[Newsletter] Gujarat PSU stocks zoom, Market Overview and Things we are reading!

🔆 Saturday Coffee Newsletter

• Market Overview: Top Stocks & Asset Classes
• Good Reads: 5 good reads on investing & finance
• ELI 5: Gujarat PSU stocks on fire!
• Pop Quiz: Answer and win a cool prize!

What’s up with markets? 📉📈

Nifty 50 gained 3% this week and is now only ~4% away from its all time high. Good times indeed for stocks. Although, Gold and Silver didn’t do much this week but they’re already having a fantastic run since the last 18 months. USD is stronger as ever and nearing the 82 mark.

In this strong market, PSU banks had yet another fantastic week with 7.3% gains followed by Realty and IT Index.

Gujarat PSU stocks on 🔥

Gujarat government announced a proposal for three things on Tuesday (April 25), about the public sector companies owned by them:

• They should pay 30% of their earnings after tax as dividends. Or 5% of net worth, whichever is higher.
• If they have more than 1000 cr. in the bank, and a networth of 2000 cr. or more, they must do a buy back.
• Oh, under some strange and irrelevant conditions, the companies must give bonus shares or do a stock split

Stocks today that have “Gujarat” in their name are hugely up the next day (April 26). Simply because oh, some news has come, and it sounds good.

On a weekly basis the stocks fired up like a rocketship with a belief that this policy will tremendously reward the shareholders of these PSU.

But, will it?

Read: Will forcing PSUs to pay dividends make them more valuable?

What we are reading 📝

• Summary of a research paper on Fact, Fiction and Factor Investing published by AQR in Jan 2023. A must-read for any investor trying to understand quantitative factor investing better. Read: Fact, Fiction and Factor Investing
• As stock pickers you will accumulate battle scars. Especially in micro and smallcap stocks where the spectrum of outcomes are wider – more violent. Read: Battle Scars
• Discover the true value of an emergency fund, learn effective saving strategies, and debunk common myths about how much you should really set aside for life’s unexpected events. Read: How Much to Save in Your Emergency Fund: A Comprehensive Guide
• Things you can learn from Howard Marks. Read: Wise Words from Howard Marks
• Knowing how to analyze a stock is crucial to make good investment decisions. The best investors in the world use a strict and rational framework to analyze stocks. Read: How to analyze a stock