Equity Advisory

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Friday, 27 March 2020

Weekend Reading

I am personally tired of reading, watching and listening about the Coronavirus. So, this week there is nothing related to it or to its impact on the economy or anything like that. Stay indoors. Staf safe. We shall overcome.


Deep thinking works
Put bluntly, facts don’t exist. Versions of them do. Even if we could agree on facts, different versions of facts exist for each individual. And that’s a big reason many of us like to simplify this disparate view into numbers/financial statements, albeit losing perspective and nuance. In the world of big data, robots may arbitrage headlines, but they can’t (at least yet) ponder multiple subjective arguments like we can do. Counterintuitively, stretching investment horizons simplifies our job is in spite of additional possible outcomes. At least we are an order of magnitude right instead of precisely wrong.
https://www.valuewalk.com/2017/09/deep-research-vs-deep-pondering/


Jay Leno always saved money from his second income
From the moment he entered the working world, “I always had two incomes. I’d bank one and I’d spend one.” Leno continued relying on this strategy even after he started hosting “The Tonight Show” in 1992, even though he reportedly earned as much as $30 million a year at the height of his career.
“When I got ‘The Tonight Show,’ I always made sure I did 150 [comedy show] gigs a year so I never had to touch the principal,” Leno says. “I’ve never touched a dime of my ‘Tonight Show’ money. Ever.”
https://www.cnbc.com/2016/12/14/why-jay-leno-has-never-touched-a-dime-of-his-tonight-show-money.html


The story of friendship amidst competitors
When one industry stalwart, B.K.Birla, invites two his biggest competitors in the tea industry, B.M Khaitan and G.P.Goenka, to the board and they stay on for 33 & 43 years!
There is nothing unusual in founder shareholders inviting other businessmen to join a company’s board to expand management bandwidth, but what Birla did was unique: he invited two key industrialists from Kolkata who were invested in the same business to join his company’s board.
http://www.livemint.com/Companies/Q8XhCQE7JK4F92GjiwgkTO/BM-Khaitan-GP-Goenka-exit-ends-Jay-Shree-Teas-unique-e.html


10,000 Experiments Beat 10,000 Hours of practice
Following the 10,000-experiment rule means starting your day with not just a to-do list but a “to-test” list like Leonardo Da Vinci. According to Walter Isaacson, one of Da Vinci’s biographers, “Every morning his life hack was: make a list of what he wants to know. Why do people yawn? What does the tongue of a woodpecker look like?”
As you go through your day, following the 10,000-experiment rule means constantly looking for opportunities to collect data rather than just doing what you need to do. It means adding a deliberate reflection process based on reviewing data before the day ends.
https://medium.com/accelerated-intelligence/forget-about-the-10-000-hour-rule-7b7a39343523


Taking a break makes you stronger. Ask Federer.
Just three weeks before his 36th birthday, Roger Federer won his eighth Wimbledon and 19th career Grand Slam. Among all his other remarkable achievements, the two Grand Slams he has won in 2017 stands out – not because it proves how ridiculously talented he is but simply because they have come against the run of play. For a while now, sportsmen have been walking away from the sport they so obsessively love, taking a break and coming back even stronger.
https://amp.scroll.in/article/844329/the-most-important-lesson-roger-federers-wimbledon-win-has-taught-us-has-nothing-to-do-with-tennis

Sunday, 22 March 2020

The Corona, Credit & Crude Conundrum

I shared this with Intelsense advisory members earlier.

You can download the document from https://intelsense.in/Saved/200322103826658_The_C3_Effect.pdf

or view it on Scribd (needs you to be logged in)


Tuesday, 17 March 2020

The Index Fund Bubble

The global order for investment management firms has changed in the last 5 years. Index investing now more or less accounts for 20-40% of the global capital deployed whether through index funds, ETFs or index-hugging funds. Since an index does not have a cash allocation, there is no buffer when it starts going down. While going up, it feeds into the frenzy and the index constituents get more than their fair share of capital flows. And no one complains. When the tide reverses, the exact opposite happens. Stocks fall because they have fallen a lot. A virtuous cycle turns into a vicious cycle.

