Premium (Unlocked) : What We Wrote About in 2016

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Here’s a list of the best things at Capitalmind in 2016. It’s long, it’s fun and it’ll tell you what you might have missed!

It’s been a crazy year indeed. From Brexit to Trump to Demonetization to what not, we have seen markets go absolutely nuts. But in the end the markets haven’t done that much, have they? We’re about at the same levels as we began the year. This is going to be a post that chronicles the year gone by.

But first, what happened in 2015?

You might not remember, 2015 saw the Nifty end 4% down and 6% Inflation took market returns even lower. Our portfolios ended up generating 17% returns for the year with the momentum portfolio generating 43.92% in two years.

2015 was interesting for Capitalmind too. Aakash and Suneel joined the team (then, Deepak, Venkatesh, Prajwal and Gautam). See the team page. We also had some great help from two interns: Ravi Duggirala – who worked out the royalty mess at Kaveri Seeds and the mastermind of the DivYield Portfolio,  Suvena who created the On Slack newsletter which is nearly a 100 posts down.

A small note of recall: read our first blog titled “Investments. Period.” It started that way, and it’s still going!

2016 – The road travelled:

Just in 2016 alone, we have published around 1,000 articles of which 200 articles are exclusively for our premium subscribers. We now have over 4,700 articles in Capitalmind – a treasure trove we will sort out for you, at least for 2016.

The year began with…

January:

January is the month of hangovers. And so, in the wake of insane volatility we introduced the DivYield Portfolio – which makes money when companies pay out money as dividends. We didn’t know that in Feb, the government would tax dividends (for individuals, who get more than Rs. 10 lakh). We would have complained but hey, DivYield made 17% in the year anyhow.

The Nifty fell about 10% in January but recovered to just -5%. However, results were just horrendous – with Nifty companies showing just a 2.5% profit increase (on aggregate). Indigo’s promoters acted cocky and the stock fell 25% in two days. And then we talked about the F.O. fund. And why the RBI buys bonds.

While markets crashed, we made 7.34% in a Stratoptions trade set in January. Imagine, making money both buying and selling option straddles! Not that we are boasting. But wait, we are boasting. So it’s time to tell you that we didn’t know a darn thing about the market fall. Just making it even. Which brings us to…

February:

We get hungry in Feb. So did former RBI Governor Dr. Raghuram Rajan, who presented Dosa Economics while FIIs (Foreign Portfolio/ Institutional Investors) continued to exit the Indian markets and the slow inflow of funds hit the Indian rupee.

China continues to make a heck of a lot of steel. And that good old Kitex Garments? It turned out to be not quite so good.  And the NSE decided to make the Nifty 50 have…51 stocks.

Stratoptions went on to make another 3.5%. But we fell to just 30% annual growth on our Momentum portfolio.

We locked ourselves in a room, contributed to the revenues of Domino’s and live tweeted the whole budget session. Once this was done, we released the annual Budget Book – Budgetonomics which had all the budget pieces we wrote, and more. We also had a periscope session – a live session answering questions online.

The Nifty drifted to below 6900 shortly, hitting a bottom on the budget day (Feb 29). This was, luckily, the lowest for the year

And Vashistha joined Capitalmind which increased the overall sage content substantially, not just by the name.  Which made it an interesting…

March:

The whole month of March was marred with clarifications, confusions and even more confusions from the clarifications of the clarifications – Non-taxable Dividend IncomeTaxes of EPF withdrawal, Deficits and more. This also meant companies rushed in to pay truck load of dividends before people got taxed in the next financial year.

We had a lot of webinars and had interactive sessions. We had 2 market experts – Abhijit Pathak (AP) explained “Intermarket Relationships & The Maruti Trade” while  Amit Kumar Gupta from Adroit Financial Services  broke down the “Currency Wars”.

Don’t get suckered by Builders offering “Interest Free Loans“. We started a Bond Tutorial in March – read back to see Part 1Part 2, and Part 3.

The market rallied 10%, and Stratoptions made 2.5%. Jindal Steel was downgraded to a Default rating, Lupin struggled with the FDA.

At Capitalmind, Shreesh joined the content team and came up with the Monsoon Portfolio – which has now been closed after a performance return of 20%.

April:

Double, Triple, 50 extra – lol not the size of coffee rather the top up that every traveller pays everywhere in the world – locally known as “mol bhaav” or in global terms “surge pricing”. A hot issue as the government went on a rampage banning Uber’s concept and said no to surge pricing.

Side-lined was the RBI Policy meeting when we covered the Indian tea market – a first step in covering sectors to build on what we now call sectoral portfolios. This was not the end. Our second sectoral coverage was on the World Sugar Industry in 2 different parts – Part 1 covering the current situation of the Sugar Sector and Part 2 looking at Sugar Stocks and the Domestic Sugar Industry. We also spoke of how to understand LiquidBees, a liquid ETF to park your cash.

