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India, from the end of September, and more notably, from the 1st of October, has been a one horse race: banking stocks. 

Every "performing" sector which has driven the entire rally from April,has actually been in the negative in this very period! See the list: Pharma, IT, Chemicals!

Let us try to understand whether this banking rally is logical or something else.

(This is written by a friend of ours who is an IIMA MBA and Indian Banking Veteran for past 35 years!)

Some "explanations" for the 45% increase in BankNifty since Sept 24, 2020: 

1. With moratorium until end August and loan book not adjusted as of 30/9, for all EMI (mostly retail) and demand loans, accruing interest but not recognising credit losses on actuals (self assessed provisions). 

2. Non recognition of NPAs and stopping accrual of interest on such loans as of 30/9, and for that matter, until the Supreme Court decides otherwise (which has taken over the government's mantle!). 

3. Non recognition of NPAs and losses on MSME loans from Apr 2019 and until Apr 2021, at least! 

4. Credit growth less than 6% since January and VS around 10/12 % in 2019. Less credit Growth is actually a positive!

5. No booking of expected losses on new loans booked (even just the last 2 years, although they’ve never been booked with fresh loans and not following global accounting standards). 

6. Not knowing the exact quality of restructured and to be restructured loans, until at least March end, 2021 (that’s only 180 days from Oct 1), a little more in the June quarter and the real picture will be better seen in the Sept, 2021 quarters and beyond. 

7. Just relying on banks unaudited self-made provisions (and we know how that went until Mr. Rajan tightened accounting and disclosure standards in 2015/16). 

Does the rally make sense? Or illogical? 

From the desk of 

Shankar Sharma & Devina Mehra

If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!

Or WhatsApp us on +91 99206 71949

Chat soon!

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The Indian stock market has been on an absolute roll over the past 30-40 days.

It is as if all the markets have gotten over the virus concern completely.

It may well be so but as long time students of the market, we must always dig deeper, because ultimately that is what people look to us, old folks, for: Experience coupled with level-headed Analysis.

Good news: In the one-month period ending November 10, 2020, the benchmark index, Nifty 50, has returned an impressive 6.10%.

 Concerning news:  this performance has been driven single-handedly by the banking and financial services sector. 

The data from October 1st is even more staggering: the Bank NIFTY is up a mighty 33% (yes, you read that right!), while the NIFTY is itself up around 12%. 

So what's the significance? Read this, with a deep breath:

The Banking and financial services sector, which constitutes slightly more than 35% of the Nifty 50 by weight, has contributed 7.33% to the overall performance of the benchmark index in the last month.

What this means is that all the other sectors combined have contributed -1.23%. Yes, negative!

Why, as an investor, should you care?

Because, data from multiple markets, and multiple time frames, (now, as you all well know, we at First Global, never settle for easy answers!) reveal that index performance driven by a narrow sector/ narrow set of stocks,  is a cautionary yellow light, if not an outright red light. 

Simply put, markets that are being driven by just a handful of companies (Indian banking, eg) while the broad market is falling or is not participating, can signal some dangers ahead.

While not trying to be alarmist, historically, on several occasions, markets have reversed course, after any substantial narrowing of breadth. 

Think of markets like blood flowing through a healthy arteries. When everything is fine, blood flows smoothly. But when arteries become narrow, it's not that a mishap will necessary happen immediately: it just tells you to become more careful, because the probability of a mishap has increased. 

It's exactly the same in investing. Constant risk analysis should be absolutely Central in any prudent investor's tool kit. 

Risk analysis does not mean that one expects the risk to materialise. It only means that one is vigilant and watchful and prepared to take corrective action if the potential risk becomes real.

Being well prepared in advance is usually 90% of the battle won, in anything in life including investing.

It may also surprise you to know that despite the recent outperformance, the banking index is still among the worst performing sectoral indices year to date, and is, despite all the sound and fury, more than 10% below its all-time high! 

The point is not whether Indian banking is out of the woods or not. 

The point is that towards the end of intermediate Bull markets, a very common phenomenon is that underperforming and laggard sectors start to rally. Now this does not mean that the Bull market becomes transformed into a bear market. 

