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Friday 31 May 2019

Weekend Reading - Some Interesting Stuff

1) Can cancer be treated by bioelectricity?
The human body—including the brain—runs on electricity - the movements of mostly positively charged ions of elements like potassium, sodium, and calcium.
Two recent meta-analyses concluded that amplifying the natural wound current with electrical stimulation prevented them all from getting worse, and even healed some of the worst ones completely. Electrical stimulation almost doubles their healing. Similarly intriguing results have been obtained for non-healing diabetic wounds—the kind that lead to the amputation of limbs, which usually leads within a few years to death.
Cancer is beginning to be viewed increasingly as a failure of communication; a misregulation of the field of information that orchestrates individual cells’ activities towards functioning as part of a normal living system. Individual cells “forget” they are part of a larger whole and treat the rest of the body as an environment whose resources can be exploited to feed themselves.
In 2013, Levin’s group showed that they could prevent or reverse some tumors in tadpoles by using drugs to target their bioelectric signaling. The same drugs could turn cancer on and off at a distance, by treating the environment, not the cells themselves.
The broader implication still is that within the next decade, we could learn enough about bioelectricity to change how cell networks communicate and make decisions about how they grow and develop. New computational modeling tools will be a major factor here.

2) China's food delivery app boom has an odd fallout - plastic
The astronomical growth of food delivery apps in China is flooding the country with takeout containers, utensils and bags. And the country’s patchy recycling system isn’t keeping up. The vast majority of this plastic ends up discarded, buried or burned with the rest of the trash.
Scientists estimate that the online takeout business in China was responsible for 1.6 million tons of packaging waste in 2017, a ninefold jump from two years before. That includes 1.2 million tons of plastic containers, 175,000 tons of disposable chopsticks, 164,000 tons of plastic bags and 44,000 tons of plastic spoons.
More plastic enters the world’s oceans from China than from any other country. Plastic can take centuries to break down undersea.

3) Sustainable growth is more important than PE multiple
The reason that Wal-Mart produced a fantastic return from 1974 to now is not that it was cheap relative to its present or near-term future earnings.  By the standards of 1974, it was actually a growth stock–priced at almost twice the market multiple.  In the current market, an equivalent valuation would be something like 30 or 40 times earnings–for a business with uncomplicated earnings that had already been in operation in Arkansas for three decades.  It produced a fantastic return because it was a fantastic business, with miles and miles of growth still in front of it.

4) The way to master more things is to simply focus on one thing right now
When you begin practicing a new habit it requires a lot of conscious effort to remember to do it. After awhile, however, the pattern of behavior becomes easier. Eventually, your new habit becomes a normal routine and the process is more or less mindless and automatic.
The counterintuitive insight from all of this research is that the best way to change your entire life is by not changing your entire life. Instead, it is best to focus on one specific habit, work on it until you master it, and make it an automatic part of your daily life. Then, repeat the process for the next habit.

5) Walk 5000 steps a day, not 10,000 for the health benefits
There's nothing magical about the number 10,000.
In fact, the idea of walking at least 10,000 steps a day for health goes back decades to a marketing campaign launched in Japan to promote a pedometer. And, in subsequent years, it was adopted in the U.S. as a goal to promote good health.
In fact, women who took 4,400 steps per day, on average, were about 40 percent less likely to die during the follow-up period of about four years compared with women who took 2,700 steps.
The benefits of walking maxed out at about 7,500 steps. In other words, women who walked more than 7,500 steps per day saw no additional boost in longevity.

Monday 27 May 2019

An Overview Of The Markets

Some time back I shared this with the members of the Intelsense advisory services. 

