Zerodha Educate Zerodha

In the first part of our conversation we spoke about absolute basics of factors investing and dove deep into the two major factors — low volatility (low vol) and momentum. We spoke about why these factors exist and the explanations, return expectations, and how to use them in an asset allocation framework.

For this episode, we focused on the other two factors—value and quality. We talk about how value as a factor is different from the popular "value investing", how to really measure the value and how to implement them. We also covered what is meant by quality, why it works and if it's a real factor.



Sankaranarayanan Krishnan is a quant fund manager at Motilal who has rich experience designing factor models and managing factor funds.



We hope you enjoy listening to this conversation

Asset allocation is one of those fancy-sounding terms. We all keep hearing about it non-stop everywhere, but very few investors think about it, and even fewer have a sensible asset allocation that works for them. At its simplest, asset allocation is not putting all your eggs in the same basket. In other words, it’s about spreading your money across different asset classes like equity, debt, gold, and real estate. This naturally leads to the question: how do I figure out a good asset allocation. Asset allocation is as much a science as it is an art.

The objective of asset allocation is to help you reach your financial goals. Coming back to the question of how you figure out a good asset allocation, there’s no perfect asset allocation that’s objectively good for everyone. There are multiple approaches, and each has its own pros and cons. For example, a naive asset allocation that has equal allocation to different asset classes is a perfectly sensible strategy in the right context and for the right type of investor.

In this episode, we caught up with Ashutosh Bhargava, fund manager and head of research at Nippon India Mutual Fund. Ashutosh manages the Nippon India Balanced Advantage Fund, among other funds. Given the nature of the fund, he’s thought deeply about the concept of asset allocation and its various dimensions. In this conversation, we talk about:


His background and how he stumbled on asset allocation
Various approaches to asset allocation
Static asset allocation vs. dynamic asset allocation
Selecting the right parameters to guide asset allocation decisions and their trade-offs

 

Dark patterns are tricks used by applications and websites to make users do things they don't want to. They rely on exploiting our behavioural biases and cognitive limitations. We all encounter dark patterns in our daily lives, like:


1. Making it easy to subscribe but hard to unsubscribe.
2. Pre-selecting actions like purchasing insurance, offering tips, payment methods etc.
3. Some e-commerce platforms "sneak" new items that you didn't choose just before the payment step.
4. Hiding or obscuring important details.
5. Using scary and fearful language.

In this conversation, Ashish Aggarwal (head of public policy at NASSCOM), Kailash Nadh (CTO at Zerodha) and Bhuvanesh R (Zerodha) discuss how dark patterns are harmful for users and the kind of regulations that must surround them.



The entire transcript of this conversation is available here.

Trading is one of the most stressful activities. It's a also very lonely activity. Every second there is a change in your profit and loss which leads to happiness, sadness, stress anxiety, and a cocktail of other emotions making trading an emotional roller coaster.



On the occasion of #WorldMentalHealthDay, Dr. Preeti, a clinical psychologist at Lissun, chats with Abid Hassan, founder of Sensibull. They dive into why prioritizing mental health is a game-changer for traders aiming for long-term success in the markets.

Financial influencers or finfluencers have become incredibly popular in the last 4–5 years. While there are a lot of amazing people who teach people about trading and investing, there are many that sell greed and set wrong expectations. SEBI recently came up with a consultation paper on regulating finfluencers. In this video, Nithin, Abid (Co-founder & CEO of @BeSensibull) and Sandeep Parekh (Managing Partner of Finsec Law) discuss the issue of finfluencers, SEBI's consultation paper and the challenges of regulating them.



Check out this post for the transcript and relevant links.

Thomas Carlyle, the Scottish writer and philosopher, called economics the dismal science. I don’t know if you’ll agree but having read economics textbooks, I certainly think they’re dismal. They’re filled with unnecessary complexity, pointless jargon and theories that have been dead and buried for decades. While economics as a discipline has progressed, the textbooks used today are stuck in the dark ages.    

Then I came across Macroeconomics: An Introduction by Alex M Thomas and I regretted not having this as my textbook when I was studying. Though it’s meant to be a textbook, it doesn't read like one. It’s a brilliant book that weaves classical economic theories with excerpts from wide-ranging Indian literature to highlight the structural, social and cultural complexities of the Indian economy. It’s one of the very few books to do so. 

Apart from just making macroeconomics more relatable Alex introduces an alternative approach to understanding macroeconomics, which questions the dominant (marginalist) approach. This alternate approach is inspired by the works of the old masters like Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and Piero Sraffa.   I learnt a lot while recording the podcast. I hope you enjoy listening to the conversation as much as I enjoyed recording it.   

Link to the book: https://www.amazon.in/Macroeconomics-Introduction-Alex-M-Thomas/dp/1108731996 

1:27 - About Alex M Thomas 

4:51 - What is political economy? 

6:35 - Theory of interest rates 

10:11- Why should you read this book? 

11:29 - The problem with economic teaching 

14:41 - How is this book different? 

15:41 - The dominant (marginalist) approach 

18:57 - How to approach economics 

22:32 - The economy as an embedded system 

26:10 - Theory of wages 

29:52 - Marginalist theory in policymaking  

34:15 - Theory of money

44:15 - Modern monetary theory

You can read the full episode transcript here.

If you have any questions or thoughts about the topics in the conversation, post them on TradingQnA.

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