Investing is only about analysis of probabilities. There are never any short things in investing. It's only a range of probabilities. 

All this means is that, statistically, one should avoid getting carried away by the surface level, "visible" happiness and ask more detailed and pointed questions, when market internals start becoming worrisome.

It is only by asking critical questions that one can get deeper insights.

The larger point for you as investors, is that you must keep asking your fund manager & Portfolio Management company, whether they are analysing markets deeply or not, or are they just acting like kids in a candy store. 

The true test of fund management skill is not to get swept away by euphoria or hysteria, but to keep a sensible, analytical head on shoulders at all times.

Being mindful of market's internal action only means that as investment managers, one remains extremely alert and vigilant in order to prevent damage to portfolios

The Primary goal of financial management has to be avoidance of big losses.

And if your Portfolio Management Services (PMS) provider or Asset Management Company, prevents significant damage to your portfolio, you will almost always win at this game of investing.

(A version of this article was first published in Moneycontrol)

From the desk of 

Shankar Sharma & Devina Mehra

If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!

Or WhatsApp us on +91 99206 71949

Chat soon!

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Our October '20 Performance

Global Funds' Performance: October '20

The Global Freedom Fund SPC - Global Tactical Strategies SP (GFF-GTS) was up 2.1% 

Our Global Portfolio product, the GMAAP was up 0.3%

Vs 

MSCI World that was down 2.3%

The S&P 500 was down 2.8%

And, the NASDAQ was down 3.2%

Global Funds' Performance: Calendar 2020 YTD 

GFF-GTS (US Dollar terms): +29.5%

GMAAP (US Dollar terms): +26.5%

Vs

MSCI World: -3.0%

The S&P 500: +3.2%

These numbers have come with relatively low volatility.

Annualised volatility has been 24-30% for our products in this turbulent year versus 32% for the MSCI World and 40.8% for the S&P 500!

India PMS Performance: October '20

The Pure Equity India Super 50 (IS50) was down 1.7%

While NSE 500 was up 2.6%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) was up 0.1%

And CRISIL Moderate Hybrid Index was up 2.6% (this is our Benchmark for the IMAAP)

 India PMS Performance: 2020 YTD 

The IS50 is up 19.5%

Vs

NIFTY 50 that is down 3.9%

NIFTY 500 that is down 3.8%

We are now more than 23% ahead of the market YTD!

The IMAAP is up 10.1%

Vs

CRISIL Moderate Hybrid Index that's up 5.1%

Once again, we have done even better on a volatility adjusted basis.

The annualized volatility for IS50 is 19.6% as against 36.3% for the NSE 500 and nearly 39% for the Nifty. The volatility for the IMAAP is a mere 10.8% against 17.8% for the CRISIL Moderate Hybrid Index.

October was a real fun month. 

Global markets went into a swoon. 

Indian markets were full of deceit.

How did we manage?

Our Global Performance Analysis

Remember what we had written in our September letter? That there was extreme speculation in American technology stocks, because even the proverbial shoeshine boys had started speculating in short-dated options.

As a result, The First Global patented TIPP (Tactical Insurance for Portfolio Protection) Tech kicked in, right from September onwards.

It saved us a bit in September, but it is in October where it displayed its full glory.

In a collapsing global market situation, our Global Freedom Fund-Global Tactical Strategies (GFF-GTS) delivered pretty decent numbers (ok, ok, we understand that modesty does not sit well with us but we do want to give it a shot once in a while).

Being up ~2% in a month where there was literally no place to hide, took some doing. After all, let alone country indices, even the MSCI World is DOWN 2.3% for the month.

We had to call upon a number of our proprietary tools built over 23 years, to help us navigate October safely and surely.

Our portfolio in October-end is positioned extremely well for any market scenario that might happen: up or down.

From September itself, we have been aggressively reducing our weight in US Tech, and increasing other Positions, across the world. 

That strategy has paid off extremely well.

As you can see, YTD, we are solidly ahead of practically all benchmarks, and we intend to keep it that way. The GFF-GTS is up nearly 30% for the year - more than 33% ahead of the benchmark.

You see, we aren't kids, who get carried away. We have been around long enough to know when it's time to hunker down.

And that's what we did in October.

