”. It is a laundry list of things to do when the good times are over. When the going gets tough, the tough get going.
IN TODAY'S NEWSLETTER
- Market Update
- News in brief
- Hitting the exit button on mutual funds
- Cover Story : Let's play a money game, shall we?
- Quiz, price is right and thought for the day
Name the company which holds the world record for highest ever sales/revenue per year?
- Maruti Suzuki India limited announced this week that the company is planning to increase prices on its models from Jan'21. The company said that input costs have risen in the past year and it is only fair that customers share some of that pain. Or all of that pain.
- Bloomberg reported this week that, the US Federal Trade Commission has filed an antitrust lawsuit against Facebook accusing it of abusing its monopoly in social media to stifle competition. This could potentially end up in Facebook having to divest from some of its acquired businesses like Instagram or Whatsapp.
- Competition commission of India (CCI) has initiated a probe against cement companies into possible cartelisation by the firms. In a release to the exchange, ACC and Ambuja cements
both said that their businesses continue to act in compliance competition laws. Funny thing, the news release made by these two companies was almost word-to-word the same. Way to tell the CCI that there is no colluding!
L&T was on a winning spree this week, or at least the lowest-bidder spree! The company was declared the lowest bidder on multiple projects including the construction of the main plant of Kudankulam 5&6 units (KKNP 5&6) for Nuclear Power Corporation of India Limited (NPCIL), the elevated sections of Chennai Metro’s new lines-4 & 5 and ONGC’s New Living Quarters & Revamp at NLRNC Project.
- Airbnb’s stocks went public this week and they more than doubled on listing day valuing the company at $100 Billion. This figure is greater than the combined valuation of Marriott, Hilton and Hyatt hotels! Other recent tech IPOs including Doordash (86%), C3.AI(More than 100%), Snowflake (More than 100%) have all delivered exceptional listing day gains. Wait a minute, you are still investing in fixed deposits, aren’t you?
IN LESS THAN A FEW HUNDRED WORDS
Hitting the exit button on mutual funds!
The association of mutual funds in India (AMFI) recently released data on mutual fund AUM across fund houses and scheme categories. If there is one trend that is super clear from the data, it is that people are hitting the exit button on equity mutual funds. Far more money has gone out of these schemes than have come in over the last 5 months. What’s more, outflows from growth/equity-oriented schemes hit the highest point this year. This chart should give you an overview.
Hybrid schemes, which invest in part equity & part bonds, have also seen their assets under management (AUM) continuously reduce in value due to cash outflows. Close to Rs.24K crores of money has flown out over the last 5 months. This chart shows the trend.
The trend in income/debt oriented funds is a bit mixed. Over the last 6 months, they have recorded 2 months of net outflows and the rest have seen net positive inflows into these schemes. However, new inflows as well as new outflows have both reduced drastically (to half of pre-pandemic levels). This is because, given the rather low interest rates on short term maturities, people have moved to longer duration maturities and consequently the monthly churn is lower.
To be fair, there is more money in mutual funds now than there was on the 31st of March 2020. Heck of a lot more (about Rs.7.75 Lakhs Crores more, 35% growth in AUM).
But a vast majority of that increase in AUM has come by way of the 60% returns delivered by the index (NIFTY50) since 31 March 2020. Total new money mobilised of Rs.2.72 Lakhs Crores during this period is only slightly above the amount of money that people withdrew in the month of March 2020 (Rs.2.12 Lakhs Crores) from mutual funds.
The key message is this – No matter the large entourage of people around new fund offerings, no matter the headlines of record high MF AUMs, the real truth is that people are being cautious. And given the silly valuations in the markets, they are right to be so.
GAME : THE PRICE IS RIGHT
This little embossing right here is called the Scinde Dawk – The first ever postal stamp of India. It is one of the rarest stamps amongst philatelists and was first in circulation in the year 1852. It cost ½ Anna when introduced. It is called Scinde Dawk because its origin is traced back to the Sindh province dawks (Hindustani word for post). One of these rare collections was sold in an auction last year. Your job, is to guess the price at which it was sold for.
Let's play a mondey game, shall we?
Let's play a money game, shall we? See how good you are with your money? I will make you two offers and you will have to pick one. Ready? Hit the link below
How to invest your money? An Asset Allocation Perspective
Earlier last month, we wrote about goal based investing. Later, we took a look at asset allocation based investing. We reviewed the asset classes, assumed a 55%/45% allocation to risky/risk free assets and looked at how an asset allocation based investment would work. Follow along this infographic or check out the full version of it at our website here.
The key to getting your asset mix (risky vs. risk free assets) right, is to quantify your risk tolerance. But how exactly would one quantify risk tolerance? Hit the link below to know more and find out the ideal asset allocation for you.
Is the company which holds the world record for highest ever revenue/sales per year. It clocked in total revenues of $524 Billion in the year 2019. If Walmart were a country, it’s GDP would be the 25th largest in the world ahead of countries like Austria, Singapore, Malaysia and New Zealand.
Food delivery platform Swiggy announced this week that they are going to onboard over 36,000 street food vendors on the platform.
Mukesh bhai has become a daada! Shloka and Akash Ambani have become parents of a baby boy. And no, that is NOT a reason to buy shares of Reliance Industries.
- Domestic wholesale sales of passenger vehicles rose 12.7% year on year in November. Two-wheeler sales rose by 22% last month.
THOUGHT FOR THE DAY
But you, may have an aptitude for ballet 🙂
ANSWER TO THE PRICE IS RIGHT
The price at which India's (& Asia's) first postal stamp Scinde Dawk was sold for in an auction in last year. Its sale price in 1852 was 1/2 anna! Calculate the return on that investment! Speaking of which, did you manage to read our special edition from last week on post office?
China will be one of the very few large economies to post positive GDP growth figures this year. But what exactly is fuelling this growth? Reforms or Statism? - China Dashboard
Have you ever wondered what a dream (& green) home of the future could look like? Three leading architects suggest that it could look like a sunflower! - Bloomberg
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