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Interest Rate Elephant!
March 14, 2023 Interest rates like many other things have been rarely understood. Not because they ride on a black swan but because humans are economic beings that are steeped in short-sighted gains driven by instant gratification. This is why the cycles of history keep rhyming because the new generation does not learn from the…
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Disco Door ETFs
“I cannot teach anybody anything, I can only make them think.” Socrates ETFs, your loved investment vehicle, suffers from a Disco Door Fatality, which means they are causing institutional and individual investors more risk and more harm than the convenience they bring. Collective The Romanian film “Collective” was nominated for two Academy Awards in 2021.…
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Long Live Broker Dealers
Broker-dealers are facing a challenging time, as a result of changing regulations, the impact of technology, and the commoditization of the industry. The rise of robo-advisors and online brokers has put pressure on fees, making it harder for broker-dealers to differentiate themselves from their competitors. However, there may be a breakthrough technology that could help…
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The Missed Apple of S&P 500!
The Missed Apple of S&P 500! If you are using S&P 500 Index Fund to feel good about your Apple ownership, think again. S&P 500’s current near 6.5% ownership of Apple has come after a lot of legacy foregone profit from the same Apple. Apple first became a billion-dollar company in December 1980, after its…
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The [3N] Method
![The [3N] Method](https://mukulpal.ro/wp-content/uploads/2023/03/1676683946842.png)
Abstract The [3N] Mechanism reconciles the conflict between informational states. This paper takes the idea of the [3N] mechanism and reexplains it as the combination of the Market Capitalization [MCAP] weighting methodology which can be understood as the Rich-Get-Richer, Non-Normal approach [NN] and Value investing, which can be understood as Poor-Get-Richer, Normal approach [N]. The…
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Need No AI to beat the S&P500!
This is my conversation with ChatGPT on the Granger’s challenge about AI, Indexing, S&P 500, why new Indexing mathematics is needed to beat the S&P 500 and why AI can’t do it. Please summarize your understanding of application of AI in building smart beta to beat the market? Smart beta strategies aim to outperform traditional…
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EVA India Scorecard – Concentration Risks
We have seen the SPIVA scorecards and how Active Mangers underperform the S&P Indexes. This is brilliant work done by the S&P Global team as they have persistently articulated how it’s hard to select and beat the S&P Indexes around the world. This feature is about introducing our scorecard and for simplicity we are calling…
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Fractional Investing’s David and Goliath Moment!
Negroponte’s digital world is here In “Being Digital,” Nicholas Negroponte predicted and advocated for a future in which traditional analog forms of media, communication, and commerce are replaced by digital counterparts. Negroponte suggested that the transition to a digital world will have far-reaching consequences, including the potential to democratize access to information, increase efficiency in…
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Is it true that for MSCI methodology, near 70% of the World is USA?
I queried the ChatGPT about MSCI World Index, for its investment thesis, institutional mandate alignment, trade offs, risks, potential enhancements etc. As of Jan 25, 2023 the iShares MSCI World ETF had around USD 2.7 billion allocated to the Index. The near 70% concentration to one country [U.S.] and 30% to the other 22 developed countries is…
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How Passive MCAP Investing method is harmful to your wealth!
Abstract Most Index Funds and ETFs are driven by an underlying Index. Most Indexing companies uses the Market Capitalization [MCAP] Method which has history going back to 1871. The Index funds and ETF industry have seen fast growth because Active Investing underperforms the Passive MCAP based Indexes. The feature below explains that though the MCAP…