Our India Performance Analysis

India was a completely different kettle of fish, where we struggled a bit: but that was to be expected because in October, the month belonged to the poor and the downtrodden.

By this we mean, it belonged to banks: Indian banks have been complete dogs for the last several months but they reared their ugly little heads up, in October (like they did in June).

We have studiously avoided Banks and NBFCs this entire year, even when they start getting a bit frisky.

And we have not regretted this decision at all.

Therefore, in October it was basically banks and some other beaten down sectors (FMCGs) which were laggards in the last several months of this bull market, decided that they wanted to get into the act.

These things happen periodically. 

There are times in markets when one should forget about the big shots, and just play a defensive game. It's not about getting runs - we have done phenomenally well this year - but it's about getting through a tricky period, safely.

As prudent investors, we are sure you agree.

One other phenomenon happened in the Indian stock market in October: the market move up became extremely narrow, because it was driven only by the laggards. The better performers of the previous months actually remained flat or even declined - which explains our small down this month.

Should you get worried about narrow markets?

You shouldn't.

Because we do all the worrying for you. 

And we are extremely cautious in everything that we do: we are not a bunch of "Rose-tinted spectacle wearers". 

We will take proactive action whenever our systems pick any turbulence.

That's what you guys pay us for. 

Not just for making money.

But also for protecting money.

Only a Fund Manager that has both skills, deserves your money.

Never ever forget that.

  • Avoid the Big Losses

  • Play Everything. Believe Nothing

  • Stay Hungry. Stay Hare-ish

Take a look at the Comparative Performance till October 2020.

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And our Human+ Machine delivers these Returns with the lowest possible risk.

As we've said before

We do not run "High Conviction" risk.

We do not run "Storification" risk.

We do not run "High Concentration" risk.

And yet we deliver. 

Or maybe, that's why we deliver.

That is the beauty of our proprietary Human+Machine investment model.

For those who aren't invested with us, but want in, just drop us a line on https://bit.ly/2V0RxAx and we will get in touch faster than the price fall in US Tech stocks, last week.

By the way, you can also WhatsApp us on +91 99206 71949 

Chat soon!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://firstglobalsec.com

 

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Our September '20 Performance

Global Funds' Performance: September '20

The Global Freedom Fund SPC - Global Tactical Strategies SP (GFF-GTS) was down 3.4%
Our Global Portfolio product, the GMAAP was down 4.4%
Vs
MSCI World that was down 3.4%
The S&P 500 was down 3.9%
And, the NASDAQ (no benchmark, but still useful to keep an eye on it) was down 5.7%

 

 Global Funds' Performance: Calendar 2020 YTD 

GFF-GTS (US Dollar terms): +26.4%
GMAAP (US Dollar terms): +25.8%
Vs
MSCI World: -0.8%
The S&P 500: +3.2%
Again, these numbers have come with relatively low volatility.
Annualised volatility has been 24-31% for our products in this turbulent year versus 33.5% for the MSCI World and 42.8% for the S&P 500!

 

India PMS Performance: September '20

The Pure Equity India Super 50 (IS50) was up 6.1%
While the Nifty was down 1.2%
NSE 500 was down 0.3%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) was up 0.82%
And CRISIL Moderate Hybrid Index was down 0.2% (this is our Benchmark for the IMAAP)

 

India PMS Performance: Calendar 2020 YTD

The IS50 is up 21.7%
Vs
NIFTY 50 that is down 6.5%
NIFTY 500 that is down 6.2%
We are now more than 28% ahead of the market YTD!

The IMAAP is up 10%
Vs
CRISIL Moderate Hybrid Index that's up 2.3%
Once again, we have done even better on a volatility adjusted basis.
The annualized volatility for IS50 is 20.9% as against 38.8% for the NSE 500 and nearly 41% for the Nifty. The volatility for the IMAAP is a mere 11.5% against 19% for the CRISIL Moderate Hybrid Index.

Remember how it felt when you entered your mid-forties and were invited to a game of cricket in the neighbourhood. You were playing against kids who were in their teens: with fresh legs, strong shoulders, unlimited stamina, complete arrogance.

You measured your run, did some perfunctory loosening up and then came charging in: the ball went wide outside the off stump.

