The Connectere brings forward the mind’s eye and panoramic view of the young writing enthusiasts on various topics

Category: Finance Page 1 of 10


Bank merger : Good or bad?

Merger refers to collaboration of two or more business entities to form a larger one with  common ownership. Mergers of banks began in India in the 1960s thereby reducing the number from 27 in 2017 to 12  till date. On 30th August 2019, our Honourable Finance Minister, Smt. Nirmala Sitharaman announced the merger of 10 separate Public Sector Banks (PSBs)into four entities which came into effect from April 1,2020. Oriental Bank of Commerce (OBC) and United Bank of India (UBI) merged with the Punjab National Bank (PNB), making PNB the second-largest Public Sector Bank of India with ₹17.95 lakh crore business and 11,437 branches.

Second merger is of Canara Bank & Syndicate Bank, forming Canara bank the fourth largest public sector bank with ₹15.20 lakh crore business and a branch network of 10,324. Andhra Bank and Corporation Bank merged into Union Bank of India forging Union Bank,the India’s fifth largest public sector bank with ₹14.59 lakh crore business and 9,609 branches. In the fourth merger, the Indian bank would be merged with the Allahabad Bank, declaring Allahabad bank the 7th largest Public Sector Bank of India with Rs.8.08 lac crore business and the number of branches would be 6,104.


In the past few years, the world has seen a boost of both artificial intelligence and robotics. Bets and bids worth billions are at stake in the future that we will be having drones that can fly themselves, robots that can cook, drive, run errands and even make new identical robots and train them by themselves. What is also at stake are the lives of millions of people who would be replaced by these robots before they even realise the transition. 

Impact Investing

Impact Investing

“The evolution of impact investing over the last two decades has proven that capital is king when it comes to having real impact. In order to truly solve some of the world’s greatest issues in energy, agriculture, food, healthcare and general social wellness, we have to put serious economic focus into these areas” – The State of Impact Investing 

Impact Investing essentially refers to investments made in companies or organizations which helps in attaining social or environmental gain along with a financial return as well. Impact investors seek to create a positive impact by investing, for example, in non-profits that benefit the community or clean technology enterprises that work towards a better environment. The term ‘impact investing’ was popularized in 2007 even though the practice had developed years ago. 


Minimalism: Less is More or More is Less?

Less is more.

This is often what is regurgitated by and to us with our consumption styles coming under increasing scrutiny after the conversations surrounding sustainability and climate change have become something which we no longer can ignore. Having less is seen as the key to combating materialism, the greatest curse of capitalism. It’s said that as we start focusing on what we need rather than what we want, not only will the world become a better place, but so will our finances. However, how much truth does this really hold? Let’s take a look. 

Financial decision making

Cognitive Biases in Financial decision making

“The investor’s chief problem, and even his worst enemy, is likely to be himself.” – Benjamin Graham. Investing has always been a tricky business, hasn’t it? Just last week, one of my friends invested in stock because its name matched her initials, and another time, one of my uncles bought twenty-one shares of a twenty-one-year-old company, on his son’s twenty first birthday, they didn’t have a logic behind it, they just believed it would be lucky for them, and it happens to the best of us. When it comes to financial decision making, we might end up being biased in our approach to investing in the right stocks.

Let’s look at some of the most common biases in behavioral finance. 

  • Endowment Effect

Each of us will always have one special object so inculcated with emotional meaning and nostalgia that no amount of persuasion could ever convince us to give it up. Our XBox, or that 10-year-old t-shirt, or our FRIENDS DVD box set, we can’t dream of giving up these things. We are endowed with these things. 

This feeling of ownership towards material belongings is known as the ‘Endowment Effect’, it affects financial decision making, and it has long been the subject of study among psychologists and marketers. 

Once we receive something, it becomes ours, and more often than not we get attached to it. Once it is ours, letting go of it feels like a loss, even if it is a burden for us. Many times investors hold on to a ‘losing’ stock rather than get rid of it because they are constantly expecting a miracle, a turnaround that may never come, and they’re just building up their losses. This effect is similar to ‘loss-aversion’ bias, according to which people believe what they own is more valuable than it actually is. 

  • Sunk cost fallacy

Let’s say you’re at a theatre watching a movie, and ten-minutes in you realize that it’s terrible, but you still stay for the whole movie, because you paid for it, and even if you leave you aren’t getting any money back. This is a classic example of the sunken cost fallacy.

It happens when an investor puts more money in a losing investment because of previous reasons. The more money you put in a corporation, the harder it becomes to abandon it, and slowly, it just becomes a cycle. This is an emotional dilemma wherein it becomes difficult to walk away from a failing investment because of the time and energy already put into it. Thus, the sunk cost fallacy is an error in reasoning in the sunk costs of an investment are fully taken into account when deciding whether to continue with the investment. 

