Why Flipkart Lost $10 billion?

Vanguard, a mutual fund based in the US, marked down the value of its investment in Flipkart, an Indian e-commerce company, by 33%. Another fund, Morgan Stanley, cut its valuation of Flipkart. Vanguard brought down the valuation of Flipkart from $11 billion to $7.3 billion. While Morgan Stanley is a little more conservative by placing…

Demonetization And Its Impact

The issues around demonetization are complex. In a recent CNBC interview with former RBI governor, Dr.Rangarajan, when asked by the anchor as to how these events will translate on the RBI’s Balance Sheet and the Government’s Balance Sheet, he replied that he ‘has to apply his mind’ on these issues. The question was regarding the…

The case against policy portfolio and automated models

A worrying trend that has emerged recently among financial planners is the swearing by rigid asset-allocation models, called policy portfolios. It has attained a fervency, crudely akin to religious beliefs. To the beginner, policy portfolio is an investment portfolio with asset classes (such as equities, debt, gold etc) following a steady, long-term portfolio weight. Economic perspectives…

In Trust we trust: Protecting Wealth through Trusts

The Chinese have an expression. Wealth does not pass three generations. It is rare the wealth of a family can last three generations. An illustration Mike ‘Mish’ Shedlock, in his blog Global Economic Analysis describes the three generations as follows. Meaning: It’s rare the wealth of a family can last for three generations (the 2nd may see the…

Financial Derivatives – Accounting and Tax Challenges

Financial derivatives are complex instruments; their accounting and communication to investors and tax authorities are even tougher. Financial derivatives have been used by large companies in India for many years (available since early 1990s).  The evolution of accounting rules (ICAI, SEBI, RBI) with respect to financial instruments broadly has been slow-paced. Though in the initial…

Dealing With Investment Risks In Individual Portfolios

My previous article, Managing Individual Investment Portfolios Better, deliberated on the friction between individual perception of financial markets and investing in general versus, the actual behavior and nature of markets. This article delves into investment risks, its causes, and mechanisms to deal with such risks. Discernment of investment risks help build better portfolios and commit fewer mistakes….