The slip fielders rolled their eyes. "This old man is over. We just need to make him bowl one over and we put him to pasture at fine leg".

You knew exactly what these idiots were thinking. You have been around the block (or cricket fields) several times.

You dug Deep. You looked at the guy's stance. You knew exactly what he was thinking. You knew his wide open stance made him vulnerable.

And you came and bowled him your best ever late inswing, delivered from wide off the crease, to fox him.

It took his off stump.

Ah... that felt good, didn't it...

September felt like that.

When the young kids start telling you "Hey old man, we know markets better", markets deliver a nice little curve ball.

And trust us: kids haven't the faintest clue how to play these: they have been brought up on a steady diet of easy pickings since April this year.

It is exactly in these situations that the market changes.

And it did.

Markets became tricky. Even treacherous - specially, the US.

India was no better.

But we did okay.

You know why?

Because we are Hares. With Grey Hair.

When things become very easy in investing, you know things are about to become very difficult.

Which is why we were prepared to deal with whatever the markets served up.

You see, we are not the kind of fund managers that crave a flat pitch bull market, in order to make a hundred.

I mean: anybody can make a hundred on a flat pitch. Anybody can make money in a trending bull market.

We actually want, from time to time, tricky markets. That is what really shows up the flat pitch bullies against real skill.

It is these kinds of markets that demonstrate the fact that dumb, passive Investing can beat dumb active Investing.

But dumb passive Investing can never beat smart active Investing.

And what do "Smart, Active" managers have over dumb passive Investing?

Mental Models. Forged over decades of playing on tough tracks.

We have a few, around here:

  • Avoid the Big Losses

  • Play Everything. Believe Nothing

  • Stay Hungry. Stay Hare-ish

First the Big Picture of our September performance.

Global Performance Analysis

By late August '20, the equivalent of the shoe shine boy giving stock tips, had become apparent. 

Friends starting sending us their option trading statements, showing us the kind of amazing gains they had been making in the last week of August. 

They are not shoeshine boys. They drive Mercs. 

But they haven't the faintest clue about option trading.

And now here is where it gets interesting: we have built systems that track the level of speculative activity, quite closely, using a variety of indicators.

By late August, early September, they had started flashing somewhat red.

So what did we do?

Well, we dialed back (a bit) on risk.

We bought some Portfolio Insurance in the GFF GTS.

Over the past couple of months, we had bought some excellent non technology plays.

Therefore we went into September not with the giddy-headed exuberance of the un-initiated, but with the grumbling visage of Constant Questioners.

You see, that's our second BIG Mental Model:

Play Everything. Believe Nothing.

This Mental Model helps. Trust us, this is what has helped us come out ahead of every single major bear market in the past 25 years. 

Every single one. 

Anyway, let's get back to present day: 

Thanks to the kind of protective strategies we put on (in hindsight we should have put on even more), we sat back and saw the NASDAQ plunge around 12-13% in September.

Of course, we took some hits. 

But we will take the final September results that came out: down ~3-4% after enjoying a 50% upswing since April, and solid YTD performance.

By the last week of September, we saw with satisfaction that we had largely escaped any significant damage to our accumulated gains.

India Performance Analysis

Our India numbers were... well... bloody good! (Sorry, this is a repeat from the July letter. And the August letter).

On a wide, wide basket of stocks.(Kind of a repeat of the July& August letters).

None of this "small list of high conviction" bs, for us. (Again, this is a straight lift from our July & August letters).

India's pitch was a deceptive one, in September. It was a two-paced. The large caps were hurting. The small were frisky.

In face of such deception, we mixed caution with aggression: we ran with the Hares (we are the Hares), and hunted with the Hounds.

The net result was that, we ended the month 6% up, while the NIFTY and the NIFTY 500, both closed down.

And this, despite having this stock called GMM Pfaudler.

Take a look at the Comparative Performance (till August, 2020, which we will update once we have September numbers for everybody else)

We enjoyed September. We seriously did.

And our Human+ Machine delivers these Returns with the lowest possible risk.

As we've said before

We do not run "High Conviction" risk.

We do not run "Storification" risk.

We do not run "High Concentration" risk.

And yet we deliver. 

