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Obsession justified

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In the past I wrote that a certain country, starting with I is obsessed with the search of multibagger stocks as per google trends. A few years back #2 country was Phillipines but looks like the South Asian diaspora in the Gulf is equally keen to find multibaggers.

https://lifeandequities.wordpress.com/2018/09/27/time-to-be-greedy/

https://trends.google.com/trends/explore?q=multibagger

I was looking for books to read, coincidentally I stumbled that if you search in amazon for the word ‘multibagger stocks’ or ‘multibaggers’ the top 4 results are from the authors of the same country that is googling for multibaggers.

To an extent it is justified as there are likely to be lots of them in the next 10 years.

Look at the economic comparison between Indian States vs Chinese Provinces, not even a comparison

The unfortunate difference is that India is a more complicated system still rooted in its past, which has strenghts of its own but you feel sorry when the career politicians are pandering to religious sentiments for populist reasons, who themselves are trillion miles away from the concept of God, notwithstanding the silver tongue, you can be assured that half the country must be delusional or blind to the economic realities and incapable of making an intellectual distinction. A fictitious past is more dear to the denizens more than a brighter future. Choice has been made.

Written by amitdipsite

November 13, 2018 at 6:41 pm

Posted in Uncategorized

C&D Analysis – hard but rewarding

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The gist is that if you are able to study the sector and apply sectoral and macro analysis rather than being blinded to micro analysis of a company, it may prove be a profitable and differentiating strategy.

You need to bet against the consensus, more often than not.

Ref: Valentine James, Best Practices for Equity Analysts

Written by amitdipsite

November 12, 2018 at 8:21 pm

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Success at 65

with 10 comments

Once, there was an older man, who was broke, living in a tiny house and owned a beat up car. He was living off of $99 social security checks. At 65 years of age, he decided things had to change.

He left Kentucky and traveled to different states to try to sell his recipe. He told restaurant owners that he had a mouthwatering chicken recipe. He offered the recipe to them for free, just asking for a small percentage on the items sold. Sounds like a good deal, right?

Unfortunately, not to most of the restaurants. He heard NO over 1000 times. Even after all of those rejections, he didn’t give up. He believed his chicken recipe was something special. He got rejected 1009 times before he heard his first yes.

Details:

In 1952, Sanders franchised his secret recipe “Kentucky Fried Chicken” for the first time, to Pete Harma of South Salt Lake, Utah, the operator of one of that city’s largest restaurants. In the first year of selling the product, restaurant sales more than tripled, with 75% of the increase coming from sales of fried chicken. For Harman, the addition of fried chicken was a way of differentiating his restaurant from competitors; in Utah, a product hailing from Kentucky was unique and evoked imagery of Southern Hospitality. Don Anderson, a sign painter hired by Harman, coined the name Kentucky Fried Chicken. After Harman’s success, several other restaurant owners franchised the concept and paid Sanders $0.04 per chicken.

Sanders believed that his North Corbin restaurant would remain successful indefinitely, but at age 65 it was sold after the new Interstate 75 reduced customer traffic. Left only with his savings and $105 a month from Social Security, Sanders decided to begin to franchise his chicken concept in earnest, and traveled the US looking for suitable restaurants. After closing the North Corbin site, Sanders and Claudia opened a new restaurant and company headquarters in Shelbyville in 1959.Often sleeping in the back of his car, Sanders visited restaurants, offered to cook his chicken, and if workers liked it negotiated franchise rights.

KFC was one of the first fast food chains to expand internationally, opening outlets in Canada and later in the UK, Mexico and Jamaica by the mid-1960s. Sanders obtained a patent protecting his method of pressure frying chicken in 1962, and trademarked the phrase “It’s Finger Lickin’ Good” in 1963.

The company’s rapid expansion to more than 600 locations became overwhelming for the aging Sanders. In 1964, then 73 years old, he sold the Kentucky Fried Chicken corporation for $2 million ($15.8 million today).

Sold too soon because of business conflicts with his franchisees.

KFC market cap today is thousands of millions USD.