Remember the CAGR of 40% we spoke of at the end of December, 2015? Its momentum slowed down to 34% CAGR after the market volatility. On the positive end, we became the only news breaker with access to the US FDA Form 483 issued to Pharma Major Lupin Pharmaceuticals.

The Nifty went up about 1.5%. Stratoptions took a small break.

May:

A new month, a new office. With a private terrace for sipping chai. This well needed upgrade from a 2 cabin office was a welcome move for us at Capitalmind.

RBI decided to tell us How To Start A Private Bank In India, advise that would have been useful if you wanted an easier way to exchange those notes. Oh, and we also noted that Mauritius based investors are soon going to be taxed, and decoded the new Bankruptcy Law.

Fund manager Samir Arora demonstrated his concept of Long-Short Investing at Traders Carnival at Bangkok. We also introduced the Sucker’s Index, spoke in detail about Risk Management, and released the Big Whales Report. Oh, and read our detailed note on the technical indicator called RSI.

If you wanted to sell in May and go away, it would have been a bad idea. The Nifty went up 4% in May and proceeded to make another 6% in the next few months. Stratoptions kept going with a 1.63% return.

June:

We revamped our site to a fresh theme. A lot of you appreciated this even while we spammed your mailbox with the new look of our Welcome Email. Our apologies!

As “Brexit” (Britain’s Exit from the European Union) gained momentum we went live explaining how an investor should hedge his portfolio and for the non-investor we aptly captured all that was to be known about the event including its impact on India.

Before all hell broke loose and finally Brexit took shape, the Nifty caved in over 300 points in a single session and Uncle Theta made a play for it which 5% in just 5 days. The new Banknifty weekly options were analyzed – a calendar straddle spread made a cool 1% in a day.

We had new avatars: options strategies in the form of Uncle Theta, Bond Baba for fixed income and our in-house number crunching demon – Data Monster.

Our first arbitrage trade on Buybacks saw a 10% return eventually: Bharti Infratel.

Oh, and you HAVE to see our video on how to park money for cash flow and save 80% tax compared to using a fixed deposit. Also, why FDI reforms were like Sergei Bubka, DLF’s promoter stake sale rumour (which hasn’t materialized even at the end of the year)

July:

Data Monster busted the myth that  you can make money from IPOs. 91% of IPOs traded below their IPO price! Oh, and we took a look at the commissions earned by Mutual Fund agents, in The Annual MF Report on Commissions. And check out how much profit insurers are making!

Bond Baba demonstrated how Zero Coupon Bonds can be played for a smart tax adjusted return. And then, he surreptitiously started looking at stocks, for this weird thing we decode: Bonus Stripping. And then there was an awesome 12% we discovered (and earned, in December) in a publicly traded bond.

Aditya Mishra, CEO of SwitchMe, explained why Bank of Baroda was starting to set home loan rates based on borrower’s CIBIL score.

And what’s noteworthy now? The market gave us the biggest warning since 2008: the Nifty 500 P/E touched 26, while earnings growth was -3%. Turned prophetic – the market peaked a couple months later and has since reversed substantially. We even got frustrated then and wrote on India’s Intolerance for such silly posts on Earnings growth.

Uncle Theta went into overdrive: from a Rich Uncle Strategy with Warrants, we demonstrated how to play HDFC’s warrants against options. Then, the Short Calendar Strategy, and Margin Efficient Directional Spreads.

August:

For premium users this happened to be a blockbuster month as there was one premium publication every day during the month.

Bond Baba explained why Capital Gains is Better Than Interest Income. Uncle Theta went into video mode: he demonstrated How To Strategically Create Option Trades and scolded StratOptions For Making Only 11 Points On Boredom. And he showed you how to make profits out of STT – the inverted strangle trade.

We held an Options Workshop with AP in Bangalore, which was a lot of fun!

Here’s one way to select insurers – find out how many claims they reject! (Data Monster)

The monsoon Portfolio returned 12.08% in 75 Days and thanks to one of you who identified A Stock which was a Better Than a Mutual Fund.

Taking a leaf out of John Oliver funny video on Investments, Retirements and All Other Things; we signed off the month with a post on retirement – one that is filled with Old age, fragile bones, doctor visits, medical check-ups and a weak bladder – Saving For Retirement: How Much is “Enough”? (Answer: a lot. But we quantify)

That promoter pledging thing? Where they pledge their shares to financiers? It can bite them in the ass, as MBL Infra’s promoters found out.  The Nifty 500 P/E went even higher, to the highest since 2000. Welspun India was found wanting of Egyptian cotton as Target and Walmart investigated it for not-enough-quality.