Or maybe, that's why we deliver.

That is the beauty of our proprietary Human+Machine investment model.

For those who aren't invested with us, but want in, just drop us a line on https://bit.ly/2V0RxAx  and we will get in touch quicker than the price rise in Ruchi Soya.

By the way, you can also WhatsApp us on +91 99206 71949 

Chat soon!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://www.firstglobalsec.com/

 

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The Outstanding books Devina Mehra and Shankar Sharma recommend for old investors and new


First Global started with Rs. 10,000 some 30 years ago.

Shankar Sharma and Devina Mehra, with no family wealth, made this tiny capital into large, multi country businesses.

How?

Through Learning. Came the Earning.

Here are some books that you may enjoy whether you are just starting on your investment journey or are already further along the way.

We have split them into 5 categories

I. Books On Our Own Biases, Blind Spots And Fallacies In Thinking

Before you can conquer the world, you have to conquer your own mind and more importantly, understand it! As a starting point we would recommend these few books starting with 'Thinking Fast and Slow' by the Nobel laureate Daniel Kahneman.

It is a pretty comprehensive look at how your own thinking can mislead you. How the automatic, fast, intuitive, 'natural' thinking that you rely on for most things in life - the one that feels right may be actually completely wrong in objective terms; the many biases like Endowment Bias (when you value something more highly simply because you own it), Recency Bias (when you think what is the norm now was always the case, or what is hitting the headlines is the most important thing in the world), Loss Aversion (which makes it difficult for you to book losses because it causes too much pain), Anchoring Bias and many more - all of which can derail not just your regular life all but also to your investing and trading career.

There are many other gems like how all of us need an understanding of probability to help us remove the illusion that we can do better than all those who have gone before us. Actually, this book is chock-a-block with ideas such that unlike many others, it cannot be really summarised in a para or two. This one is worth reading while making notes and highlights!

The caveat of course is that just because you understand what investing biases are, does not mean that you will be able to eliminate them from your thinking.

'The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us' by Christopher Chabris & Daniel talks of the illusions of our mind: about how our minds are finite resources and hence from our attention to our memories we perform far below what we think we do.

It deals with some of the reasons why human beings make bad witnesses to how confidence is no proxy for competence. A very useful book to make you aware of several illusions you carry as you go about the world.

Even if elimination of these illusions is not possible, the awareness that these exist, changes the lens through which you see the world

'Misbehaving: The Makings of Behavioral Economics' by Richard Thaler also illustrates with many examples how we human beings are not as rational as what we think we are and how changes which should not make a difference to a rational person do make a difference in the real world.

To give an example, how making organ donation automatic while allowing an opt out results in a totally different outcome from what asking people to sign up from organ donation does. There are many such examples.

It is a fascinating story of how human beings can be easily molded to do things or make choices that objectively speaking may not totally make sense.

‘The Halo Effect’ by Phil Rosenzweig talks of a number of characteristics that we attribute to successful companies and corporate leaders (great strategy, customer focus, outstanding human resource practices etc) are all mostly due to the halo that is cast by the current performance of these companies.

The corollary to that is that once performance goes down, suddenly the same strategies and leaders start to look not so good after all.

This is the reason why many ‘how to’ books on corporate success (if you do this, this and this, you will achieve success) like 'In Search of Excellence', 'Good to Great' etc talked of outcomes and prescriptions, which did not hold out in the real world. The companies mentioned in these, more often than not, underperformed in both operations and stock market in the coming periods

II. The Nitty-Gritties Of Investing

This is the distinctly unsexy stuff but if you want to make a serious effort in investing or trading, you need to have the building blocks.

If you have already done a structured course in finance like CFA or MBA or MSc Finance you may be familiar with much of this, otherwise it is worthwhile to spend your time and effort on some books like ‘Damodaran on Valuation’ by Aswath Damodaran and ‘Valuation: Measuring and Managing the Value of Companies’ by Tom Copeland to give you an idea on how to go about analysing the financials of a company and making an attempt to value it.

If you are a beginner in this field, basic books on accounting and finance may also be required but you definitely need to have this tool box in order to make sense of your investments.