Written by amitdipsite

October 27, 2018 at 8:08 pm

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Chalk Talk from the past

with 4 comments

In case of leveraged entities (NBFI/NBFC/Banks/FI), mere liquidity drying up is a solvency concern, financial institution is no longer a “going concern”. This was learnt by me after losing 100% of the portfolio in 2008 financial crisis. Government can step in to take over the entire 100% shareholding of the company and rig the terms of the deal that the company is worthless. That has happened in the past and can happen again. eg: Numerous banks including 3rd Biggest Mortgage lender in the UK, Northern Rock.

In the financial sector many times there is no difference between “crisis of confidence” and actual “crisis because of NPAs”. Only when a bigger institution is able to buy out the other because of technical liquidity crisis, or liquidity issue gets resolved does the difference come into play.

https://www.ft.com/content/9ba3c422-dd6e-11dc-ad7e-0000779fd2ac

Alistair Darling on Sunday announced the first nationalisation of a sizeable British bank in a quarter of a century as he put Northern Rock into public ownership, infuriating shareholders and shocking the two private bidders hoping to take over the stricken mortgage lender.

Worst still, the shenanigans who considered the company worthless sold it a handsome profit for couple of billion pounds few years later and flipped the company over to Virgin Money for close to a billion dollars. https://www.theguardian.com/business/2011/nov/17/virgin-money-buys-northern-rock

Equivalent to a Navy ship saving your merchant vessel and claiming all goods belong to Navy, or locksmith saving your jewelry locked up in the safe and claiming it to be his. A mere rumour is enough to cause the run on banks and self implosion.

Assume you were living for three generations in your maternal grandparents house for over 60 years, and Government needed to resolve the traffic issue by building a flyover or MRTS over/under your house and that your house needed relocation. Can the Government take your house and give you Zero compensation ? Will you not feel your human rights have been violated ? In stock market, Government, Regulators do not have the same sympathy and they consider it a game played by the rich. Even though many pensioners in the UK lost 100s of thousands of pounds, some their entire liquid net worth, Government did not differentiate and High Court, Supreme Court and European Court of Human Right refused to listen to the appeal of shareholders.  https://www.uksa.org.uk/action/northern_rock

So, as an investor you are pretty much on your own, don’t expect help from any quarter and your the last in pecking order post creditors have had their claim.

Such seems to be the market mood in India where financial sector is facing difficulty in rolling over short term debt, asset liability mismatch can kill any blue whale, nobody is too big to fail, though RBI’s aura and character is not sending similar vibes as the indignation and rage was against the hungry reprehensible mortgage lendors in 2008.

In a nutshell, if you want to bet on the financial sector, rule of the game, as I have learnt is to make a diversified bet in mid cap NBFCs as any company can go down another 90% from this point if solvency is at stake. If two out of ten go down, losses will be more than offset by a comeback in other eight.

The spiral of redemptions, margin calls, less funds, less commercial paper, wind down, less liquidity for NBFCs is a self feeding cycle. Solution cannot come from the same mentality and mindset that caused the crisis.

Result of investments YTD: India portfolio is down 25% and Global Portfolio down 5% in 2018 YTD.

Don’t think you are very smart when it comes to analysing risks in a financial institution for the teacher of this game also lost massively in 2009 https://www.irishexaminer.com/business/buffett-lost-217m-on-irish-banks-85681.html “The tennis crowd would call my mistakes ‘unforced errors’,” Buffett admitted.

Once again, the name of the game is to always have the wherewithal to be in the game and position yourself for some great performances, not a 3 stock portfolio of fast growers without stop loss. Only 4% of the stocks in S&P have made all the gains in the past 30 years, the other 96% have done nothing since the last few decades. Concentrate on Amazon and Apple and you are a legend, concentrate on any other 96% companies and you look like a fool or worse, written off.

My bet is on the NBFC space, notwithstanding, one day many Indian banks will also fail and go to Zero like the UK and US banks, but that day is not today or the next year. This is what equity is supposed to be, you cannot make 15% CAGR while the bulk of money earns 3% CAGR in bank deposits. This is an emotional game for the most part (less of a science/maths) by the market participants with indeed financial and real life consequences for people and society.

Written by amitdipsite

October 19, 2018 at 10:06 pm

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FIIs get their money back from the land of Spiritual Giants

with 3 comments

Resulting in:

1/ Strong US Dollar

2/ Weak equity prices, at least in some sections if not the index in emerging countries.