This is what we are seeing now. 

The way it possibly ends is when other investors (discretionary/quant/alpha-oriented funds) decide that some factor they are tracking (could be valuations, could be any other metric like volatility, global macro, relative strength, overbought/oversold indicators etc) is now in their comfort zone and start buying. The other possibility is that large investors will get scared of the fall in the indices and full out money thereby starving the passive funds of their fuel.

This is a reason why we are seeing such increased volatility in the global markets.

From a fundamental perspective, earnings are going to be severely hit, supply chains dented (maybe permanently for some, which I have discussed in my previous post). People still are trying to assess how bad things are going to be. 

One thing I am sure. We will now be extrapolating our fears.

No one said investing was easy. Equity gets a risk premium over other asset classes. Yes. A risk premium. Because it is risky!! 

To end let me quote, my friend and fellow VP member @zygo23554:
This virus is God's wrath that brings to the fore fragilities and frailties in your health, relationships and portfolios. 
Fear yourself, not the virus. All it does is show you the mirror so you realize who you truly are. 

Monday, 9 March 2020

What is changing in the business world with the coronavirus?


Just wanted to note down some thoughts on the possible impacts of the current Coronavirus pandemic and the resultant global market crash. I am not an economist, neither a political analyst but merely an observer of human and system behaviour.


Supply chain optimisation likely to incorporate redundancy and failover
The current global supply chain is optimised based on cost and time. That is manufacturers tend to get their components or parts built in places where it is cheapest t produce and ships it to the factories just-in-time. With a large-scale pandemic like situation, which comes right on the heels of US-China trade war, large (and small) corporates will rethink their supply chain and dependency on China. They will now need to build in inventory costs as the supply chain would need to factor in redundancy and supply disruption constraints. This will, in turn, increase the cost structures and reduce margins. Some industries, like electronics, which ran of wafer-thin margins, may find it very difficult to survive or will need to take price hikes.

Move from globalisation to localisation may get accelerated

The last few decades had seen an unprecedented wave of globalisation with free movement of people and products. This is increasingly facing headwinds as resistance builds up in local communities leading to economic and social strife. The rise of the right-wing globally and Brexit are manifestations of these social shifts. As more business shifts inwards, global companies will need to have a better local presence in countries they wish to do business in. Second-order impacts may include a decline of tax havens and higher taxes for global companies as they would need to pay taxes for profits in each individual country they operate out of.

New work culture building up

Working from home was prevalent in only a few industries like IT. With a lot more people getting used to working from home, it is likely that more companies will realise that they can actually run their businesses when employees do not come to one centralised office. This is a very profitable move for companies as they would be able to reduce expensive office space, maintenance, electricity and other such costs. Second-order consequences are too many to list here but a few prominent ones are negative sales impact on auto, petroleum, real estate prices. Shorter-term it would also have a negative impact on all crowded places like restaurants, shopping malls, movie theatres.

Ecommerce likely to get a boost

Online sales have already started getting bigger and is likely to expand much further once more and more people hesitate to go out in public places like crowded shops and malls.

Government & Central Banks have limited options

Respective governments and central banks essentially have two policy actions that they can use – fiscal and monetary. That is, they can tinker with taxes, government expenditure and interest rates. The issue is you cannot fix a supply-side issue with a demand-side solution. That is, if you are running say an automobile factory and don’t have the necessary supply of engines from China, then reducing interest rates will not solve your problem. This is the same reason why when food inflation shoots up, you can’t really do much by cutting rates, simply because the food is just not there. Similarly, neither does cutting taxes, both corporate and individual, help in any way. What these measures do is to price the risk in the market. With reduced interest rates, central banks (and governments) push the people to invest in riskier assets or fuel consumption or both. The last option that the government has is spending out of this problem. Government expenditure has the potential to create employment, provide a sense of security to corporates and basically spur the economic engine to start working once again, with the hope that it leads to a positive spiral of higher consumption and sustained growth coming back.

