Thursday, March 10, 2016

Life and Equities | Permanently moved blog

Money is a part of life not the heart of life.

Increasingly influenced with this realisation, I am more inclined to move away from blogging just about equities alone.

I hardly write a post or two a month, but whenever I do, I shall do so at

https://lifeandequities.wordpress.com/

Thanks for reading.

Saturday, March 5, 2016

Investing rules - Maximise money per hour of research

  1. -Read books from successful investors.
  2.  Stop watching TV News Channels.
  3. Nobody knows the future, so stop asking.
  4. Money is only one of the types of Wealth.
  5. Crazy people of like nature enforce yet conceal each others' craziness. Find your craziness and tone it to saner proportions.
  6. Mean reversion is an enduring truth of market.
  7. Average common man will buy more in peaks and less in trough.
  8. Excesses in under and over valuation is an enduring theme.
  9. Find High Growth Companies in Low Growth Industries.
  10. Stop Finding companies in High Growth Industries.
  11. Find out the type of investor you are, someone who buys on borrowed tips of one who researches on their own.
  12. Find market leaders in small niches, not #3 or #4 players selling cheap.
  13. Thinking in 3-5 year time frames and not 3-4 months / quarters.
  14. Understand the business, competitive forces and ability to predict future of the business.
  15. Stop thinking solely in PE terms.
  16. Stop playing greater fool game.
  17. Bet on four stocks at a minimum, don't over concentrate, don't over diversify.
  18. Think independently. You will outperform the majority.
  19. When there is no company worth investing in the country, go all cash, to go out of the country.
  20. Get rich slow-but-sure, don't buy lotto, don't play in casino, don't gamble, don't leverage.
  21. Maximise money per hour of research, no point buying into a position requiring active monitoring. The person who makes 100 million from stock market by investing 1 hour per day wins over the person who makes 100 million by investing 6 hours a day. Time is finite and limited. Learning and knowledge is infinite.
  22. Make money and stock market both your slave, make money and forget about them.
  23. Never retire, work incessantly.
  24. Money is means and not an end. Money is a slave to free you from your daily routine.
  25. Show you have the creative potential and do something that nobody has ever done.
  26. Have more creative ambitions in life than earning billions, you are more than your body (thankfully) that needs to be fed on money supplied goods and services alone and very soon you will enter a dimension where money will not work. How soon ? Likely before 2500 weekends.
  27. Gradually drift into a field which you are passionate about, otherwise you are a big disservice to yourself and the society in a profession that is not your passion.
  28. Buy damaged stocks, not beaten down companies.
  29. Admit mistakes.
  30. Learn from own and others' mistakes.
  31. Explain your picks to yourself with four convincing reasons.

Wednesday, March 2, 2016

FMCG Babas of India

Indian self-proclaimed gurus have been upping their game now with all the tricks in the book, marketing, finance, psychology, and blind fan following, hero worshipping, branding, economies of scale, outsourcing, distribution network. They are now a genuine industry, career choice and threat to conventional FMCG companies. Many brands like Patanjali, Sri Sri Ayurveda, Isha Foundation, MSG and many more have gained critical mass to directly challenge well established players in corporate India. Enjoy the game and hopefully my poem on Indian FMCG Babas.





Indian Religious Gurus vs Santa Claus



Indian FMCG Babas came with bundles of goodies

Kids thought they were Indian Santa Claus’s homies




Unbeknown to gullible Indian villagers

FMCG Babas are wolf-in-sheepskin entrepreneurs




Santa Claus bestows free gifts to kids in all neighbourhoods,

Indian Babas are mercenaries and brand their goods




Santa only wants your love and goodwill

Indian Babas have an eye on your Estate and Will




Santa wants a place in your heart

Indian FMCG Babas want a pie your grocery chart




Santa wishes yule tide and hopes all goes well

FMCG Baba blow the conch of corporate death knell






 


Disclosure: Not Invested in companies discussed. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market can (and many a times do) result in loss of principal capital. 

http://www.elevendimension-funds.com




Friday, February 26, 2016

What they don't teach you at Business Schools (Harvard or not)

As a minority investor your interests should be aligned with the interests of the promoters of the company. Buffett looks for integrity first, followed by intelligence and energy.

As you may be holding 20 positions, you can only infer from AGM or market gossip or genuine feedback about company. 

Some of the hints and clues that minority interest take cue from are dividend policy, communication during bad times, dealing with group companies, acquisition of shares from open market etc.

 One of the big turn offs for investors is when the promoter groups run a large number of companies be they public or private (this is a very common disease with Indian promoters) think ADAG Group, VH Group (Venky's India). 

The key problem is that # of hours in a day are limited and the promoters looking at 5 businesses will do worse than one looking at 1, especially if they invest a lot of personal time in absence of professionals.

 As I am on a constant prowl for opportunities and lately in India now, organic cosmetics, foods *everything* is growing very rapidly, I stumbled upon a company which is associate of a BSE / NSE listed company Poly Medicure Ltd. The company has made its sister company (Vitromed Healthcare) RICH by giving it the jobwork, paying it rent for using premises, buying and selling products to it at so-called arms length.

Anyone interested in further probing the management can ask few simple questions:

Qs 1) Has Poly Medicure got any shareholding in Vitromed Healthcare ?

Likely answer - NO

Qs 2) What were revenues of Vitromed Healthcare prior to alliance / dealing with Poly Medicure ?

Likely answer - Zero

Qs 3) Knowing that certified organic food business is trending, your sister company has founded a step down subsidiary and has ventured into Organic Juices and Organic Cosmetics. This business must be juicy. You invest personal time as does your son in this business. Meaning Poly Medicure Ltd is now being neglected. Anyhow who are the investors and beneficiaries of this organic business (http://www.vitronaturals.com/natural-juices-cosmetics) ?

Likely answer - 100% owned by my family

Qs 4) Okay great, you have all the legal right to have as many businesses in the free land of India. But why are you advertising Poly Medicure's facilities and manufacturing prowess on the website of Vitro Naturals where the listed company that I own a part of gets no benefit and is not compensated ? Shouldn't we be getting some compensation "at arms length" ?

 http://www.vitronaturals.com/page/company-production-facilities

No answer from management.

The reason is, management of Poly Medicure Ltd. is greedier and slipperier than usual, 100% goes into pockets of the family that runs the company listed on BSE / NSE India.

So my friend, avoid companies like these where management shares its second best business with you and keeps the best to itself. These companies will not be long term wealth creators.