3/ Cause panic amongst inexperienced investors

Trade Deficit of US per month is increasing which cant support ever increasing USD.

FIIs go for the exit:

People with 7-8 years experience in long only equity are writing whether they should SELL “everything” in the stock market, Now. Its a good sign for equity investors.

Spiritual Giants

I had a hypothesis a while back that you can be an unknown villager earning maybe 200$ a month milking the cows for a living, not known outside of your village, but as great in realisation and proximity to the Measureless Amplitude and similar in spiritual stature as Krishna or Buddha. This was recently proven true from other persons account.

Heard a person who has spent all his life since 13 years of age on this research and practice and travels the whole world to lecture for free, this to be the case. What is further clear is that not only can we normal people not imagine, but even the likes of famous people who make a living buy a personal jet :-), through selling meditation like Deepak Chopra, Jaggi Vasudev, Ravi Shankar, Eckhart Tolle etc. even if they may have had one or more personal experiences outside of 4 dimensional physical world either given or self stimulated, even they cannot imagine let alone talk about it or try to understand what is the stature or realisation of these simple country folks.

Funny but true, the President of the economically wealthiest country thinks he knows everything 🙂 whereas we know 0.0 followed by a million zeros .1 % in truth.

Conclusions:

Money is not correlated to spiritual realisation.

Laws of physical wealth and spiritual realisation are almost as exclusive as the physical laws of gravity and electro magnetism.

People are blind to infinite potential of evolution and discovery, that is the only reason to be bored in an otherwise ever deeper universe.

Man only thinks of pushing himself via rocket into another galaxy while he gets out of body, unconsciously, every night.

Written by amitdipsite

October 13, 2018 at 7:14 pm

Posted in Uncategorized

Time to be greedy

with 11 comments

For the long only investor the walloping has been persistent in 2018 as I wrote in the past. https://lifeandequities.wordpress.com/2018/06/06/lag-gayi/

Stocks can fall, a LOT.

Someone said Yes Bank reminds them of Yes Bank in 2013 when it lost 50% in the past, probably they were not in the stock market prior to 2012. Yes Bank fell 90% in 2009 compared to its highs in 2008.

Fresh generation of investors in the country where the search for the word “Multibagger” according to google trends is highest, have predictably panicked.

https://trends.google.com/trends/explore?q=multibagger

multibagger

 

Nobody can tell how low the stock will fall but it fairly easy to tell if its fallen more than its intrinsic value. In this sympathetic age of being ever connected the things seem to take on the cascading chain reaction effect like a flu.

Stay safe from the flu and stay indoors your own brain, away from the crowd and evolutionary psychology of fear and greed and sympathetic diseases of capitulation and over exuberance. There may be some concerted effort required in  the beginning until it becomes a muscle memory but it can be done, wishing your stocks that are 50% low go actually another 50% low so you could buy more.

That would not apply if you had only 3 stocks in your Concentrated portfolio which are all down 90%, hence the name of the game, according to me, is to be hardy as a cockroach in all market cycles.

We are now asking for answers, as to why Indian small caps fell so hard ?

This Sher captures it:

ZUBAAN TOH KHOL

NAZAR TOH MILA

JAWAAB TOH DEH

MAIN KITNI BAAR LUTA HUUN

MUJHEY HISAAB TOH DEY

 

Do you remember the Volatility Index in the stock market was lowest ever in 2017 in 20 years and we “HOPED” that stock market will be a loyal companion.

This jibes:

BEWAFAAI TO YAHAN SAB KARTEY HAI,

AAP TO SAMAJHDAR THEY, KUCH NAYA KARTEY

Now the investors are left alone playing games in their mind, there will be a lot of reward for the right calls thought through calmly in isolation without emotion. But there could be more pain.

 

ABHI IS ISHQ KE IMTEHAAN AUR BHI  BAAKI HAIN

ABHI AUR ZALEEL HONA BAAKI HAI

 

 

Written by amitdipsite

September 27, 2018 at 7:26 pm

Posted in Uncategorized

Did you triple money in stocks in the past 10 years

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Well if you did it in Pakistan as a foreign investor then you ran but are still standing at the same place where you started. Red Queen.

Written by amitdipsite

September 20, 2018 at 7:36 pm

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