The Indian government gets a Godsend as crude prices collapse

India, as a major crude importer has just received a Godsend with crude oil prices collapsing due to the fight between Russia and OPEC (Saudi). The government finances are in a mess with no money to spend at all. With this fall in crude, the government can potentially use the money saved and channelize into infrastructure development. There are large areas where India can and should invest in for future global competitive advantage. Now is the time to get into those areas like green energy, increasing healthcare facilities, schools, colleges, railways, airports, inland waterways, ports, defence. The list can go on.

China is in a precarious situation

China is a very insulated country. But rumours are that the banking system in China is under stress and the coronavirus has only exacerbated the situation. Unless it can demonstrate that it has been able to successfully contain the outbreak and are getting back to normalcy, they will be the biggest sufferers as the global manufacturing supply chain will readjust and leave them behind. This will have a large long term impact on the social and political situation in China. But with an authoritarian government in place, it is likely that China will be able to show the resolve required to quickly get back to normal.

First global crisis in the age of social media and fake news

This is perhaps the first major global crisis in the age of social media. Social media amplifies and distorts messages, so the impact of people is very different from when all media was state-controlled or influenced.

Flight of capital to safety

There is a flight of capital towards safety and security. Unfortunately, in India, last 2 years has seen multiple critical situations in the banking and financial sector, one of which is currently underway. This has severely eroded the faith that investors have in banks. With a possibility of further rate cuts from RBI, bank deposits will become more unattractive. IN such a scenario, gold and US dollar tends to do well.

Investment horizon reduces during crashes

Market crashes have a way of reducing our time horizon from decades or years to weeks and days. If an investor just sticks to thinking about the underlying businesses and how they can get impacted by the change in the context, and maintain the long-term horizon, it will perhaps help in reducing the stress and anxiety.

Better to stick to your investment plan

All crises finally come to an end. This too shall pass. And when there is a global crisis, governments tend to take coordinated action. I would be very surprised if we do not see significant quantitative easing (reduced interest rates) and other policy measures announced by governments across the world.

So, fasten your seat belts and enjoy the ride. After a few years, you will probably tell the next generation of market participants, “Heck! I lived through that!”

Friday, 6 March 2020

Weekend Reading


Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

In Amazon we trust!!
Amazon and Google are still the two most trusted internet companies. Facebook and twitter the worst!!

So, Amazon has decided to deliver your food in India
Amazon does not care for timing... You can be last in a market and still win. Of any consumer technology product in the country, food delivery gets maximum traction, followed by grocery, fast moving consumer goods and general ecommerce. Last year, Amazon shut down its four-year-old Amazon Restaurants delivery service in the United States, while it invested in food delivery platform Deliveroo in Europe, indicating the complexity of running this business at feasible unit economics.

This one does not breathe
Scientists discover first known animal that doesn't breathe. This is the first animal on Earth proven to have no mitochondrial genome and no way to breathe. A microscopic and genomic analysis of the creature revealed that, unlike all other known animals, H. salminicola has no mitochondrial genome — the small but crucial portion of DNA stored in an animal's mitochondria that includes genes responsible for respiration.

An app knows who you are
These two are must-read articles to understand where we are headed in consumer tech as well as concerns related to personal privacy.
Clearview was unknown to the general public until this January, when The New York Times reported that the secretive start-up had developed a breakthrough facial recognition system that was in use by hundreds of law enforcement agencies. The company quickly faced a backlash on multiple fronts. Facebook, Google and other tech giants sent cease-and-desist letters. You take a picture of a person, upload it and get to see public photos of that person, along with links to where those photos appeared. The system — whose backbone is a database of more than three billion images that Clearview claims to have scraped from Facebook, YouTube, Venmo and millions of other websites — goes far beyond anything ever constructed by the United States government or Silicon Valley giants.

