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Finance Investment Strategy

Hedge Funds 101

Introduction This week, let’s gain a good understanding about “What exactly Hedge Funds are?”, “What they do?” and “Who they cater to?”. Hopefully by the end of this article, you’d associate the term “Hedge Funds” with more than just fancy cars, an elite lifestyle and humungous mansions (that’s what most movies portray right?) Alright, let’s […]

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Economy

Introduction to Economic Cycles

INTRODUCTION This week, let’s focus on getting the basics of an Economic Cycle right. When you’re through with this article, you’d no longer feel lost when the wizards on Financial Times say stuff like “Expect a serious economic contraction in Q2 of year 2034″. Alright, let’s jump right into it! What is a Cycle? A […]

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Economy

Shapes of Economic Recovery

In order to understand the behaviour of the economic recovery from the COVID-19 pandemic, the different shapes of recovery has been a hot topic of discussion in most forums. Howard Marks draws a beautiful analogy in his memo stating, “The government will provide life support to the economy during the coma and bring the patient […]

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Behavioral Finance Finance

Behavioral Finance Series Part II

Part I gave a good introduction to what Behavioural Finance actually is. As a recap, Behavioural Biases can be divided into two categories namely, (I) Cognitive Errors and (II) Emotional Biases. In this post, let’s delve deeper and understand what our “Emotional Biases” are shall we? EMOTIONAL BIASES Emotional Biases are the types of behavioural […]

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Finance Investment Strategy

Application of Factor Based Investing

Setting the Context: Just like investors analyse different asset classes to allocate their investments, another style of investing is observing the exposure of the investment portfolio to different factors. Factors are the drivers of return across different asset classes. For example, consider growth of GDP, it’s pretty intuitive that when an economy is performing well, […]

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Behavioral Finance Finance

Behavioral Finance Series Part III

SETTING THE CONTEXT So, in the previous two posts in the “Behavioural Finance Series” I had provided a brief introduction on the topic of Behavioural Finance, its distinction from the Traditional Finance Perspective and covered an overview of different types of Emotional Biases. If you’ve not already gone over those articles here’s the link, Part […]

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Behavioral Finance Finance

Behavioral Finance Series Part I

This week’s post is going to explore a topic I’ve perpetually been fascinated about – “Behavioural Finance”, specifically the various biases we might fall victim to! INTRODUCTION To provide you some context, Traditional Finance [TF] assumes that investors are “rational” decision makers and have access to perfect information equally. It characterises investors as risk averse […]

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Finance Investment Strategy

Introduction to Factor Investing

What is Factor Investing? Introduction Factor Investing is an approach wherein the investor focuses on identifying the key drivers that push the different asset-class returns (like stocks or bonds). These drivers could be macro-economic drivers or fundamental drivers. Following Factor Investing would allow an investor to dig deeper into the exposures (think risks) for each […]

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Economy Finance

Taper Tantrum

Who knew markets could throw tantrums too? That’s exactly what happened in the year 2013 – when the market collectively reacted to the possibility of the Fed stopping it’s large-scale bond purchase program. Concept: What was the”Bond-purchasing” program about? The Fed started purchasing large amounts of treasury bonds and other financial assets, in order to […]

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Behavioral Finance Finance

Behavioural Models

Setting the Context: In a previous post, I had gone over the basics of different types of theories underlying Portfolio Management. Now, since these theories stem from the Traditional Finance perspective, I felt it was apropos to introduce a couple of theories which come under the realm of Behavioural Finance. Right, so let’s jump into […]