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Friday 26 July 2019

Weekly Reading: Some Interesting Stuff

1) The psychology of prediction
Anything that Morgan Housel writes is worth reading.
This article describes 12 common flaws, errors, and misadventures that occur in people’s heads when predictions are made.

2) Electric vehicles in EU have to sound like traditional vehicles
I don't know if when cars were first introduced if it was required to sound or look like horses :-) But, new electric vehicles will have to feature a noise-emitting device, under an EU rule coming into force on Monday. It follows concerns that low-emission cars and vans are too quiet, putting pedestrians at risk because they cannot be heard as they approach. All new types of four-wheel electric vehicle must be fitted with the device, which sounds like a traditional engine.

3) Mauboussin on what he would tell his younger self (~read more)
The motto of the Royal Society – “nullius in verba” – roughly translates to “take nobody’s word for it.” Basically, the founders were urging their colleagues to avoid deferring to authority and to verify statements by considering facts. They wanted to make sure everyone would think for themselves.
In the world of investing, that means constant learning—which entails constant reading. So I would encourage my younger self to read widely, to constantly learn, and to develop points of view independent of what others say and based on facts. Specifically, I would recommend developing the habit of reading. Constantly ask good questions and seek to answer them.

4) How global money laundering operates
Corruption isn’t something that happens only in hardscrabble countries led by dictators and plagued by instability. It happens everywhere. Public money is stolen and siphoned away from poor countries at the expense of citizens, while private money is invested in wealthy nations where the well-heeled bask in luxury.
The global financial system, the international financial system, these offshore centers of finance essentially provide an open door from their countries to the world, which means that they can just walk out of their countries with as much money as they like, stash that money offshore, then spend it without anyone realizing that it’s them.
Money moves freely from country to country; law and law enforcement can’t. It becomes very easy if you’re very wealthy to just put your money wherever you like. That means you put your money where it will be treated best, where you will get less scrutiny for it.

5) The anatomy of a fraud
Be wary of companies that are all story and no numbers. If the story is so great, shouldn’t there be plenty of numbers to back it up?

Friday 19 July 2019

Weekend Reading - Some Interesting Stuff

1) Pay attention to your attention
I felt that I had to pay attention to my attention, that I had to focus on my focus. It was new. It wasn’t something I’d had to think about since I was a kid.
The same way we discovered that the sedentary lifestyles of the 20th century required us to physically exert ourselves and work our bodies into healthy shape, I believe we’re on the cusp of discovering a similar necessity for our minds. We need to consciously limit our own comforts. We need to force our minds to strain themselves, to work hard for their information, to deprive our attention of the constant stimulation that it craves.
The same way the consumer economy of the 20th century called upon us to invent the nutritional diet, I believe that the attention economy of the 21st century calls upon us to invent an attention diet. 
The first and most important goal of an attention diet should be to consciously limit the number of distractions we’re exposed to.
Basically, the name of the game is quality over quantity. Because in a world with infinite information and opportunity, you don’t grow by knowing or doing more, you grow by the ability to correctly focus on less.

2) Tax on BigTech by France - will others follow?
France has approved a digital services tax despite threats of retaliation by the US, which argues that it unfairly targets American tech giants. The 3% tax will be levied on sales generated in France by multinational firms like Google and Facebook. The French government has argued that such firms headquartered outside the country pay little or no tax. At present, they are able to pay little or no corporate tax in countries where they do not have a large physical presence. They declare most of their profits where they are headquartered. The European Commission estimates that on average traditional businesses face a 23% tax rate on their profits within the EU, while internet companies typically pay 8% or 9%.France has long argued that taxes should be based on digital, not just physical presence. It announced its own tax on big technology firms last year after EU-wide efforts stalled.

3) Is FaceApp, the new sensation, safe or is it collecting information about you to be able to misuse later?
Wireless Lab, the company behind FaceApp, has very expansive Terms of Service that raise a growing number of privacy concerns. Section 5 of the Terms of Service “grants FaceApp a perpetual, irrevocable, nonexclusive, royalty-free, worldwide, fully-paid, transferable sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, publicly perform and display your User Content and any name, username or likeness provided in connection with your User Content in all media formats and channels now known or later developed, without compensation to you.”
“You just sent them close up, well-lit images of your face,” he continues. “Now, they know your name and vital details and can create an annotated image record of you as a human. The next model would have no problem triangulating and verifying and adding more data from other sources like LinkedIn which would then give them your education, your work history, skies the limit.”

