Hi,
Some weeks you work on something, and it doesn’t work out the way you want it to. This was one of those weeks, where an article’s narrative just wouldn’t take shape.
However, it did lead me down various roads and to some fascinating reads that I had to share.
Do consider forwarding the newsletter to others who might find stories about economics, public policy, and business interesting. It helps the newsletter grow!
Let’s get started.
Herd mentality of retail investors in the stock market
Author Vivek Kaul drives a narrative with stories and data explaining the relationship between stock prices and demat accounts.
The rise in stock prices in 2020 and 2021 incentivised individuals to open accounts so they don’t miss out on making money.
More than half of the demat accounts in India have been opened in a little over the past two years, while Foreign Institutional Investor (FIIs) have been dumping Indian stocks.
Because of this enhanced retail participation, stock prices haven’t fallen in line with the relentless selling by the FIIs.
Data tells us that FIIs bought when stocks were cheap and sold when they were high while retail investors are now buying when stocks are expensive.
What happens when the market crashes again? Can investors realign their expectations?
Read it here→ Ants, Chickens and Herd Mentality of Retail Investors in the Stock Market
Sanctions are pushing Russians companies to default
Russian companies are being thrown towards technical default. This is due to the compliance hurdles thrown up because of sanctions. They result in a delay of interest payments on foreign currency bonds, which could lead to a default.
This is a unique circumstance as the Russian companies have the capacity and the willingness to pay. But the bondholders are being put under scrutiny.
It just goes to show that detangling from Russia will come at a cost. Who will bear the cost? Russian securities are pervasive across global fixed-income portfolios and benchmarks, meaning the impact could ripple across pension funds, endowments and foundations.
Read the article here→ Citi's Caution on Sanctions Threatens to Send More Russian Companies Into Default & for a better understanding of what happens if Russian bonds default read Russia Is Spiraling Toward a $150 Billion Default Nightmare
Amazon Prime is an economy-distorting lie
The writer Matt Stoller highlights the negative impact on society when a firm abuses its monopoly power.
In this video he talks about how Amazon Prime inflates prices across the board to provide for “free shipping”. Using cutthroat tactics Amazon forces sellers to bake the cost of shipping into the price of their goods. It might seem like a legitimate business tactic but not when you have the power to distort industries across the economy.
This 15 min video will change the way you look at Amazon.
If you prefer to read, you can read the article here→ Amazon Prime Is an Economy-Distorting Lie.
A couple of twitter threads that made me think this week
Currently pondering
This beautiful tweet by Aparna Karthikeyan made me think about what I want to be known for when I die.
I was born in a particular religion, in a particular community.
I had no choice, no say in it. It has been a life of privilege, one I don't know if I deserved.
I hope I can decide what I will die as.
I hope you enjoyed this edition of Filtered Kapi. Do let me know if something struck a chord with you.
Filtered Kapi #28 Someone sent you this?