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Top 10 Reads: All Time Highs, Bond Rally, BS3 Record Sales, Elitist Investor, Gokaldas Exports, MFIs Trouble 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 are the top 10 interesting things discussed there in the last few days. Find all older ones here.

#general: Don’t Be An Elitist Investor

Acting like a snob will not make you many friends. It will also cost you a lot of money. Many people are familiar with Warren Buffett’s 2007 $500,000 bet that any combination of hedge funds would not outperform the S&P 500 Index over the next 10 years. Though investors have paid the enormous fee of 2% of assets plus 20% of profits, the simple index has trounced the snobby portfolio. The S&P 500 has returned 7.2% over this period while the hedge fund portfolio, chosen by Ted Seides of Protégé Investments, managed only a 2.2% gain. Tony Isola

#stock: Gokaldas Exports gets a Year End “Pop”

One of the open secrets of the fund management business is the desire for stocks to have high prices at the year-end as this is used for measuring fund performance and hence the bonuses of the fund managers. Gokaldas Exports, which is approximately 40% owned by Blackstone, offers an amusing lesson.  Alpha Ideas

#stock: Two Wheeler Dealers Expect 90 Percent Of BS3 Stocks To Be Sold; Industry Expects Sales Record

The BS3 ban as the Supreme Court ruling on maintaining the April 1 2017 deadline has resulted in a massive sales rush on the last day BS III vehicles can be sold. While it has not been the same for commercial vehicles or three wheelers, bike and scooter makers are seeing massive footfalls at their dealerships. So much so that of the 6.71 lakh units of BS III compatible motorcycles and scooters left in the pipeline, dealers are expecting to sell off almost everything! NDTV Auto

 #general: If you aren’t rich by 45, you might as well give up

Life may begin at 40, according to any number of Hallmark cards, but by 45, your chances of ever landing a major raise are pretty much dead. At least, that’s one of the many takeaways from a recent paper by a group of Federal Reserve researchers in Minneapolis and New York, who used a massive trove of Social Security Administration data dating back to 1978 to analyze how men’s earnings evolve over time. Business Insider

#general: A small Hyderabad-based firm is giving the world’s biggest seed company Monsanto a hard time

Tens of millions of dollars were within reach for M. Prabhakara Rao as he prepared in April 2015 to take his Indian cotton seed company public. The Indian businessman already had $54 million in initial funding from an American private equity investor. Rao had also locked in a long-term licensing agreement with MonsantoBSE 0.06 % Co , the world’s largest seed company, for the technology used in genetically modified cotton seeds that made up the majority of his annual sales. Economic Times

 #general: All-Time Highs Are Usually Followed By All-Time Highs

Momentum is one of the most misunderstood concepts in the investment world. Everyone intuitively understands value investing (buy a dollar for fifty cents) but few people grasp how much momentum (in both directions) impacts the markets. I wrote the following post for Bloomberg in late-January. Since this was published there have been 13 additional all-time highs in the Dow. This won’t last forever but these things can go on for longer than most would imagine is possible. A Wealth of Common Sense

 #macronomics: Fresh trouble for MFIs as drought-hit Karnataka sees no repayment of loans

Trouble for the Rs 57,000-crore microfinance sector is brewing again with the drought-hit Karnataka, the largest MFI market with about 14% share, emerging as the new stress point with non-payment of dues. Repayment concerns are also being noticed in some smaller pockets of Tamil Nadu, two persons familiar with the development said. Economic Times

#bond:10-year benchmark bond rallies on repo squeeze

Benchmark 10-year bond rallied to its highest level in two months, as traders who had shorted the debt rushed to cover positions by buying the paper in spot markets after being unable to secure them through the inter-bank repo market. The Hindu Business Line

#macronomics: The declining importance of bank credit

The beginnings of a quiet structural change in Indian finance have been evident for a couple of years now. Companies have begun to seek funds from sources other than banks. These include equity, foreign direct investment, corporate bond issues, commercial paper and borrowing from finance companies. A column in the Mark to Market column in this newspaper reported on 24 March that banks provided barely a fifth of the incremental credit extended to companies in fiscal year 2017. Live Mint

#macronomics: In a first since 1991, FDI flow takes care of CAD

For the first time since the opening up of the economy in 1991, India’s current account deficit – the excess of imports over exports – is being funded by foreign direct investment (FDI), a sign of rising confidence among long-term investors in Prime Minister Narendra Modi’s ability to strengthen the country’s economic foundation for sustained growth. Economic Times
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