4) Cordless charging of EV batteries - now a reality
If the future of mobility is destined to be electric, CEO Alex Gruzen of WiTricity wants to make sure it’s cordless, too. WiTricity, a Massachusetts-based start-up, designs systems that deliver power wirelessly to car batteries using a technology known as magnetic resonance.
Electric vehicles are now the single largest consumer of battery-watt hours. EVs have surpassed cell phones and all consumer electronics. That’s kind of remarkable, given the billions of phones sold every year.
This summer, they hit a major milestone: for the first time, a global automaker, BMW, launched a plug-in hybrid car featuring their wireless-charging technology.

5) What is wrong with India's PSU banking system in the backdrop of 50 years of bank nationalization
Bank nationalization was a by-product of a power struggle between Gandhi and rivals within the Indian National Congress party that was only superficially about economics. 
Gandhi wanted to isolate her rivals, including her finance minister, and force them out of the government. So, she maneuvered them into declaring that the public sector was inefficient and should be dismantled. Then she herself took the opposite position, nationalizing the banks and leaving her enemies with no option but to go. It was a matter of intra-party politics, not poverty relief.
The Harvard Business School economist Shawn Cole found that “while nationalization initially spurred financial development and caused unprecedented amounts of credit to flow to agriculture, this came at a cost of lower quality intermediation. Moreover, a more than doubling of agricultural credit to villages led to no measurable increase in agricultural investment. Even the increase in credit was not sustained.”
The effect on industry, meanwhile, was clearly negative. Banks, once nationalized, became risk-averse and hidebound, rarely lending to new firms. Under-lending became chronic; manufacturers found themselves severely short of credit. Bank officials did not have to care about finding and evaluating profitable firms. Instead they lent to those companies selected, for whatever reason, by their political bosses.
Such cronyism led to periodic bad loan crises that required bailouts by the banks’ owners, the taxpayers. The same dynamic continues to this day: The last Indian budget set aside 700 billion rupees ($10.2 billion) for recapitalizing public sector banks. This means a total of 2.7 trillion rupees has been infused into the state-controlled banking sector since 2017. Even so, banks are still burdened with bad assets and reluctant to lend.

Friday 12 July 2019

Weekly Reading - Some Interesting Stuff

1) Why plants don't die from cancer?
I recently watched the fantastic documentary series on Chernobyl. I would recommend it to anyone interested.
Chernobyl’s exclusion zone isn’t devoid of life. Wolves, boars and bears have returned to the lush forests surrounding the old nuclear plant. And when it comes to vegetation, all but the most vulnerable and exposed plant life never died in the first place, and even in the most radioactive areas of the zone, vegetation was recovering within three years.
Critically, unlike animal cells, almost all plant cells are able to create new cells of whatever type the plant needs. This is why a gardener can grow new plants from cuttings, with roots sprouting from what was once a stem or leaf.
All of this means that plants can replace dead cells or tissues much more easily than animals, whether the damage is due to being attacked by an animal or to radiation.

2) The downfall of Ranbaxy
The Ranbaxy story remains a fascinating one for me. How in a span of a few years, how the two Singh brothers managed to completely destroyed a reputed business is a lesson to be learnt for all.
In its race for profit, Ranbaxy had lied to regulators, falsified data, and endangered patient safety in almost every country where it sold drugs. Ranbaxy had not properly tested the stability of almost any drugs on the US market. The most basic good manufacturing practices require continuous monitoring of drug quality. 

3) Chinese private enterprises start stuttering
We’ve been smacked by roaring trains of nonsense this year. In April, drugmaker Kangmei Pharmaceutical Co. said that it overstated cash holdings by $4.4 billion, due to an accounting “error.” Kangde Xin Composite Material Group Co. didn’t skip a beat, telling us its auditor could find no trace of a 12.2 billion yuan ($1.8 billion) bank deposit.  “Qualitative factors are playing an increasing role” when assessing Chinese enterprises, S&P Global Ratings wrote in June. Put more bluntly: Firms may look great on paper, but the cash you see on their balance sheets may not even be there. 
A loss of investor confidence is the last thing private enterprises need as the economy stutters. With banks reluctant to lend, stock and bond offerings remain their key funding channels.

