
1/ Since "liquidity" has been the buzzword these days, here's an anecdote and a powerful lesson from history about printing unlimited amounts of money. Story time. #fintwit





More from Dinesh Sairam
This thread is for investors or those who are interested in CDSL as an investment. Often the central reason quoted for an investment here is the gush of FCF the business produces and some float money also to boot. But this argument ignores a central problem as well. (1/11)
I completely agree that CDSL is a business that produces ample amount of Free Cash. So, it begs the question: "What are they doing with all that cash?" Generally, firms can utilize the cash on their books in 4 ways: Dividends, Acquisitions, Capex/Investments and Buybacks. (2/11)
CDSL does have a Dividend Payout Ratio of ~35-40%. But Dividends are the least efficient way of utilizing cash, due to the Triple Taxation on Dividends. More
Handled well, Inorganic Growth is so lucrative that some companies build their business models around acquisitions (Say, MSSL or Cyient). However, CDSL literally CAN'T be one such company. Read 7 (c) of the below regulatory document to know more:
https://t.co/071lwnnwJ4
(4/11)
CDSL can also reinvest cash into their own business, like most companies do. But CDSL (And most Exchanges) have little need for Capex/Reinvestment. CDSL's IPO came in at Rs. 523.99 Crores. Two years in, the Cash and Investments on their books stands at Rs. 650 Crores. (5/11)
I completely agree that CDSL is a business that produces ample amount of Free Cash. So, it begs the question: "What are they doing with all that cash?" Generally, firms can utilize the cash on their books in 4 ways: Dividends, Acquisitions, Capex/Investments and Buybacks. (2/11)
CDSL does have a Dividend Payout Ratio of ~35-40%. But Dividends are the least efficient way of utilizing cash, due to the Triple Taxation on Dividends. More
Handled well, Inorganic Growth is so lucrative that some companies build their business models around acquisitions (Say, MSSL or Cyient). However, CDSL literally CAN'T be one such company. Read 7 (c) of the below regulatory document to know more:
https://t.co/071lwnnwJ4
(4/11)

CDSL can also reinvest cash into their own business, like most companies do. But CDSL (And most Exchanges) have little need for Capex/Reinvestment. CDSL's IPO came in at Rs. 523.99 Crores. Two years in, the Cash and Investments on their books stands at Rs. 650 Crores. (5/11)

More from Economy
The argument for deficits & debt raising interest rates in the US is not increased credit risk, it is that interest rates are a function of economic fundamentals, flows & policy. Deficits/debt change those.
I can't tell if I'm agreeing or disagreeing with @jc_econ.
Increasing government spending or reducing taxes increases demand (or reduces saving). This raises the price of loanable funds or the interest rate.
In a dynamic context, more demand means a stronger economy, the central bank raises interest rates sooner, and long rates rise.
(As an aside, we are not close to the United States needing to worry about credit risk and the risks are more overstated than understated in most other advanced economies too. But credit risk is not always & everywhere irrelevant, just look at the UK in 1976 or Canada in 1994.)
Interest rates have fallen over the last 20 yrs while debt has risen. This does not necessarily mean that debt rising causes interest rates to fall. It could also mean that other things have happened at he same time that pushed down interest rates more than debt pushed them up.
The suspects for these "other things" include slower productivity growth, slower popln growth, higher inequality, less investment, etc. All of which either increase the supply of saving or reduce the demand for investment, reducing the equilibrium interest rate.
I can't tell if I'm agreeing or disagreeing with @jc_econ.
There is no relationship b/w deficits & interest rates in the US & many other advanced economies. Centuries of dynamic institution building underpin our reserve currency status that allows rates to be a function of economic fundamentals, flows & policy not credit risk 1/3
— Dr. Julia Coronado (@jc_econ) January 26, 2021
Increasing government spending or reducing taxes increases demand (or reduces saving). This raises the price of loanable funds or the interest rate.
In a dynamic context, more demand means a stronger economy, the central bank raises interest rates sooner, and long rates rise.
(As an aside, we are not close to the United States needing to worry about credit risk and the risks are more overstated than understated in most other advanced economies too. But credit risk is not always & everywhere irrelevant, just look at the UK in 1976 or Canada in 1994.)
Interest rates have fallen over the last 20 yrs while debt has risen. This does not necessarily mean that debt rising causes interest rates to fall. It could also mean that other things have happened at he same time that pushed down interest rates more than debt pushed them up.
The suspects for these "other things" include slower productivity growth, slower popln growth, higher inequality, less investment, etc. All of which either increase the supply of saving or reduce the demand for investment, reducing the equilibrium interest rate.
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On the occasion of youtube 20k and Twitter 70k members
A small tribute/gift to members
Screeners
technical screeners - intraday and positional both
before proceeding - i have helped you , can i ask you so that it can help someone else too
thank you
positional one
run - find #stock - draw chart - find levels
1- Stocks closing daily 2% up from 5 days
https://t.co/gTZrYY3Nht
2- Weekly breakout
https://t.co/1f4ahEolYB
3- Breakouts in short term
https://t.co/BI4h0CdgO2
4- Bullish from last 5
intraday screeners
5- 15 minute Stock Breakouts
https://t.co/9eAo82iuNv
6- Intraday Buying seen in the past 15 minutes
https://t.co/XqAJKhLB5G
7- Stocks trading near day's high on 5 min chart with volume BO intraday
https://t.co/flHmm6QXmo
Thank you
A small tribute/gift to members
Screeners
technical screeners - intraday and positional both
before proceeding - i have helped you , can i ask you so that it can help someone else too
thank you
positional one
run - find #stock - draw chart - find levels
1- Stocks closing daily 2% up from 5 days
https://t.co/gTZrYY3Nht
2- Weekly breakout
https://t.co/1f4ahEolYB
3- Breakouts in short term
https://t.co/BI4h0CdgO2
4- Bullish from last 5
intraday screeners
5- 15 minute Stock Breakouts
https://t.co/9eAo82iuNv
6- Intraday Buying seen in the past 15 minutes
https://t.co/XqAJKhLB5G
7- Stocks trading near day's high on 5 min chart with volume BO intraday
https://t.co/flHmm6QXmo
Thank you