Understanding yourself is where wisdom starts.

Jun 21, 2024

Did you know saving Money can hurt the Economy?

Imagine you and your friends decide to save more money because you're worried about the future. yeh to achhi baat hai, right? But what if everyone in your town starts doing the same thing at the same time?

In economics, this situation is called the ‘Paradox of Thrift’.

Here's the paradox: while saving money is good for individuals, if everyone saves more during tough times, it can actually make the economy worse. When people save more and spend less, businesses sell fewer goods and services. This leads to less production, fewer jobs, and even more people saving instead of spending.

To break this cycle, economists often suggest balancing saving with spending and investment. For example, governments might encourage people to spend more during downturns by cutting taxes or giving out stimulus checks. This boosts demand for goods and services, which can help kickstart the economy again.

MEME OF THE WEEK:

Market Kya keh raha hai, Sir?

Before we start today here’s a little Disclaimer:

The stocks discussed here are not buy or sell recommendations from my side. We are simply sharing this information so you can stay informed about what is happening in the markets and understand how companies are performing. This is intended to help you learn how to analyze the market and make informed decisions.

Fertilizer Stocks See Big Gains.

This week, Fertilizer stocks increased by upto 20%. Let’s understand why:

First, there’s talk of removing the Goods and Services Tax (GST) on fertilizers. If GST is removed, fertilizers will become cheaper for farmers, which is good news for fertilizer companies as they might sell more. This will be discussed at a big meeting on Saturday, June 22.

Second, the government recently raised the Minimum Support Prices (MSP) for 14 crops grown during the Kharif season, such as rice, maize, and cotton. With higher MSPs, farmers will get more money for their crops. This extra money can help them buy more fertilizers and other farming supplies.

Investors are feeling positive about these changes. They think that cheaper fertilizers and higher crop prices will help the agricultural sector. This positive feeling has made fertilizer stock prices go up.

Global Stock Market: Higher Prices, Less Supply.

Global stock prices are up by 14% over the past year, reaching record highs, but the supply of stocks is decreasing. Here’s why:

Fewer companies are listing on stock markets, and many are buying back their own shares. This year, The value of Net Stock Issued (Stock issue - buyback), is negative $120 billion—the lowest since 1999.

Many big companies like ByteDance (the parent company of TikTok), OpenAI, Stripe, and SpaceX are staying private. They prefer private funding because it offers more flexibility and fewer reporting requirements.

Private equity funds, which invest in private companies, managed $8.2 trillion by mid-2023, more than double the amount in 2018. With so much private money available, companies are not feeling the need to go public.

Staying private benefits company founders, but it worries others. Public markets are more transparent, which helps regulators and analysts understand how companies operate. If fewer companies go public, there might be less support for business-friendly policies.

To address this, institutional investors are increasing their investments in private equity, which can benefit retailers through pension and mutual funds. Regulators might also impose stricter rules on large private companies to ensure transparency or reduce reporting requirements for public companies.

What more caught my eye:

Gautam Adani meets Bhutan PM, signs MoU for 570 MW green hydro plant
Sectors to watch out for in Monsoon-2024.
Rs 76,000-cr Vadhavan Port project in Maharashtra gets Cabinet approval.
Investing Framework you should follow!
Zepto raises $665 mn at a Valuation of $3.6 Bn to double dark store count.

Recommendations:

First up is the movie Inside Out. This animated film takes you inside the mind of a young girl named Riley.

You’ll meet her emotions like Joy, Sadness, Anger, Fear, and Disgust. It’s a fun and touching story about understanding feelings. The second part of the movie just came out and is also great!

Recently, Roger Federer gave his first-ever commencement speech, where he touched on significant things. He also shared how life is bigger than we think. Federer is such a positive person, and his words can really inspire us. This is a must-watch video!

That's it for this week's recommendations!

Remember, in life, it's important to stay positive and keep pushing forward. Every challenge is an opportunity to grow and become stronger. Believe in yourself and never stop learning.

Song of the week:

This is Parth Verma,
Signing off.