Friday 24 May 2019

Weekly Reading - Some Interesting Stuff

1) Finland is teaching school students how to identify fake news (and we should follow suit)
As the trolling ramped up in 2015, President Sauli Niinisto called on every Finn to take responsibility for the fight against false information. A year later, Finland brought in American experts to advise officials on how to recognize fake news, understand why it goes viral and develop strategies to fight it. The education system was also reformed to emphasize critical thinking.
“It’s not just a government problem, the whole society has been targeted. We are doing our part, but it’s everyone’s task to protect the Finnish democracy,” Toivanen said, before adding: “The first line of defense is the kindergarten teacher.”
The students broke off into groups, grabbing laptops and cell phones to investigate their chosen topics – the idea is to inspire them to become digital detectives, like a rebooted version of Sherlock Holmes for the post-Millennial generation.
Her class is the embodiment of Finland’s critical thinking curriculum, which was revised in 2016 to prioritize the skills students need to spot the sort of disinformation that has clouded recent election campaigns in the US and across Europe.

2) The slow building of the second iron curtain - China and US fight it out with Huawei caught in the crosshairs
The worries about Huawei have historically stemmed from the fact that the company’s founder, Ren Zhengfei, was a technician for the People’s Liberation Army prior to founding Huawei — not to mention the tens of billions of dollars the Chinese government has invested in the company. Fears have been exacerbated in the wake of China’s passage of its National Intelligence Law and other cybersecurity laws in 2017, which, according to Lake, “compel corporations to assist in offensive intelligence operations” instead of just requiring them to cooperate with law enforcement on national security matters.

3) India starts spending meaningfully for solar energy
India's investments in renewable sources are now outpacing those in fossil fuels. The falling costs of bringing solar power online as well as favourable government policies have seen solar’s star rise in recent years. At a time when other nations are curbing coal use, India is bucking the trend and the vast majority of the country is still powered by fossil fuels, mostly coal.

4) One of the oldest industries (meat industry) is about to be disrupted by factory produced meat
In the foothills of a mountain in a rural part of Japan northwest of Tokyo, a farm called Toriyama painstakingly breeds and raises cattle to make Wagyu beef–delicately marbled meat that sells for around $100 a pound. In a lab in San Francisco, food scientists now plan to recreate Toriyama’s meat in a bioreactor.
The best way to deal with the meat challenge is just to make better meat without all the issues associated with killing animals today.” Those aren’t just issues of animal ethics; the meat industry is also one of the world’s largest contributors to climate change. The basic techniques aren’t new and have been used in medical research for decades–for example, in tissue engineering of organs for drug discovery. The company still has major challenges ahead. After researchers figure out how to make cells grow quickly enough to address cost issues, it will move its focus to flavor; the nutrients fed to the cells can be tweaked to affect the taste of the meat.

5) How could auditors miss the issues in IL&FS?
There are a host of allegations against the auditors, from missing out on the sprawling IL&FS subsidiary empire and not highlighting the asset-liability mismatch on the company’s books, to inappropriate valuation of assets, poor recognition of non-performing assets (NPAs), and non-detection of circular rotation of funds between group entities.
The glaring failures prompted the government to set an example with this case. “Do the auditors work for the management or for stakeholders. Can auditors blindly accept the version of the management and rely on comfort from management?" asked a senior SFIO officer.

Friday 17 May 2019

Weekend Reading - Some Interesting Stuff

1) 4D printing can help objects transform based on external stimuli
3D printing has helped companies use that data and information to address some of these demands, allowing them to customize product designs in ways that are difficult, if not impossible, to replicate with conventional manufacturing. Considered an extension of 3D printing, 4D printing has the potential to take customization a step further by enabling 3D-printed parts to transform their shape in response to external stimuli such as heat, light, pressure, and humidity. In practical terms, this means 4D-printed objects can theoretically react much more dynamically, rather than remaining as rigid, solid structures. In the future, it may be possible to envision a time when products created with 4D printing can adapt and adjust to their surroundings, in addition to being customized to fulfil user needs.