We used Outliers to discover Sudarshan Chemicals, which returned over 200%. (See how)

And that was August. Which brings us to….

September:

A laid back start to the month as we watched Mukesh Ambani unveil Jio., We revisited our Fixed Income Portfolio which had done a decent 20% through the rate fall. Our Long Term Portfolio had an average 17.5% return since January, 2015 and 37% annualized since its inception in November, 2014.

Following up our previous publication on Savings for Retirement, we came out with a 2 part education series on active investing. First a webinar on How to Use Excel to Save Yourself from Being Suckered Into Financial Junk and Take Control, Invest Actively: Active Investing Series Part 1.

Thanks to Jackie Vaswani for his ideas on the weekly mashup – a weekly newsletter bringing you the publications of the week gone by. (Started in September) We unlocked a few premium articles for general users too!.

And here’s How Rakesh Jhunjhunwala Made Crores Trading In and Out of Some Companies He Owns .

We exited the Monsoon portfolio as the Monsoon said goodbye too. (20% in four months). Stratoptions scored 2% in the month even as the peaked around 8800 and reversed to end flat. The Nifty companies saw profits lower by 9% in the June quarter.

Bond Baba explained Perpetual bonds. Nothing lasts forever, except some bonds. (Conditions apply) And then, why are there two 10-year bonds with different yields?

We raised an eyebrow at the Strange Case of the Highest LIBOR since 2009. Rising interest rates in the west now? They started much earlier!

October:

Our monthly coverage of the Indian Automobile Sales led us to coming out with an in detail review of how Renault’s KWID has been eating into Maruti Suzuki’s market share. Just before the Indian army surgical strike on Pakistan, Bond Baba revealed The Kicker in Ultra Short Term Bond Funds and showed How To Harvest Losses from Muhurat Trading while Data Monster conducted an experiment on whether Your Portfolio Beats The Nifty.

The retirement post from August had given us a lot of positive feedback and while the discussions went overboard, we made an attempt to capture all the questions and came out with the Feedback and Q&As – Take Control, Invest Actively: Active Investing Series Part 1 and topped this off with the Webinar – Hedging Your Portfolio To Earn More, Save Tax.

Uncle Theta made money off the Infy results through a volatility trade.

Cyrus Mistry and the Tata drama started. It’s still not ended. Very few people care anymore. But they’re still fighting.

But the real fight was in:

November:

This is the beginning of the madness. We first made arbitrary Diwali predictions. Then, Donald Trump beat Hilary Clinton to the US presidency. But the big deal for us in India: Narendra Modi said the Rs. 500 and Rs. 1000 currency notes would no longer be legal tender. These took over all conversations! Read about them hereherehere and here and even more here.

We think there will be a recession or a contraction in the Indian economy. The data might not say it, but it will sure feel like it.

The market fell about 5%. And while we calmly exited momentum stocks, we added a whole new set of stocks: The Strong Stock Portfolio: 30 Stocks That Show Promise. Bond Baba showed off with a 24% return on fixed income bond funds.

November is not the time to be suckered into a Loan for furniture . But you should read about what Reverse Repo is!

If you were wondering, here’s why Companies are Buying Back Their Shares.

The Nifty went all the way down to the 7900 level but recovered to close only 4% down in November. And Stratoptions suffered its first loss for the year. It still closed up 28% for the year!

Which brings us to:

December

It’s been a great year indeed. Foreign investors sold over 33,000 cr. of Indian debt in a  month. Much of that is because US yields are rising, and Indian yields were, well, too low.

What were companies saying about how the Note-Ban affected them? (Read)

The Demonetization drama brought back the Market Stabilization Scheme. What is it?

Banks still love real estate borrowers, it turns out. But they won’t cut lending rates, even if they cut interest rates on deposits!

Bond Baba ran away from Longer Term Bond Funds after the RBI refused to cut rates. And he revealed the pecking order: Capital Gains > Interest > Dividend.

Meanwhile, 10 year SIP returns on the Nifty fell below 8%.

And to end this post, we bring you Capitalmind’s Do-It-Yourself Wealth Allocation Strategy.

The End or the Beginning

A wise man once said, “Today is the beginning of the rest of your life”.

You can’t erase the past. But you can’t carry it for a burden forever either. The past is a friend you learn from. The future is where you earn from.

At Capitalmind, we’re bullish on life. Markets will go up and down. There will always be opportunities. There will always be things to speak about, to analyze and to avoid. To great conversations and a wonderful time in 2017!

This is the first of a series of posts we are doing about this year. We hope you liked it!

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