4) EV battery technology (for the uninitiated!)
There are, essentially, three problems to solve in order for batteries to truly transform our lives: power, energy, and safety.
In common parlance, people use “energy” and “power” interchangeably, but it’s important to differentiate between them when talking about batteries. Power is the rate at which energy can be released.
The article discusses the developments of battery technology and explains it well for laymen.

5) Brian Lara scores a half-century
Now, that the World Cup is over and we are all disappointed, let's go down memory lane with one of the greatest batsmen in world cricket - Brian Lara.

Friday 5 July 2019

Weekend Reading - Some Interesting Stuff

1) Will the DMart story play out like Aldi?
when Walmart’s US CEO Greg Foran invokes words like “fierce,” “good” and “clever” in speaking almost admiringly about one of his competitors, he’s not referring to Amazon. Foran is describing Aldi, the no-frills German discount grocery chain that’s growing aggressively in the United States and reshaping the industry along the way. Aldi has built a cult-like following. When it enters a new town, it’s not uncommon for hundreds of people to turn out for the grand opening. The allure is all in the rock-bottom prices, which are so cheap that Aldi often beats Walmart at its own low-price game.
There’s no secret to how Aldi keeps its prices so low: The company strips down the shopping experience in an unapologetically and brutally efficient way.

2) Or will it grow up to be like Costco?
I am reading up on the retail companies after a friend insisted I study Dmart. I am fascinated by Costco. I have shopped a few times there but never bothered to learn its history or to track its story.
Costco is an unlikely fashion retailer, but has somehow managed to become a fashion powerhouse.
Costco’s 85 million members, who pay an annual fee starting at $60 to gain access to goods at bargain prices, are filling their baskets with $70 North Face jackets and $13 Jessica Simpson jeans, along with bulk salmon and pasta. The company generated $7 billion in sales annually in clothes and footwear, which is more than Old Navy, Neiman Marcus, or Ralph Lauren. Its fashion revenue has been growing at a rate of about 9% a year for the past four years, which is faster than its food or electronics business.

3) How to be happy?
When we first get something that’s awesome, it feels really awesome. But then we get used to it pretty quickly. This phenomenon is what psychologists call “hedonic adaptation.
The prescriptions?
One was to spend time and money on things that don’t last as long—that is, things that are harder to adapt to. What this ends up translating to is the by now well-known consumerist commandment to “buy experiences, not things.” 
The other was to set aside time to be grateful for what you already have. This may come in the form of a gratitude journal or a period of brief reflection, and could be as basic as acknowledging the luxury of taking a hot shower or having a choice about what to eat for dinner. 

4) R3 pontificates on a range of issues
Raghuram Rajan discusses a vast range of issues. He discusses globalisation, the rise of nationalistic politics across the world, migration, adapting to new skills, welfare systems,
Very good read and practically not possible to summarize.

5) When you are a victim of your own success
You may be aware of Kleenex, Velcro and ChapStick, but what about escalator? Or dumpster? Linoleum, zipper, trampoline? All of these are (or were) trademarks of companies whose products were so successful that they came to represent an entire category. And it can actually cause quite a problem for those companies.
“When something becomes so pervasive in everyday society as a result of its own fame, there’s an argument that it no longer represents the brand, it almost represents the action,” Mr. Cohen said. “So as a result of that, in trademark law, you cannot trademark things that are descriptive or generic in nature.”
Bayer Co. v. United Drug Co. was a seminal case in which Bayer lost its trademark for Aspirin to what experts now refer to as “genericide.” That 1921 case set the table for the modern standard that courts currently follow: If a brand name is understood by the public to refer broadly to a category of goods and services rather than a brand’s specific good or service, a company may be at risk of losing its trademark. Escalator, cellophane, and laundromat have all lost their trademark status to genericide.