Equity Advisory

Are looking for an honest, transparent and independent equity research and advisory? www.intelsense.in is run by Abhishek Basumallick for retail investors. Subscribe for long term wealth creation.

Friday, 28 June 2019

Weekly Reading - Some Interesting Stuff


1) One business where Amazon failed
Amazon plans to shutter its four-year-old Amazon Restaurants delivery service in the US this month. Amazon started the food-delivery service as on-demand meals were becoming big business for tech startups, with companies like Postmates, DoorDash, Caviar, and Uber Eats competing to deliver food from restaurants to consumers. Others, like Sprig and Maple, went further, vying to both prepare and deliver freshly cooked meals. In the US, Amazon Restaurants was available for free to customers with a $119-a-year Prime account.
Restaurants aren’t the first delivery-based business to evade Amazon, which is otherwise a master of logistics. The company has famously struggled to make online grocery-delivery work, with Amazon Fresh still a niche player more than 10 years after its launch.
Food delivery is a tough business with complex logistics, labor practices that are often poor, and notoriously thin margins. Many of the hottest delivery companies in Silicon Valley just a few years ago have since gone out of business.


2)  A real simple guide to the controversial paper by Arvind Subramanian
This is a very well-articulated, yet simple article on what Arvind Subramanian has talked about in his paper on GDP mis-representation. A must-read.


3) Chennai is facing an unprecedented water crisis; and it can spread to all of India, unless we start acting fast
Rains have become more erratic because of climate change. That, coupled with a delayed arrival of the seasonal monsoon, which usually comes in June, has all but dried up Chennai's water supply. Government data show that the storage level in the four lakes combined is less than one-hundredth of what it was at this time last year. A severe heat wave gripping most of India, including Chennai, has aggravated conditions.
What's happening in Chennai could easily happen anywhere across India
Public institutions are suffering. Hospitals and nursing homes are charging more for services to cover the increased cost of water, according to the local press. There are also reports that toilets at schools are dirty due to a lack of water.
One thing that could have possibly averted this acute water shortage? Rainwater harvesting.
In 2002, the government of Tamil Nadu passed legislation that mandated rainwater-harvesting structures on all buildings, including private homes, in the city. The goal: to capture rainwater and store it for later use. It was a revolutionary idea. When the city got hit with heavy monsoon rains a few years later, rainwater harvesting raised the water table enough to last the city until 2016.


4) Understanding the psychological drivers behind the mistake made by Bill Ackman on Herbalife
Although this article does not deal with the psychology, it does provide the narrative of what happened in the Herbalife deal. I was thinking on the errors made by Bill Ackman. Incentive caused bias, endowment bias, commitment and consistency bias scream at me. That is why it is never a good idea to take a public stand on a stock and make its success a matter of one's own ego.


5) JP Morgan's view on how to navigate a cycle which may be peaking
JP Morgan is not suggesting that US is getting into a recession yet believe that investors should start taking precautions. Moving to higher quality bonds and equities is the first and most important step. Looking at investments from a yield perspective and moderating capital appreciation expectations is the next. The third is to look where the growth is. Trade war, global manufacturing slowdown and liquidity in markets are all marked as risks.

No comments:

Post a Comment