Copying your hero
Early in my career I tried to emulate Buffett and spurned the use of spreadsheets and models. But here’s the thing: Buffett has a supercomputer in his head and I don’t. I need to visualize financial statements by building financial models. I get to feel them by building them; Buffett doesn’t. We all learn differently.
Also, the Buffett of the past is not the Buffett of the present or the future. First of all, the investing environment of 40 years ago was very different from the current one. Thus 40 years ago Buffett was fighting different battles and had different constraints. (He definitely did not have to think about negative interest rates.) The investing environment changed and Buffett evolved. He avoided airlines and technology – until he became the largest shareholder of airlines and Apple. So which Buffett do you want to emulate, the one of the past, present, or future?

Thursday, 27 February 2020

Weekend Reading


Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

The ends of the world are melting
he ends of the Earth are melting at a rate not seen in at least 115,000 years.  And over the past few months, there’s been increasing evidence that the changes we’re seeing at our planet’s poles are only growing more severe. These changes in the most remote places on Earth have huge consequences for our daily lives because our daily lives have huge consequences for the most remote places on Earth. Decades of routine human activities – going to work, driving a car, eating a hamburger, choosing a stock portfolio – have transformed the frozen parts of this planet on a scale never seen before. If we do not change our behaviour drastically to slow down and eventually stop the Arctic melt, rising sea levels and even faster rising global temperatures will threaten our very way of life.

The Japanese toilet - a marvel of technology
Japanese toilets are marvels of technological innovation. They have integrated bidets, which squirt water to clean your private parts. They have dryers and heated seats. They use water efficiently, clean themselves and deodorize the air, so bathrooms actually smell good. They have white noise machines, so you can fill your stall with the sound of rain for relaxation and privacy. Some even have built-in night lights and music players. It's all customizable and controlled by electronic buttons on a panel next to your seat.

The last great thing about the internet
Wikipedia is the eighth-most-visited site in the world. The English-language version recently surpassed 6 million articles and 3.5 billion words; edits materialize at a rate of 1.8 per second. It is the only not-for-profit site in the top 10, and one of only a handful in the top 100. It does not plaster itself with advertising, intrude on privacy, or provide a breeding ground for neo-Nazi trolling. Like Instagram, Twitter, and Facebook, it broadcasts user-generated content. Unlike them, it makes its product de-personified, collaborative, and for the general good. More than an encyclopaedia, Wikipedia has become a community, a library, a constitution, an experiment, a political manifesto—the closest thing there is to an online public square. It is one of the few remaining places that retains the faintly utopian glow of the early World Wide Web. A free encyclopaedia encompassing the whole of human knowledge, written almost entirely by unpaid volunteers: Can you believe that was the one that worked?

Subscription for your monthly coffee!
Panera Bread is hoping to disrupt the morning coffee. The company is unveiling a subscription plan for its most popular caffeinated drinks. For a flat rate of $8.99 a month, customers can get unlimited coffee (hot or iced) and tea at all of its stores nationwide. Coffee is an imperative component of the breakfast wars. Both Starbucks and Dunkin’ have been seeing a surge in coffee sales, thanks to the steady growth of mobile orders placed via smartphone apps. But coffee is only the start. Having a menu that reflects Americans’ desire for healthy, protein-rich breakfast items is now an industrywide mandate.

Online buying in India is fuelled by discounts
Digital buyers in India are going to reach 330 billion by the end of 2020. The phenomenon of online shopping has taken India by a storm. What sets online shopping from traditional offline stores is the practice of discounts.  Online stores, save a few exceptions, do not have to pay sales taxes- the explanation being the absence of a physical sales storefront, an office or a warehouse. While major players like Amazon and Flipkart do have warehouses, not paying sales taxes means a great deal for smaller sellers, resulting in lower prices automatically.


