Archive for June 3rd, 2015

Is finance parasitic?

June 3, 2015

Finance Professors have been ignorant of the practices in the financial industry for years. Like magicians they have only shown us the bright side of their occupation. It required a crisis like in 2008 to break all these myths of a well functioning efficient market mechanism. All doyens of financial industry were seen indulging in practices which make all the previous money making frauds and tricks look so lame in comparison.

But then guess what? The aura of the industry and its soothsayers has not just remained but increased manifold. It is a classic case of bad behaviour continuing to be rewarded by the society. For instance this story of a young person really excited on getting a job offer from one of the doyens only to end in a really bad tragedy.

So such posts comparing the sector to a parasite is interesting to read:

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Who manages Delhi? How central govts balance their capitals?

June 3, 2015

Excellent article by Ashok Lahiri reflecting on the tussle between State government and LG over Delhi.

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Putting Economic Models in Their Place (and economists too?)

June 3, 2015

Prof. Brad Delong has a piece reflecting on the Paul Romer outlash.

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Is Make in India campaign copied from Swiss land?

June 3, 2015

Not sure how much truth is there to this. There is an eerie similarity of the lion used in Make in India campaign to a similar lion (on the wheels as well) used by a Swiss Bank (Cantonal Bank of Zurich in Switzerland).  The govt obviously refutes.

I doubt it, given how lion is such an important symbol in India.

This bit is more interesting:

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What makes HDFC Equity Mutual fund one of the oldest and successful funds?

June 3, 2015

It is always an interesting question. What makes an mutual fund equity fund scheme successful over a long run?

Based on efficient market theory, one should not really be seeing a active mutual fund beat markets over a long run. I mean some short term performance can be signalled to just luck which reverses soon as we see all the time. Over time one also expects markets to become more efficient leading to decline in performance of active funds. Even if we disregard efficiency theory, it is difficult to imagine anyone can really have the skills to beat markets consistently over a long run.

However, some mutual funds in India continue to perform and beat the benchmark by quite a margin. HDFC equity fund is one such fund:

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