2) Utilizing a margin of safety can serve you well in nearly any area of life
All information—no matter how bulletproof it may seem—comes with some degree of error. The future is uncertain and life always seems to get more complicated. A margin of safety acts as a buffer against the unknown, the random, and the unseen.
The world is more uncertain now than ever before. There is too much information for one person to handle, too many moving pieces for one person to manage. This is why the greatest benefit that a margin of safety provides might be reduced stress and overwhelm. Nobody can predict the future, but there is a sense of quiet confidence that comes over you when you know you are capable of handling the uncertainties of life.
If your life is designed only to handle the expected challenges, then it will fall apart as soon as something unexpected happens to you. Always be stronger than you need to be. Always leave room for the unexpected.

3) US-China Trade war can escalate and lead to long term changes in supply chains
U.S. trade policies that are not rooted in economic considerations but are driven by political postures could prove costly for U.S. businesses and consumers, in addition to eroding the country’s leverage in global trade.
If people start to think this [trade war with China] is a lasting phenomenon, you could see significant dislocations,” he added. “You could see companies relocating their supply chains; in some cases, that’s going to be moving production into China to avoid tariffs on goods exported from the U.S., and in some cases [it could mean] moving sources out of China to countries that don’t face the tariffs that China does – all that could be very disruptive.”

4) How Amazon Prime came to be one of the greatest retail innovations ever
Amazon Prime launched in February of 2005, was a first of its kind: For an upfront payment of $79, customers were rewarded with all-you-can-eat two-day delivery on their orders. At the time, Amazon charged customers $9.48 for two-day delivery, meaning if you placed just nine of these orders in a year, Prime would pay for itself.
With it, Amazon single-handedly — and permanently — raised the bar for convenience in online shopping. That, in turn, forever changed the types of products shoppers were willing to buy online. Need a last-minute gift or nearing the end of a pack of diapers? Amazon was now an alternative to the immediacy of brick-and-mortar stores.
This is the story of how the greatest retail innovation of the internet age was created, in the face of sound logic and reason that suggested it might very well be disastrous. It’s also a story of how a frankly bland idea — fast shipping — was powerful enough to alter consumer psychology forever.

5) How experts make mistakes and how only some learn from it
In Tetlock’s 20-year study, both the broad foxes and the narrow hedgehogs were quick to let a successful prediction reinforce their beliefs. But when an outcome took them by surprise, foxes were much more likely to adjust their ideas. Hedgehogs barely budged. (Hedgehogs knew “one big thing,” while the integrator foxes knew “many little things.”) Some made authoritative predictions that turned out to be wildly wrong—then updated their theories in the wrong direction. They became even more convinced of the original beliefs that had led them astray. The best forecasters, by contrast, view their own ideas as hypotheses in need of testing. If they make a bet and lose, they embrace the logic of a loss just as they would the reinforcement of a win. This is called, in a word, learning.

Thursday 9 May 2019

Weekend Reading - Some Interesting Stuff

1) Do nothing to achieve more
All of us have a problem with busyness. But being busy and being successful are not one and the same. But, doing less or nothing at all is easier said than done, especially in a society that suffers from extreme busyness. Bill Gates attributes much of Microsoft’s success to the big ideas and concepts he stumbled upon while doing nothing.
On either Saturday or Sunday, force yourself to step away from all forms of technology — a practice known as a digital sabbath. Shut off your smartphone and hide it in your closet. Power down the laptop and slide it under your bed. Give your brain space to think by stepping away from the daily grind and doing nothing. Your mind will have time to stumble upon new ideas and further process old ones.

2) Can you do better by working 4 days-a-week?
A 4-day work-week is being discussed by a lot of corporates and productivity experts. Here is one company in Australia which has tried it.
A mid-week break lets staff go to the gym, get on top of housework, look after young children, schedule appointments, work on their start-up or just watch Netflix. Sometimes, they’ll catch up on work. Sick days are down, staff satisfaction is up, says Blackham. “You get that Monday feeling a couple of times a week.”
For employers, shutting down mid-week gives “more bang for your buck”. he says. “The Wednesday break means you return to Thursday fresh, and this is when people feel most productive.”
Some start-ups which have trialled the four day week in the US have had to return to five day working after finding the day off made the company less competitive and staff more stressed. 