III. Stories Of Great Investors And Traders

These you have to read from the point of view of not getting a final how-to prescription, but understanding the many different approaches there are to heaven.

Ideally, you should read about many different strategies and tactics before you can evolve your own strategy. Do this widely: from reading ‘Berkshire Hathaway Letters to Shareholders’ to ‘The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution’ by Gregory Zuckerman, which is about Jim Simons and the totally different approach of taking millions of bets with a small edge and a lot of computing power.

Then there are books like ‘Market Wizards’, ‘The New Market Wizards’, ‘The New Money Masters’ etc that have interviews of (or analysis of the strategies of) many well known traders and investors.

Some of these books are old but even so they will give you pointers and if you to read about what happened to some of those people subsequently you will realise that at times success in the markets does not hold for ever. Nor does a strategy work for ever - which is an equally important lesson to learn

IV. Autobiographies And Biographies Of Business People And Of Businesses

There is virtually an ocean of these. Since investing is mostly about investing in securities of corporations it is important to understand how businesses are built and run.

There is no formula to this but you will often find that the one line story or impression you have of a business is very different from how it was actually built up step by step

For example, when reading 'The Everything Store: Jeff Bezos and the Age of Amazon' by Brad Stone, you realise that while the whole impression is of a great leader Jeff Bezos and a linear growth rate for Amazon, the reality was very different. What actually happened was this: at every step of the way, Amazon took dozens of bets, lost a great deal of money in many of them and maybe one or two of them at every stage paid off.

Similarly Nike appears like a great success story from the word go but when you read 'Shoe Dog: A Memoir by the Creator of Nike' by Phil Knight, you realise that this was a company that was started in the sixties and took a very long time to even come to the take off stage and also contrary to the general impression, it was not a very marketing-oriented company in the beginning and for a long time thereafter.

There are some very interesting lives that business people have led and the stories can make for a fun filled ride. A couple that we can recommend are Richard Branson's 'Losing My Virginity', which proceeds at breakneck speed and Subhash Chandra's 'The Z Factor', which is as candid an account as you can get of what it means to run a business in India

V. Books On Technicals / Derivatives / Trading Techniques

This category may not be relevant for everyone but if you do plan to trade rather than invest or trade derivatives, please ensure that you read multiple books about your chosen methods/techniques.

Indeed, textbooks are probably what you should start with to understand the instruments properly. Else, don't venture here at all.

From the desk of 

Devina Mehra & Shankar Sharma

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!

Or WhatsApp us on +91 99206 71949

Chat soon!

https://firstglobalsec.com

(A version of this article first appeared on the CNBC TV18 site)

 

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Our August '20 Performance:
So how did we do?
Well...umm..err...

We F......n did it.
Again.


Look we understand.

Our tone might look like we are preening.

But look again: why on earth should we not, considering that we have had another very, very solid month?

Our philosophy is a bit different from the usual that you will hear: Be mild. Be modest. Be understated.

We kinda made peace with the fact that we might be many things but not quite the ones above.

You know why?

Because if you are not going to share your happiness with your friends ( we're all friends, right?) in your happiest times, who are you going to share it with?

So let's start the sharing. 


Global Funds' Performance: August '20

The Global Freedom Fund SPC - Global Tactical Strategies SP (GFF-GTS) was up 7.6%.

Our Global Portfolio product, the GMAAP was up 7.3%

Vs MSCI World that was up only 6.0%

Global Funds Performance: Calendar 2020 Year to Date

GFF-GTS (US Dollar terms): +30.4%

GMAAP (US Dollar terms): +31.2%

Vs

MSCI World: +2.7%
S&P500: +7.4%

AND we achieved the higher returns with lower volatility too - something we are are even more proud of!

Annualised volatility was 19-26% for our products in this turbulent year versus 29.2% for the MSCI World and 37.3% for the S&P 500!

India PMS Performance: August '20

The Pure Equity India Super 50 (IS50) was up 8.0%

While the Nifty was up 2.8%
NSE 500 was up 3.7%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP)  was up 2.7% (this, quite frankly, is remarkable, given the IMAAP's very low volatility Profile)

And CRISIL Moderate Hybrid Index was up 2.2% (this is our Benchmark for the IMAAP)

India PMS Performance: Calendar 2020 Year to Date

The IS50 is up 28.5%

Vs

NIFTY 50 that is down 6.4%

NIFTY 500 that is down 5.1%

The IMAAP is up 15.3%

Vs

CRISIL Moderate Hybrid Index that's  up 5.0%

Once again we have done even better on a volatility adjusted basis!

