FinTwit: Benefits and Drawdowns

The title is inspired by tweet from an anonymous Twitter handle.

Fintwit - Financial Twitter, subgroup or handles that prominently active in finance and stock market-related topics.

Benefit:
You will learn things from finance professionals directly. You can interact with them, ask for help, learn from their interactions with other professionals as well. You can interact with people similar to you, who are still figuring out investing and trading. Many people I have met on Fintwit are really helpful, just one DM away.

Drawdown:
Anything that they share can't be trusted. You need to take it with a pinch of salt. When some people don't like you questioning, you might get blocked too.

B:
You will be able to access news on companies.
D:
That news can be planted too.

B:
You will know marketing tactics used by these experts in selling their workshops, webinars, products.
D:
If you are not able to see through their BS, you will fell prey to their tactic and end up losing money.

B:
You will find amazing quotes from legendary investors shared by Fintwit.
D:
You might get in trouble if you believe in those out of context quotes.

B:
Entertainment.
D:
Time waste.

Why India should continue 2FA in payments?

Today Sachin Bansal shared an interesting tweet about two-factor authentication as follows.

Apart from promoting UPI, removing 2FA and making credit/debit card issuers solve for fraud using data will take digital payments in India to the next level.

Detection of fraud transactions using AI is one of the use cases many software companies are providing to global banks. These algos reduces the number of frauds to the great extent. Maybe he is planning something in this direction and put it as a teaser.

You know, what is better than detecting frauds via Machine learning, ensuring trust among customers? 2FA used in Indian digital payments. OTP means security for Indian consumers. Removing it means, removing trust from digital transactions. People will minimize the usage of cards. I know colleagues who hate new wireless swipe up to ₹2000 without pin.

A few years ago, I got OTP requests for credit card transactions on an Indian shopping site. I reported it to my card provider and got the card replaced soon. Because of this OTP system, I got saved that day. Without it, I might have lost money, and looking at customer support issues, it might be difficult to get money back. We keep hearing payment frauds even if users have to accept/decline UPI requests.

Boiler Room 2000 (spoiler alert)

I have watched a 'Boiler Room' recently, which was suggested by someone on Twitter.

The film shows people's greed and quick rich schemes by chop shop brokers. How people believe at anything these young brokers say over the phone, selling them dreams and looting their life-saving.

First of all, It looked weird to see the main character's actor in a serious role after watching his acting in the Friends TV show. Vin diesel as a stockbroker after watching him in fast and furious looked weird too. Ben Affleck gave an amazing performance as always. That speech to new joiners was amazing.

The movie felt similar to other stock market movies, where the main character joins a trading firm. Learns the business, becomes good at what the firm does. Later on, his heart changes thinking how his action is ruining people's lives. In the end, his stint ends when the regulator starts investigating, helps SEC to fight evil.

The side story of an investor who loses his saving, ending up losing his marriage too, makes the film stronger. I read on IMDb that in the alternate version, Seth passes by that investor Harry, who is carrying a gun on his way into the office.

SIP vs Buying the dip: 1. Daily prices

Earlier post: SIP vs Buying the dip - Plan

Last week, I posted that I will check if SIP is better or Buy the dip? I have downloaded Nifty50 TRI data from here and considered savings interest as 3.5%. Data on savings interest can be seen here.

These calculations are done till the last trading day that is 23rd October 2020.

SIP: Buy ₹1000 worth of units based on Nifty50 TRI value. At the end of the respective period of calculation, the total units bought are calculated. The current value of those units is calculated and then all data is fed to the XIRR function of Google sheet.

BTFD: If Nifty50 TRI is not down 1%, we will add ₹1000 into a savings account. If Nifty50 TRI is down 1%, we will use 10% from whatever money accumulated in the account. Interest accumulation is done daily at a rate of 0.013% for simple calculation.

After calculations, final returns can be seen in the table below.

As you can see, the effect of buying the dip on returns reduces in the long term. Is it really due to a shorter time frame or the recent dip in March 2020? We need to check it using rolling returns with different time frames. I will post those data some other day.

To-Do List:

• The same analysis on weekly data: SIP vs 5% DIP
• Rolling returns analysis on daily data
• Rolling returns analysis on weekly data

Let me know if you want to test any more scenarios.

Crazy weird ideas

Stock Loyalty program:

Create an app for a loyalty program for your company's products. Add scanner functionality in an app through which customers can scan QR code inside the wrapper or package of your product. On scanning, it will give them some points. After getting enough points, customers can convert points into the company's stock. The number of points to put in product packaging's QR code and conversion ratio for points-to-stock can be reviewed every quarter.

Stable crypto coin backed by equity fund (or hybrid fund):

There are many cryptocurrencies backed by commodities like Gold or fiat currencies. The reason behind this is to reduce the volatility of the crypto coin. What if it is backed by equity assets as well? S&P500 ETF along with bonds ETF and some allocation to the gold might be the perfect solution to reduce volatility as well as storage of value.

Find the odds of the company becoming successful:

Identify the total number of companies registrations in the last 20 years. Identify companies with billion of dollars in revenue. Find out the chance of the company becoming successful from these numbers. Is it better than the chance of winning the lottery or not?

Collector's fallacy

You must have tons of tweets bookmarked, articles added in pocket app to read later, YouTube videos in watch later list, unread books, unread emails, podcasts, IMDb/prime watchlist, etc. Wherever the website provides you with the option to save content for later consumption, it will keep on accumulating. We want to consume so many things we come across online, but we get little time for them.

I thought only I was the one who kept on piling up these things, but a few days ago Deepak @tapak7 shared a tweet stating "I need 7 lives, just to catch up with my saved list of newsletters, blogs, and podcasts". Many people commented the same. I learned that day that it is called a collector's fallacy (thanks to @puneetk009).

After reading the replies and searching for a collector's fallacy on Google, I concluded that the purging list every month or so is the best way to clear the backlog. This way you will know what's really important or what is just there taking up space. Still, a long way to form this habit of purging. What if I delete an important article? Hope it gets out of stock like Myntra's bag/wishlist if you don't take action. Probably, this mail is in your collection too. 😜

Fintwit Twitter blocks

If you are following accounts of Indian Fintwit, you must have come across 'that person blocked me' or 'why he blocked me?' posts every weekend. Many might have experienced that you get blocked after questioning those kind of people. If you question MTM screenshots, trade, the thought process behind the trade, constant tweeting on one company, etc you will get blocked. If they are constantly tweeting about the company as a long term investment, when the company's price tanks, they go on a blocking spree. It's amazing how they can't handle the criticism.

Number of blocking instances increases after the person starts paid seminars or workshops. Anyone questioning the seminar will get blocked. It's simple, no one wants bad publicity. Imagine yourself as a shop owner, if you see some person foul mouthing about your product/service, what would you do?

Another reason for blocking is it reduces the reach of the troller. The number of people who can read the troll's reply will be the same as your tweet. After blocking the troll can still take a screenshot and post it on his profile, but it would not have the same reach as commenting directly to that person's tweet reply.

Recently, there has been a new trend of blocking the person who likes the tweet of a troll. It's like the 'Minority report' movie, where they block any future trolls before actual trolling takes place.