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Looking beyond the obvious. Ideas, analysis, and projects at the intersection of finance, economics and business.

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Student-led analysis of finance, business and politics

Comparing SIP and Lump Sum Investing

Comparing SIP and Lump Sum Investing

  Objective To compare the long-term outcomes of systematic investment plans (SIPs) and lump-sum investing under different market conditions. Methodology Assume an investor has ₹1,20,000 available for investment. Scenario A invests the entire amount immediately. Scenario B invests ₹10,000 every month for one year. Compare returns under rising and falling market environments. Findings During steadily rising markets, lump-sum investing often outperforms because more capital is invested earlier. During volatile or declining markets, SIPs can reduce timing risk by spreading investments over multiple periods. Key Learnings Time in the market generally beats timing the market. SIPs help reduce emotional decision-making. Lump-sum investing benefits from long investment horizons. Market conditions influence outcomes significantly. Conclusion Neither strategy is universally superior. The appropriate choice depends on cash availability, risk tolerance, and investor behavior.

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Why Market Crashes Are Often Rational

Why Market Crashes Are Often Rational

  Every market crash appears irrational in the moment. Headlines focus on panic, fear, and uncertainty. Yet many crashes are not the result of irrational behavior but rather the rapid repricing of expectations. Investors do not value companies based on the past. They value them based on the future. When expectations about growth, profits, or interest rates change, prices must adjust accordingly. The 2022 technology selloff provides a useful example. Many companies continued to grow revenues, but higher interest rates reduced the present value of future cash flows. Investors were not reacting to current performance alone. They were reacting to a different future. Understanding markets requires looking beyond price movements and asking a deeper question: what changed in expectations? Key Takeaways Markets are forward-looking. Expectations matter more than recent results. Price declines are not always signs of panic. Repricing is often a rational response to new information. Conclusio...

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Every day we consume more information than ever before. News updates arrive every minute. Social media delivers endless opinions. Podcasts, newsletters, and videos compete for our attention. Yet despite having access to more information than any generation in history, genuine understanding often remains scarce. Information tells us what happened. Understanding explains why it happened. In a world overflowing with information, the ability to connect facts, incentives, and systems into a coherent narrative becomes a competitive advantage. The reason is simple. Information tells us what happened. Understanding explains why it happened. Reading that a company's stock price fell by 10% is information. Understanding the business fundamentals, investor expectations, and market psychology behind that decline is insight. This distinction matters because careers, investments, and decisions are rarely rewarded for knowing facts alone. They are rewarded for connecting facts into meaningful pat...

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Building a Simple Discounted Cash Flow Model

Building a Simple Discounted Cash Flow Model

Project Objective The goal of this project was to build a simple discounted cash flow (DCF) model from scratch to estimate the intrinsic value of a company. Methodology Estimate future free cash flows. Determine an appropriate discount rate. Calculate the present value of projected cash flows. Estimate terminal value. Sum all discounted values to derive enterprise value. Key Learnings Small changes in assumptions can significantly impact valuation. Terminal value often contributes a large portion of total value. Small changes in assumptions can significantly impact valuation. DCF models are highly sensitive to growth and discount rate assumptions. Conclusion A DCF model should not be viewed as a prediction machine. Instead, it is a framework for understanding how expectations influence valuation and investment decisions. Future Improvements Add sensitivity analysis. Incorporate scenario modelling. Compare results with relative valuation methods.

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