A few good things on money and the markets

March 5, 2024

Welcome to the first edition of ‘Z-Connect this Week’, a newsletter where we wrap up everything we publish on Z-Connect, Varsity, Rainmatter, and TradingQnA. Those explainers, podcasts, updates, and every other experiment we cook up to help you understand the annoying and needlessly mysterious world of finance.

On Subtext

Big Trouble in Brittle China I: How the Chinese Dragon Burnt Itself

As an Indian, it’s easy to see China as the ‘bad guy’ of global affairs. That’s the side you always see in our media: an angry, overconfident nation set on irking others and gobbling up their territory. Over the last year, as the news was slowly flooded with negative stories about the country, I relished it. And so, I thought I’d write a small, self-satisfied take on the chaos in Chinese stock markets from a few weeks ago. Instead, I found myself on an intense diet of China scholarship: podcasts, reports, think tank publications, and more.

I don’t think I understand the country better now, but at least I’ve been rid of the notion that I do. I hope humility is a step forward. At best, I have a few vague ideas about China. In a cruel, twisted joke, the ingredients of China’s recent struggles were the very things that made it grow. Two, China’s most severe weakness, perhaps, is that it doesn’t trust its people. These are the stories we’re trying to tell in our series ‘Big Trouble in Brittle China’.

In the introductory post of the series, I look at how China’s addiction to investment is giving it less return every year. Check it out here.

Financephobic: How Zerodha Messed Up By Hiring Me

Until I started working at Zerodha, the finance industry was alien to me. It still is, to tell you the truth. Don’t believe me? Let me draw you a picture: I opened my Kite account for the first time in six years yesterday. Under peer pressure. It had two shares in an old insurance company I once bought as an experiment that have been gathering cobwebs ever since. If I open my account again before 2030, I’ll call it progress. And I work for a stockbroker.

So yes, I’m exceptionally bad with my financial life. In fact, I have an aversion to finance. I’m financephobic. I refuse to believe I’m the only one of my kind, though. From where I sit, it looks like smart, financially literate people teach other smart, financially literate people how to do well in life, while the rest of us sit on our heinies and hope that fate is kind.

I can plug this gap. I can talk to other financephobes. At their level. That’s my hope with the series ‘Financephobic’, anyway. Check out the first edition here.

Investing is a problem that has been solved

How would you feel if someone said, “Investing is solved?” A little shocked? Maybe even a little angry because it might force you to think about your own difficulties with investing. About 4-5 years ago, a veteran of US investment management said this on a podcast, and it has been stuck in my head ever since. It’s a provocative premise, to say the least, and when I initially heard the statement, I’ll admit to having quite a bit of cognitive dissonance. But upon thinking about it, there’s truth to the statement and nuance as well.

After thinking about this for well over 4 years, Bhuvan shares his thoughts on whether investing is solved. Check out the post here.

It’s the economy, stupid!

Here are two undeniable truths.

One, data is important if you want to understand the world. It’s why we love India Data Hub’s weekly newsletter, This Week in Data, which neatly wraps up all the major data stories of the week.

Two, data is boring. I bet the words ‘major data stories’ just made you gag.

We’re trying to make things slightly better. We’re taking it upon ourselves to create a simple, digestible version of This Week in Data for those of you that don’t like econ-speak. Take a look at our last few editions herehere and here.

On the Varsity blog

Perils of using the last traded price (LTP)

This is a must-read if you are a systematic trader. Most systematic options trading strategies use last traded prices (LTP)  in the backtests. It sounds reasonable, doesn’t it? Well, you’d be surprised to know that backtests that look good with LTP as an input might not fare so well when deployed in live markets. If you are wondering why and what parameter you should instead use, this post by Shyam is for you.

What powers does a nominee for an incapacitated person have?

Let things get dark for a moment. What would happen to your portfolio if something bad happened to you? Maybe you’ve put a few plans in place: you have a nominee that’s empowered to take control of things. But what if you’re not dead, only incapacitated? You won’t be able to do anything. Nor would your nominee. Your portfolio would be useless to anyone.

SEBI is thinking hard about the issue, though, and it has suggested some changes. Check out Vikash Jain’s post on SEBI’s far-reaching proposals here.

What is a credit score, and why is it important for you?

You probably know how much of your financial life depends on your ‘credit score’. But do you really understand what it is? Or what can you do about it? Kulsum gives you a primer on how credit scores work and how you can bring up yours. Check it out here.

Rajeev Thakkar (PPFAS) on overcoming Behavioral Biases in Investing | Know Your Fund Manager Ep-2

Satya recorded a wonderful podcast with the super insightful Rajeev Thakkar of PPFAS Mutual Fund. It’s a must listen.

Masterclass on factor investing (smart beta) with Sankaranarayanan Krishnan—Part 2

This week on Zerodha Educate, we continue our conversation on factors investing with Sankaranarayanan Krishnan, a quant fund manager with Motilal Oswal who has spent his career designing, researching, and managing quantitative investment strategies.

Last week, we looked at the two major factors: volatility and momentum. This week, we’re looking at the other two: value and quality. We examine what these factors are, how they work, and how to devise strategies around them. Give it a listen here:

Pair it with this Varsity article.

On the Rainmatter blog

This Week in Fintech and Health

As you may know, we support founders who are working to help Indians become healthier and wealthier through Rainmatter. Given that we are deeply passionate about these two areas, we spend a ton of time tracking the developments in the space, as well as thinking about various aspects of fintech, capital markets, longevity, sports, etc. Every week, we publish a crisp digest of all the interesting things we are thinking about as well as the perspectives we discover on the internet. In this week’s edition of ‘This Week in Fintech and Health’, we wrote about the rise of corporate venture capital in India, the future of neobanks, and some side effects of the bio-hacking culture. Check it out here.

I hope you found a few enjoyable rabbit holes to go down. Please do tell us your feedback and suggestions in the comments.

Senior writer at Zerodha

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