So, you wanna be a trader?
welcome to the 80-20 rule
Most people have a rosy view of what “trading” is. Many view it as a means of financial independence. For some, it is an escape from the mundane. However, in reality, trading is like any other business. Worse, the outcomes barely have any relationship with the effort you put in.
It is said that in any business, only 20% of the work actually moves the needle. The rest is a grind. Trading is no different.
80% of a trading business is operations. It is the the non-sexy, manufactured-urgency, grind work that needs to be done.
Take your internet connection, for example. Most consumers (and providers) are unaware of small glitches that plague their network. A trading business feels every single one of then. This is something we wrote about this week, frustrated with Hathway for not even caring about it: Monitoring Network Glitches.
And no, the “cloud” is not going to solve this problem. You will end up having to monitor your cloud along with everything else.
So for all the wanna be traders out there, get a taste of what is involved - download and run the script linked in the post and flag glitches if they are egregious. Unfortunately, the only way to raise the standard of service in India is to complain endlessly about it. So, you will be doing a bit of nation-building here as well. Also, get acquainted with consumerhelpline.gov.in.
Make a fuss and hope for the best!
Markets this Week
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
Like Great-Grandparent, Like Great-Grandchild? (NBER)
Using data on 2.5 million great-grandchildren linked to their great-grandfathers in the US (1850–1940), we show that economic gaps persisted strongly across four generations despite major structural change. We find that one-third of the initial differences in economic status across white great-grandfathers remained in their great-grandchildren.
Consumption-based Investment in the Mutual Fund Industry (SSRN)
We examine whether U.S. mutual fund managers invest in line with gender-specific consumption patterns. Male and female managers allocate investments differently across sectors, with consumption patterns closely linked to investment decisions. Using a novel measure of portfolio masculinity, we find that more masculine portfolios underperform.
How Costly are Trading Heuristics? (SSRN)
We analyze the large set of trading heuristics discussed in top finance journal articles over the past 75 years using both retail and institutional trade-level data. We find that retail investors use about 70% of the heuristics more often than would be expected based on counterfactual simulated trading data. Retail trades using more heuristics are associated with lower future returns, with more than half of stock selection heuristics negatively linked to future performance. Institutions, in contrast, use only 15% of the heuristics more often than in the counterfactual data and benefit from their use.
India
China has halted shipments of specialty fertilisers used to increase the yields of fruits, vegetables and other remunerative crops to India for the last two months. India imports about 80% of its supplies of these chemicals from China (economictimes).
India posts first current account surplus in four quarters (reuters)
Indian urban discretionary spending remains subdued. High urban living costs constrain discretionary expenditure. Job creation has not kept pace - joblessness among urban youth aged 15-29 is 17.9% (livemint, reuters).
India is allocating record rice volumes for ethanol production as it struggles with unprecedented inventories that are likely to swell further with the arrival of the new season crop, a reversal from earlier shortages that led to export curbs (reuters).
Birla Opus, owned by billionaire Kumar Mangalam Birla, has already shaken up the nation’s paints sector with its pricing war. Now, JSW Paints Ltd’s ₹9,300-crore acquisition of Dutch giant AkzoNobel’s India unit portends a tighter squeeze on the profitability of their peers as they battle to protect turf (livemint).
DGCA's surveillance detects several safety flaws at airports, aircraft (livemint)
How license fee hikes by Karnataka’s Congress govt are driving distillers to neighbouring states (theprint)
SC: Property registration is not the same as property ownership (economictimes).
India says it will never restore Indus water treaty with Pakistan (reuters)
Amazon India launches home diagnostics services in six cities (thehindu)
row
The Treasury Department announced a deal with G-7 allies that will exclude US companies from some taxes imposed by other countries in exchange for removing the Section 899 “revenge tax” proposal from President Donald Trump’s tax bill (bloomberg).
The U.S. housing regulator, William Pulte, directed Fannie Mae and Freddie Mac to consider cryptocurrency as an asset for single-family mortgage loan risk assessments (foxbusiness).
Canada’s digital services tax will hit companies like Amazon, Google, Meta, Uber and Airbnb with a 3% levy on revenue from Canadian users. It will apply retroactively, leaving U.S. companies with a $2-billion US bill due at the end of the month (cbc). Trump is cutting off trade talks with Canada (bbc).
HIMS - a $11 billion company built on people’s preference to avoid tough conversations, dodgy Chinese pharmaceuticals and aggressive billing (alexkesin).
China’s industrial firms saw their profits drop the most since October (bloomberg)
Chinese companies are ramping up shipments to Britain to levels not seen in years. Exports from China of small packages to the UK were up 66% in May from a year earlier (bloomberg).
China's auto industry has inflated car sales for years through a burgeoning government-backed grey market that registers new cars right off the assembly line and then ships them overseas as "used" vehicles (reuters).
China Is Studying How to Hack and Crash Our Power Grids (linkedin)
OnlyFans has grown into a giant of X-rated content. The platform is used by over 4m “creators”, who post content, and over 300m “fans”, who pay for it. In its fiscal year to November 2023, the latest data available, it brought in revenue of $1.3bn. At around 50%, its operating margin was higher than those of tech giants such as Alphabet, Meta and Microsoft (economist).
Odds & Ends
Everyone Is Already Using AI (And Hiding It) (vulture)
How 3D-printed guns are spreading online (bbc)
Disposable e-cigarettes are more toxic than traditional cigarettes (independent)
Drinks contained in glass bottles contain more microplastic particles than those in plastic bottles, cartons or cans (technologynetworks).
Meme of the Week