Thursday, 20 February 2020

Weekend Reading


Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

Augmented reality comes to car workshops
Porsche Cars North America is completing the rollout of its Tech Live Look program at its 189 U.S. dealerships. The effort uses online augmented-reality technology to enable dealership techs to communicate directly with Porsche's Atlanta-based technical support team about thorny repair issues in real-time in such a way that the factory experts see what the tech sees.
The new technology enables a precise recalibration of cameras to specific distances and heights to capture needed images. It also permits precise measurement of high-voltage batteries on electric and hybrid vehicles.

Union in a tech firm
Employees at crowdfunding platform Kickstarter voted Tuesday to form a union, the first of it's kind in the technology industry, after an 18-month battle with the company’s management.
Kickstarter United will now be formally recognized by the management after a vote held by the National Labor Relations Board, in which workers voted 36 to 47 in favour of unionizing. It is the first union comprised of white-collar, full-time employees in the technology industry. Toward the end of the dot-com bubble in 2001, customer service workers at a website called etown.com successfully voted to unionize with the Communications Workers of America, which was reported by The New York Times as the first dot-com union, but the company folded the next month after it failed to secure more venture capital funding.

A brief history of advertising
In the 1830s, New York City’s most popular newspaper was just 4 pages and circulated to fewer than 3,000 people in a city with a population fast-approaching 300,000. News was a luxury item, costing 6 cents an issue, which was too expensive for most people at the time.
Then 20-something Benjamin Day had an idea. He would sell his own newspaper for just a penny, undercutting the competition. To make up for a lower price, he would sell advertisements. The idea, which was novel at the time, was not just to sell newspapers to his readers, but to sell the attention of his readers.
It may be harder than ever to get people’s attention these days because our entertainment options are now seemingly unlimited.
But the leaps forward in technology have given advertisers more avenues to reach us than ever before. And they have the ability to personalize to the end-user because so much of our lives are now available for everyone to see online.
The avenues will change and things will become more personalized. The advertisers understand human nature as well as any other industry.

When the security guard is the thief
Avast, the multibillion-dollar Czech security company doesn’t just make money from protecting its 400 million users’ information. It also profits in part because of sales of users’ Web browsing habits and has been doing so since at least 2013.
That’s led to some labelling its tools “spyware,” the very thing Avast is supposed to be protecting users from. Avast claims it recognizes customers use Avast to protect their information and so it can’t do anything that might “circumvent the security of privacy of the data including targeting by advertisers.”

The rise and reign of Jeff Bezos
The last one today is not an article, but a documentary. I have always been fascinated by Amazon and Jeff Bezos. He is a person who has shaped how today's generation view shopping. He has even changed our behaviour patterns. Very few people I know of, who do not check amazon while making a buying decision. His next big ambition of space expedition is another big and audacious goal. The recent donation of $10 billion dollars to combat climate change is another remarkable gesture. On the other hand, he also has his detractors. Those who paint him and Amazon as the villain. The documentary explores some of these aspects. Worth a watch for those who love documentaries.

Friday, 14 February 2020

Weekend Reading


Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

Coffee is good for you
It's now clear that coffee drinkers are less likely to get cancer than people who drink other beverages, including tea.
Just to be clear, coffee can't repair your DNA directly, so it's in no way a cure for cancer. But scientists now know that coffee does reduce cellular damage, including mutations to your DNA that otherwise might lead to cancer.

Brands still matter. Brandless shuts shop!
Today direct-to-consumer retailer Brandless becomes the first SoftBank Vision Fund-backed startup to close down, as it stops taking orders and halts all business operations. Brandless had been one of SoftBank's highest-profile companies. Launched in 2017, the online retailer had a big ambition: to sell "better for you" essential products at lower-than-name-brand prices, going toe-to-toe against Amazon and Walmart. But the economics were tricky from the start. Everything it sold was $3. It was losing money from high shipping costs and was plagued with quality problems. It had tried increasing prices to $9 on some products, but it wasn't enough.

