Sinewave Securities

Key Terms in Lending Sector Cost of Funds and Net Interest Margin  – As banking works on lending the capital, earn the difference principle, lesser the cost of funds, more will be the difference. Thus difference post expenses is known as Net Interest Margin i.e. the amount of money that a bank is earning in interest on loans compared to the amount it is paying in interest on deposits.

From Buffett and Charlie of Berkshire to Raamdeo of Motilal Oswal What is investing ? Investing  is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. “Risk” is the possibility that this objective won’t be attained. By that standard, purportedly “risk-free” long-term bonds in 2012 were a far riskier investment than a longterm investment in common stocks. At that time, even a 1% annual rate of inflation between 2012 and 2017 would have decreased the purchasing-power of the government bond. “Investment is most intelligent when it is most businesslike.” — The Intelligent Investor by Benjamin Graham Warren tells his investment journey starting from purchasing farm in Omaha and explains how simple decisions if allowed to compound can turn rags to riches. “The investment had no downside and potentially had substantial upside. There would, of course, be the occasional bad crop and prices would sometimes disappoint. But ...

Stocks to Riches Parag Parikh was an ace equity investor and founder of PPFAS Mutual Fund (India's leading mutual fund house). His fund has outperformed broader markets for an extended period of time making it one of the most successful fund house of country. The book Stocks to Riches is beginner's guide to stock market, how markets work and how people perceive it to work, behavioral finance, mental models and investor psychology. Mr. Parikh wrote this book in 2005 after the dot com bubble, and Asian economic crisis when the Indian equity market was about to enter a bull run. It is divided into 11 chapters, starting from the basics and gradually moving towards an investor’s behavioral insights.

The Healthcare delivery Industry - According to the Global Health Expenditure Database compiled by the World Health Organisation (WHO), India’s current expenditure on healthcare was 3.5% of GDP in 2018. India’s real GDP in fiscal 2019 was Rs 139.8 trillion (constant fiscal 2012 prices). Accordingly, India’ current healthcare expenditure during fiscal 2019 is estimated at approximately Rs 4.9 trillion. India trails not just developed countries such as the United States (the US) and the United Kingdom (the UK), but also developing countries such as Brazil, Nepal, Vietnam, Singapore, Sri Lanka, Malaysia, and Thailand in terms of healthcare spending as a percentage of GDP as of 2018.

The book as the title suggest Fooled by Randomness brings out the role of chance and luck over widely proclaimed qualities marketed more often in the world of randomness. It lays an alternative perspective to various aspects like luck, probability, theory etc. As Taleb proclaims in the preface “my motto is to tease those who take themselves and quality of their knowledge too seriously”. Being a mathematician and an long standing advocate of probability theory Taleb does not refrain from trolling the concept of “certain knowledge” and its practitioners. Qualities like perseverance, persistence and doggedness may be necessary but not enough  in order to win. The prologue gives brief outline regarding the flow of the book and what does it stand for. It lays down the “Table of confusion” covering the central distinctions used in the book.

This is part two of the series in which I have tried to combine and sort them topicwise. Black Sholes The Black-Scholes formula has approached the status of holy writ in finance, and is used when valuing equity put options for financial statement purposes. Key inputs to the calculation include a  contract’s maturity and strike price, as well as the analyst’s expectations for volatility, interest rates and dividends. If the formula is applied to extended time periods, however, it can produce absurd results. In fairness, Black and Scholes almost certainly understood this point well.

Few case studies and concepts by Buffett given through the newsletters are compiled topic wise. It combines Buffett’s magic and mind, simplicity and subtleness which results into extraordinary results overtime past 60 years has been provided in these newsletters year after year. The idea of ”praise specifically criticize generally” can be seen over the years in these letters over the years.

 𝗔 𝗖𝗼𝗻𝘃𝗲𝗿𝘀𝗮𝘁𝗶𝗼𝗻 𝘄𝗶𝘁𝗵 𝗖𝗵𝗿𝗶𝘀 𝗠𝗮𝘆𝗲𝗿 –Moderated by prof. Sanjay Bakshi. He talks about focusing illusion –whatever you are looking or thinking at the time has outsize support in your mind comes. Prof. Bakshi brings up a few questions from Chris Mayer’s book 100 Baggers.

CFA India Society’s  YouTube channel is one of the most underrated source to widen your knowledge spectrum. I have tried to pick a few episodes and summarize them. I have also added the ideas from the latest interviews of the delegated person from a few episodes. Howard Marks Howard Marks of Oaktree Capital Management –CFA charter holder and one of the most renowned investors. Oaktree Capital Management is an American global asset management firm specializing in alternative investment strategies. Oaktree emphasizes an opportunistic, value-oriented, and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Throwing the light upon 2008 GFC, Howard gives his view about broader markets, bitcoin, central bank bailouts and a lot more. I have tried to summarize two episodes –The Truth about Investing and Something of Value. Buy at any Pr...