Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Structural Change in Fuel Economics | Glad Tidings

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I had written about Astral Polytechnik in 2011 when it was 30 times cheaper than its current market price using a Value Migration model from Adrian Slywotszky.

http://multibaggersindia.blogspot.com/2011_03_01_archive.html

http://multibaggersindia.blogspot.com/2011/07/matter-of-choice.html

 Sometimes a single line/statement is more important, an Epiphany ! rather than weeks of research and days of drudgery.  After reading that sentence essentially you can bet a million bucks on the idea.

In the past few days NZD fell 11% against USD. These kind of currency moves are black swan, unlike a common occurrence in equity markets. New Zealand has had a trade surplus in past 10 out of 11 years. NZD has appreciated against all currencies of the world from 2008 – 2014 over a long term trend series.

Reason for long term uptrend of NZD ?

Strong economy of New Zealand based on real goods and resources instead of virtual resources. Exports of agricultural goods.

If you listen to Jim Rogers, commodities are the bees knees, farmers are expected to be 21st century’s investment bankers. Nobody is manufacturing more land, but world is making more babies !




Reason for fall in the past one fortnight for NZD?

Biggest export commodity for New Zealand is butter, milk and cheese. Being a commodity, price is cyclical. Dairy prices are more than 40% off peak since February 2014.


So what is the good news?

I am a proud New Zealand citizen (not withstanding I am majorly invested overseas rather than in New Zealand), with most of investment overseas, this 10% currency move does not personally affect me. It does affect the farmers. Also, I am not enouraging a currency trade, although I strong feel NZD/USD, NZD/GBP trade would do very well for the next one to two years as milk prices rebound.

I looked for biggest imports for New Zealand. They are quite similar for India, with Petrol Oil and Lubricants taking up most of forex.





Huh? so what, I know that already

New Zealand already runs trade surplus despite importing oil. India runs trade deficit because of oil.

Now what can change the game ? Not importing oil.

I feel the time for idea is closing in. I would be a worried person if my main business is exporting oil. Export would continue as margins are 2500%. 5$ cost and 100$ sale price, so selling at 25$ also would result in profit in export of oil.

Answer is (plug in at home) Electric Car


While researching recently for the next disruptive technology (It may not translate to serious money over long term, but one could surf for short time), electric cars are top on the list.

Petrol costs 2.2$ roughly here (110 INR) in New Zealand

New Zealand produces 74% of electricity through renewable energy.

http://www.energywise.govt.nz/your-vehicle/new-technologies/electric-vehicles

 

Did you read that, 2.2$ per litre petrol vs 26cents per litre petrol ? History does not repeat but rhymes. If this is not value migration, what is it?

India or other countries may not generate much renewable energy but do import oil.

Two strong themes then emerge:

Currency Trade ( Countries importing Oil would gain currency over next 10 years)

Which Electric Car company would gain ?

Not a dream anymore

Plug in Electric cars are no longer a perpetually 20 year distant dream of visiting extra stellar space.

United States sells 10,000 plus in electric cars per month ( month ! not year)

Critical mass is already in place.

Nissan’s Leaf, Chevy Volt and Tesla Motors (in premium segment) look three well placed companies.

http://www.nissan.co.nz/zero-emission-electric/leaf/

http://www.chevrolet.com/volt-electric-car.html

http://www.teslamotors.com



Norway is a shining example, 6% of new cars sold in Norway are plug in electric or plug in hybrids.

http://en.wikipedia.org/wiki/Electric_car_use_by_country

http://en.wikipedia.org/wiki/Plug-in_electric_vehicles_in_Norway

“The fleet of plug-in electric vehicles in Norway is the largest per capita in the world, with Oslo recognized as the EV capital of the world. In March 2014, Norway became the first country where over 1 in every 100 passenger cars on the roads is a plug-in electric,out of a registered fleet of over 2.52 million passenger cars. Norway’s fleet of electric cars is one of the cleanest in the world because almost 100% of the electricity generated in the country comes from hydropower.”

http://www.greencarreports.com/news/1094705_plug-in-electric-car-sales-in-sept-leaf-up-again-volt-down

www.telegraph.co.uk/motoring/picturegalleries/10012110/Top-10-electric-and-hybrid-cars.html


Many ways to make many millions. Agri, Currency, Equities. I am laser focussed on equities, automatically playing on agriculture, looking for an even headier cocktail that amalgamates the duet! NZD and equity play on agricultural goods. There are some interesting names in Africa but do not offer great growth rates.