The real risk is what you don't know about
The biggest economic risk is what no one’s talking about, because if no one’s talking about no one’s prepared for it, and if no one’s prepared for it its damage will be amplified when it arrives. Two things happen when you’re caught off guard. One is that you’re vulnerable, with no protection against what you hadn’t considered. The other is that surprise shakes your beliefs in a way that leaves you paranoid and pessimistic. Paying attention to known risks is smart. But we should acknowledge that what can’t see, aren’t talking about, and aren’t prepared for will likely be more consequential than all the known risks combined.

Something I wish someone told me when I was starting off
For more than three decades, I’ve spent my days perusing the business pages, reading finance books, scanning academic studies and talking to countless folks about their finances. Yet, despite this intense financial education, it took me a decade or more to learn many of life’s most important money lessons and, indeed, some key insights have only come to me in recent years. Here are 10 things I wish I’d been told in my 20s—or told more loudly, so I actually listened.

You think you are listening, but you are not!
The closer we feel toward someone, the less likely we are to listen carefully to them. It’s called the closeness-communication bias and, over time, it can strain, and even end, relationships.
Once you know people well enough to feel close, there’s an unconscious tendency to tune them out because you think you already know what they are going to say. It’s kind of like when you’ve travelled a certain route several times and no longer notice signposts and scenery.
But people are always changing. The sum of daily interactions and activities continually shapes us, so none of us is the same as we were last month, last week or even yesterday. It turns out the best way for us to really understand those closest to us is to spend time with them, put down our phones and actually listen to what they have to say.

Thursday, 6 February 2020

Weekend Reading


Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

Now you can be as fast as Usain Bolt!!
Nike openly promotes the Vaporfly as "the fastest shoe we've ever made," and Vaporflys were worn last year by 31 of 36 of the top finishers at the six biggest marathons in the world.
But rival shoemakers and many in the running community cried foul, saying the shoe's design amounted to "technological doping." The $250 shoes have foam soles and a carbon fiber plate in each heel to help propel a runner's stride.
World Athletics also announced it would be undertaking further research to "establish the true impact" of new technology that could provide a performance advantage, noting that "there is sufficient evidence to raise concerns that the integrity of the sport might be threatened by the recent developments in shoe technology."

Addressable TV - the new frontier for TV ads
A new era is underway in which media companies can show different ads to different households while they are watching the same programme. advancements in dynamic ad insertion have paved the way for marketers to address specific audiences with assets tailored to their tastes and preferences, calling into question the very future of the traditional TV ad as we know it.

A peek into how online ads work
When you click onto a website, the page has some blank boxes that are set aside for ads. Instantly, those slots are posted on an ad exchange, along with data about you (which your browser dutifully hands over). An auction is held, and the winners send their ads to fill the spots. When it works right, you don’t even notice the lag.
Obviously, no person is sitting there bidding on a display ad for a single viewer. With millions of such transactions occurring every day, it’s all done by computers. That means competitive advantage should come down to who has the best algorithms.

Use your mobile to vote
King County, where Seattle is located, announced on Wednesday that it’s implementing smartphone voting for an upcoming board of supervisors election.
King County’s 1.2 million residents can use their cellphones to vote in the election. The board of supervisors election is one of many “pilots” that Tusk plans to implement over the next five years in counties around the US. There’s no indication yet of whether King County plans to expand the system to statewide or national elections.

Tech in 2020: Standing on the shoulders of giants
A very good collection of datapoints on how technology is changing consumer usage patterns specially in the mobile, ecommerce, media consumption spaces. What are the challenges and what are the paths to the future.