The annualized volatility for IS 50 was 20.9% as against 34.6%  for the NSE 500 and nearly 37% for the Nifty. The volatility for the IMAAP was a mere 8.8% against 30% for the CRISIL Moderate Hybrid Index.

Returns÷Stress

You see, it does come down to the basics: what are the returns divided by stress ( volatility=stress).

Anybody can make money  buying a few stocks and then, riding their luck.

That's great cocktail party talk ( or let's say,  Zoom cocktail party talk).

But that's not Investing.

The key lies in crafting a global portfolio that, under even the most trying circumstances, achieves the normally unachievable: deliver pretty acceptable returns with more than acceptable peace-of-mind.

That's really what we keep refining every single day.

Global Performance Analysis

The Weak Dollar Trade continues

In August, we had massive winners like Overstock, Apple, Square, China, Japan, Silver, etc.

But The Key also lay in our April- May identification of the weak Dollar Trade.

That Trade led to a lot of things getting clearer as this year has progressed.

At the time of writing this note, the Euro is nudging 1.20.

We saw this coming and built positions in European indices.

We have a reasonable, 15-16% exposure to Chinese stocks.

Are we worried?


Of course. We are good old-fashioned worry-warts.

But...

We also bought a natural hedge, in the shape of the Hong Kong Stock Exchange.

You guys probably know that we are partial to the stock exchange business. We own quite a few across the world.

But the HKEX is also a natural hedge against any further US-China tensions: Chinese companies are and will continue flocking to this Exchange.

Imagine what that does to this stock's fortunes.

Gold, Silver, Oil: The Trend is on The Mend

All these positions continue unchanged and will continue till the time we detect any end to this Trend.

And do finally remember:

These results were delivered with a very diversified portfolio, with around 40-50+ positions, across the world.

India Performance Analysis


Our India numbers were... well... bloody good! (Sorry, this is a repeat from the July letter).

On a wide, wide basket of stocks. (Kind of a repeat of the July letter).

None of this "small list of high conviction" bs, for us. (Again, this is a straight lift from our July letter)

August delivered us very good winners in the form of Essel Propack, Alkyl Amines, Aarti Drugs, Chemicals, Metal Producers etc
We played the Payments Trade in India via SBI Cards.
And this is because we own several payment companies globally.

Now you begin to see how our combined Global and Indian footprint keeps helping every single one of our investors: they mesh like Yin and Yang. Or whatever meshes this well.

The Trade That Changed

Back in May and June, when the whole world (in India, that is) was talking about sticking to "safety" (in the shape of large banks, FMCG, consumer plays, etcetera), our models sensed that the big, big money was going to be made in the Mid Cap space. 

We are nothing if not Hare-ish.

We cut our positions in Hindustan Lever, Asian Paints, etc.

We built positions in the next line up of really good names in the mid cap space.

And they worked out quite satisfactorily.

We understand that you are itching to know where we think the market is going.

Truth be told: "It will be volatile" 😉.

Sorry. Just feeling a bit kiddish.

Frankly, and seriously, we remain optimistic about the stocks we own.

And that's what matters, doesn't it?

And of course the proof of the pudding is in the eating: our India PMS is far, far ahead of the competition. 

Take a look at the comparative Performance (till July, 2020, which we will update once we have August numbers for everybody else)

And our Human+ Machine delivers these Returns with the lowest possible risk.

We do not run "High conviction" risk.

We do not run "Storification" risk.

We do not run "High concentration" risk.

And yet we deliver.

Or maybe, that's why we deliver.

That is the beauty of our proprietary Human+Machine investment model.
 

For those who aren't invested with us, but want in, just drop us a line on https://bit.ly/2V0RxAx and we will get in touch quicker than a Bumrah yorker

By the way, you can also WhatsApp us on +91 99206 71949 

Chat soon!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://firstglobalsec.com

 

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