3) Is free good for you?
Technology companies based in Seattle or Silicon Valley now account for five out of the five most valuable companies in America.
Big Tech has, in some sense, gotten “too big.” And in 2019, politicians are starting to listen.
The issue is complicated by the fact that even though it’s convenient to shorthand Microsoft, Google, Amazon, Apple, and Facebook as “Big Tech,” these five companies are actually structured in very different ways.
Contemporary antitrust law mostly cares about high prices. The standard, in other words, isn’t that one company dominating a market is bad. It’s that it’s bad if a company’s market domination leads to bad outcomes for consumers.
However, most of the big tech is cheaper or provide better service to the end customer making them difficult to prosecute. Google provides nearly all of its services for free. Amazon makes shopping cheaper. Anti-trust needs to find out a balance between low prices and utility to the customers.

4) We are killing the planet and ourselves; we just don't realize it yet
Humans are transforming Earth’s natural landscapes so dramatically that as many as one million plant and animal species are now at risk of extinction, posing a dire threat to ecosystems that people all over the world depend on for their survival
Humans are producing more food than ever, but land degradation is already harming agricultural productivity on 23 percent of the planet’s land area.
Over the past 50 years, global biodiversity loss has primarily been driven by activities like the clearing of forests for farmland, the expansion of roads and cities, logging, hunting, overfishing, water pollution and the transport of invasive species around the globe.

5) The food we eat is killing us
Health officials around the world are struggling with the explosive rise of deadly drug-resistant strains of the fungus Candida auris, which prey on people with weakened immune systems. Worryingly, their emergence may be tied to indiscriminate use of fungicides in agriculture and food production.
Antibiotics are applied on a massive scale in food production, pushing the rise of bacterial drug resistance. A British government study published in 2016 estimated that, within 30 years, drug-resistant infections will be a bigger killer than cancer, with some 10 million people dying from infections every year.
“Food is no longer valued for its ability to sustain life,” Walker concludes, “but only for its ability to generate profits.” 

Monday 6 May 2019

Investing is an active game

Cornelius Vanderbilt, known to his contemporaries as the Commodore, was once the richest man in the world. He started his life at the bottom and worked his way up. His business empire started with one passenger boat and he went on to own a large steamboat business. Later he diversified into the railroad business and owned the New York Central Railroad by 1867. He passed away in 1877, leaving more than $100 million, which was more than the money that was held by the US Treasury at that time). His last words to his family were, ''Keep the money together.''  Even today, there is the Grand Central Terminal, a Vanderbilt building still standing in New York City that carries the legacy of the great businessman.

Interestingly, within a period of 50 years, one of the direct descendants died bankrupt. The history of the Vanderbilt family is extremely instructive at many levels.

Other than the obvious reasons of prudence in managing costs and expenses and living within one's means, you also learn that no amount of wealth can be perpetuated forever if the custodians do not value money. When you know that no new money is going to come in then you need to value what you have much more. It does not matter how much money you have to start with. Unless you save more than what you earn, wealth will erode.

The most logical action to take for enduring wealth is to invest in businesses which earn high returns on capital and does not blow up doing so. Wealth creation and wealth preservation are not mutually exclusive. The best way to preserve wealth is to create it in the first place. Owning a business is the best and most efficient way of doing so.

As an investor, one useful way of thinking that I have used is to think of myself as a person with a small bag of money who is going around allocating that to different people in order to get a reasonable return. I visualize that I am getting into a partnership with the promoter of the company for some time and get a return from the business. If the business stops doing well after some time, I take my money back and then get into a partnership with another promoter. 

This line of thought forces me to think about the quality of the promoter whom I am partnering with, long-term dynamics of the business, the strategy the business is following and also ensure I am tracking the progress of the business. It also helps in preventing too many knee-jerk reactions to purely market-related events.