  • Bandwagon Effect

Remember when you started using fanny packs, or the crocs, or any other fashion trends that you really weren’t keen about, this is known as the ‘Bandwagon effect’, and all of us have fallen for it, whether we consciously know it or not. This effect occurs when people start mimicking the buying choices of other people. For many marketers, this phenomenon when put into action can boost the popularity of a certain stock or a product, straight into a grand slam. This effect influences investor behavior even when a stock/product has features they don’t need, or even understand. 

I am sure you must know about the ‘dot-com bubble’ which burst in the beginning of this century is a typical example of herd behavior, wherein people blindly started investing in dot-com companies, when they didn’t even understand the behind-the-scenes of it, just because everyone was doing it, and they wanted to get in.

  • Familiarity Bias

If asked, wouldn’t you be more willing to invest in companies that you buy products from, or where you work, or where you have a family connection, because you seem to trust them. This is known as the ‘familiarity bias’. It is the inclination to remain close to what is familiar to them, and believe more in the choice that they recognize and are aware of, because unfamiliarity makes them unsure and uneasy.

This bias puts off the investors from analysing the genuine potential of the lesser acknowledged companies and stocks, that may actually turn out to be more profitable than the common options they always choose to look at.

  • Anchoring Bias

Let’s say, you went shopping, and you saw the price of a shirt to be Rs. 2000 in one store, and Rs. 900 in another, and this makes the latter option seem cheap. The higher cost in your anchor price, this technique is often used by retailers to use a higher list price for their products on ‘sale’ at Rs. 4000 with a 75% markdown to Rs. 1000. 

Investors often tend to base their decisions on the first source of information they receive (like the initial purchase of a stock), and later might have a difficulty adapting their views to new information. Traders lean towards holding onto a belief and then apply it as a subjective reference point for financial decision making.

  • Gambler’s Fallacy

Suppose you are asked to toss a coin multiple times, and a ‘head’ occurs the first five times, most people would then be inclined to believe that a ‘tail’ is likely to occur the next time, arguing that the repeated occurrence of ‘heads’ increases the likelihood of a ‘tails’ outcome. Gambler’s fallacy is a phenomenon named after gamblers who believe that a string of good luck will follow a string of bad luck.

Gambler’s fallacy lies in seeing arrangements where none exist, investors often feel the need to impose a sense of order on things that are actually random, just to make sense of them, and to feel in control. This bias can often give rise to unfounded credibility to the claims of fund managers who have been earning good money for a few years in a row, and hinder their financial decision making.

These are just a few cognitive biases that hinder financial decision-making, and it is important to be careful while taking such decisions, navigate these biases in effective ways; wealth managers who understand these biases and their consequences are often the best choice when it comes to financial decision making for your investment portfolios. 


Innovative investments: Art and collectibles

An alternative investment refers to investment in assets other than traditionally invested in, like bonds, stocks, and cash. An alternative investment is a broad term and it includes various kinds of tangible assets like wine, coins, stamps, and even art. Artworks have made headlines when they are sold for billions in the auction. One must ask why people spend so much money on these paintings, furniture, and other antiques. Are there any financial gains attached to it or is it simply for pleasure?

Well, it is a mix of both. Art and collectibles though have a low intrinsic value they still have demand among its enthusiasts. This is what makes the market of art and collectibles tricky to invest in. Some of them generate huge returns while some lose their value over time. In this article, we will look at how artwork and collectibles can be seen as an alternative investment. We’ll start by understanding the value of art in an economic sense; then look at art as an investment, and what are its advantages and disadvantages; finally the things to keep in mind before investing in Art and the collectible market.


Innovative investments: Sneakers

When one thinks about investments, sneakers are definitely not the first thing that comes to mind. Shares, equity, gold, and property are mainstream in the arena of investments. But over the years with an increase in the relevance of pop culture and globalization turning athletes, singers, actors, and artists into “celebrities”, the sneaker industry has become a booming business. 

We all have seen people obsess over Air Jordans or Yeezys or the latest celebrity collab. Some have special display cases or shoe closets for their sneakers, while others have boxes on boxes stacked with them. Have you ever wondered why people collect and even do business with these sneakers? This article will explain why sneakers are a new, innovative, and profitable investment. 


Innovative investments: Birkin bags

I’m pretty sure the majority of us include possessing a Birkin bag in our bucket list. Why is it so? Perhaps because these bags are the embodiment of luxury and are thus, not very pocket friendly. Their price ranges anywhere between $9000 to half a million dollars.

The question is, what is in this bag that makes it command such eye-popping prices? The story begins with Jane Birkin, who used to carry a basket everywhere she went. However, one day on a flight when she tried to fit her basket in the overhead compartment, the lid came off and all the contents fell off. Jane sulked and discussed with her seatmate how it was impossible to find a perfect bag, customized for all uses. Then the pair spent their time on the flight by sketching all possible designs for the handbag. 

Page 1 of 10

Powered by WordPress & Theme by Anders Norén

Get all updates from The Connectere. Sign up below

The Connectere publishes new content daily. It ranges from articles to podcasts and news analysis. To not miss out on these updates, sign up for our email newsletter. We promise we don't ever spam. (Once you put in your email, you will need to go and confirm the subscription from your inbox once)