As Munger advises, avoid the mistakes, remember the obvious, shun the esoteric. Don’t short NZ Dollar, Norwegian Krone and Electric Cars. There may be some serious winners in electric cars. Most important part of ecosystem of electric car is battery. No wonder BYD bet in 2010 is in the right direction. I am taking note after 5 years after the two rising young men at Berkshire! Saw this in 2009 but did not pay much heed.



 

 Tesla stock is up 8 times in the past two years

 Tesla investing 5 Billion USD in a battery plant.


http://www.bizjournals.com/sanjose/news/2014/09/03/tesla-chooses-nevada-for-gigafactory-battery-plant.html?page=all

Get rich


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


http://www.elevendimension-funds.com

Written by amitdipsite

October 4, 2014 at 2:18 am

Posted in Uncategorized

8 Responses

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  1. Thanks Amit for sharing this.

    It is amazing to hear the “Wise Trio”..never get sick of it.. always something to learn from them.

    Vikas Rana

    October 6, 2014 at 7:07 am

  2. Growth in sales of alternatively-fueled cars is outstripping that of petrol and diesel ones.

    The latest statistics from the Society of Motor Manufacturers and Traders (SMMT) show 9,955 AFVs were registered in September, a 56% rise on the same time last year.

    http://www.theguardian.com/environment/2014/oct/07/uk-electric-car-sales-surge-in-2014

    Amit Arora

    October 8, 2014 at 12:16 am

  3. M&M Buys 51% of Peugeot Motorcycles. It provides Good Technology background for M&M with respect to Sound Peugeot Motorcycles E Scooter. Now M&M has Reva as well as E Vivacity.
    It will be Good game changer for M&M. Pl share your views.

    Karthikraja K

    October 8, 2014 at 4:46 am

  4. Dear,

    Peugeot scooter is tiny division, will not perk up Mahindra meaningfully by this acquisition. Mahindra on the other hand is a stable large company in itself.

    Co-incidentally was reading a chapter today from Business Adventures by John Brooks, on Edsel by Ford.

    Auto is a terrible industry in general.

    Amit Arora

    October 8, 2014 at 5:31 am

  5. Nice post on business model comparison of Amex, Visa and Mastercard.

    http://punchcardblog.wordpress.com/2014/01/02/do-financial-services-companies-have-moats-part-ii-american-express/

    A multi billion dollar mistake by Buffett, derive the lesson ? (lousy industry! aka retail)

    http://investingsidekick.com/buffett-wrong-tesco/

    —————————————————————-

    I was surmising today, “Why do equity analysts use excel based models? Isn't it plain obvious when you see a beauty, just intuitively. Do we weigh the petals of a rose, analyze it under microscope ? When you see a good thing, you know it.

    There seem to be 100 times as many books on investing than the number of great companies (plus stocks) themselves. Great companies are a plenty, great stocks few.”

    Amit Arora

    October 10, 2014 at 7:58 pm

  6. Seem to be the investor maturity model taking cue from Einstein, Einstein had the opinion there were 5 ascending levels of intelligence.
    1. Smart. 2. Intelligent. 3. Brilliant. 4. Genius. 5. Simple

    Speculator / Lottery Ticket Investor -> Tip Investor -> Herd Investor -> -> Intelligent Investor -> Diligent and Thorough Investor -> Intuitive Investor*

    *Intuitive Investor does not use calculator and excel spreadsheet

    Amit Arora

    October 10, 2014 at 8:11 pm

  7. While Costco is indeed different, I am not sure about V-Mart, value investors current fav.

    Jatin

    October 11, 2014 at 10:19 am

  8. When it doubt, stay out. Its very hard to lose money on a share one has not invested in🙂

    Amit Arora

    October 11, 2014 at 7:30 pm


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