This means that even if I am invested in a very good company, I still need to continuously monitor it to ensure that it is doing exactly what it had promised and planned to do. If there are deviations, I need to understand why and what actions are being taken to course-correct. Investing is not a passive game. We have to be constantly vigilant and keep an eye out for what is happening.

P.S. If you want to read more about the Vanderbilt family, you can pick the fascinating book, "Fortune's Children: The Fall of the House of Vanderbilt" written by Arthur T. Vanderbilt.

Thursday 2 May 2019

Weekend Reading - Some Interesting Stuff

Here are the top 5 articles I found interesting this week. 

1) A look at BYD, the world's largest electric vehicle manufacturer
Founded in Shenzhen in the mid-1990s as a manufacturer of batteries for brick-size cellphones and digital cameras, BYD now has about a quarter-million employees and sells as many as 30,000 pure EVs or plug-in hybrids in China every month, most of them anything but status symbols. Its cheapest model, the e1, starts at 60,000 yuan ($8,950) after subsidies.
Last year, BYD opened one of the world’s largest battery plants, a 10 million-square-foot facility in Qinghai province, and in February it broke ground on another of similar size.
China has adopted EVs at a stunning pace. Thanks to generous government subsidies and municipal regulations that make owning an internal combustion vehicle in many cities inconvenient, expensive, or both, China accounts for more than half the world’s purchases of electric cars. More EVs were sold in Shanghai last year than in Germany, France, or the U.K.; the city of Hangzhou, smallish by Chinese standards, had higher sales than all of Japan. Virtually all of Shenzhen’s 20,000 taxis are electric BYDs, compared with fewer than 20 of any make in New York. More than 500,000 electric buses ply Chinese roads, compared with fewer than 1,000 in the U.S.

2) Amazon is helping Indians take their products global
Indian sellers exporting their wares on Amazon’s global marketplace rose to more than 50,000 in 2018, and together sold goods worth over $1 billion. By 2023, Amazon expects this volume to rise to $5 billion. Launched with just a few hundred sellers in May 2015, more than 50,000 Indian exporters are now part of the Amazon Global Selling programme, offering more than 140 million made-in-India products to Amazon customers in the US, UK, Australia, China, south-east Asia and other overseas markets.

3) Can we use technology to break the vicious cycle of airconditioners and atmospheric heat 
Use of the energy-intensive air-conditioner causes emissions that contribute to higher global temperatures, which means we’re all using AC more, producing more emissions and more warming.
“If you cool something, you heat something, and that heat goes into the cities.” Their use exacerbates the heat island effect of cities—lots of concrete soaks up lots of heat, which a city releases well after the sun sets.
Using technology currently in development, AC units in skyscrapers and homes could get turned into machines that pull carbon dioxide out of the atmosphere.

4) Water crisis and climate change are becoming scary, but is anyone looking to solve these issues
More than 600 million Indians face “acute water shortages,” according to a report last summer by NITI Aayog. Seventy percent of the nation’s water supply is contaminated, causing an estimated 200,000 deaths a year. Some 21 cities could run out of groundwater as early as next year, including Bangalore and New Delhi, the report found. Forty percent of the population, or more than 500 million people, will have “no access to drinking water” by 2030. Climate change will surely make the problem worse.

5) How Satya Nadella has led the transformation of Microsoft to regain its formal glory
Under Satya Nadella, Microsoft has more subscribers than Netflix, more cloud computing revenue than Google, and a near-trillion-dollar market cap. Microsoft cut funding to Windows and built an enormous cloud computing business—with about $34 billion in revenue over the past year—putting it ahead of Google and making progress in key areas against the dominant player, Amazon Web Services.
Microsoft’s Office collection of productivity software, formerly a one-off purchase is now a cloud-based service boasting more than 214 million subscribers who pay around $99 a year; it has more subscribers than Spotify and Amazon Prime combined.

For those on the path of the cycle "Fani", please stay safe.