Friday, 24 January 2020

Weekend Reading


1) Now an electric car on subscription
Canoo thinks the tides are changing and a subscription-based car-buying model is the future. Canoo subscribers pay a monthly fee for a bundle that includes a Canoo EV, maintenance, registration, access to insurance, and charging. The service launches next year. Canoo calls its vehicle an "urban loft on wheels." With a wraparound bench, the Canoo’s inside is designed to feel like a living room.


2) Yuval Noah Harari warns that companies and governments can "hack" humans
For Harari, the age of rival investment between the US and China in Artificial Intelligence should worry us all.
"On the most shallow level it could be a repeat of the nineteenth century industrial revolution, when the leaders had the chance to dominate the world economically and politically," he said. "I understand the current arms race as an imperial arms race...You don't need to send the soldiers in if you have all the data on a country."
From the geopolitical to the personal, the age of digital surveillance also threatens what it means to be human and free, Harari warned.
"The point is when you gather enough data on people, you get to know people better than they know yourself. Are we at the point where companies or governments can hack millions of people, that means they know my medical history, personal weaknesses?"
But how do you hack a human being?
"You need a lot of biological knowledge, enough computer power, and enough data about me. You can hack my body, my brain, my life, you can reach a point where you know me better than I know myself," he said.
In his view, there is state surveillance in China, surveillance capitalism in the US, and no serious third player in the arms race for tech dominance.


3) They know where you were last summer!! ;-)
Clearview AI, a relatively unknown tech company, has devised a ground-breaking facial recognition app. You take a picture of a person, upload it and get to see public photos of that person, along with links to where those photos appeared. The system — whose backbone is a database of more than three billion images that Clearview claims to have scraped from Facebook, YouTube, Venmo and millions of other websites — goes far beyond anything ever constructed by the United States government or Silicon Valley giants.
Federal and state law enforcement officers said that while they had only limited knowledge of how Clearview works and who is behind it, they had used its app to help solve shoplifting, identity theft, credit card fraud, murder and child sexual exploitation cases.


4) Is there a case for central bank digital currency (CBDC)?
Money, as we know, has three functions. It’s a unit of account, a medium of exchange and a store of value. Money issued by central banks, which is the norm around the world, performs all these three functions. Such money is uncontested legal tender. A central bank digital currency (CBDC) is a different proposition, different from these commercial cryptocurrencies because a CBDC will be able to perform like money. It will be able to perform all the three functions of money that I listed above. It will be like traditional money except that it will be in a digital form. The main advantage will be that a CBDC will make payment systems more efficient.


5) A new book walks through business failures
While much can be learned from business success stories, there is a lot to learn from mistakes, failures, blunders, errors, lapses, traps, snags, bad judgment, mistiming, malpractice, deceit, fraud, and foibles as well, Robin begins. Forewarned is forearmed, and the lessons of hindsight and research can help avoid failures on your part as well, and prevent the destruction or erosion of value.

Thursday, 16 January 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

A peek into biohacking - trying to extend human lifespan to beyond 100 years
Silicon Valley pros see a century of human life as a 20th-century limitation. If we went from a TRS-80 to an iPhone in 30 years, we can surely double human life using big data and self-quantification. What is the body if not another piece of hardware waiting to be hacked? Isn’t it time that death got disrupted?


Renting clothes - the next big disruption!! ;-)
Rental is going strong, with Rent the Runway, the pioneer in this area, now 10 years old and profitable. The global online clothing rental market is expected to grow annually by over 10% for the next four years, according to MarketWatch. And the fashion resale market has been expanding a breathtaking 21 times faster than traditional retail over the past three years, Fortune reports. Millennials and Gen Zers, in particular, enjoy frequenting thrift and consignment stores, shredding the last remnants of social embarrassment about such places and remaking their image into trendy shopping destinations.
Rent the Runway, an online service that rents out designer clothes and accessories, was a major leap toward bringing the sharing economy into the fashion business. Today, the company’s subscription base has crossed 11 million members.


How Technology is Hijacking Your Mind — from a Magician and Google Design Ethicist
Magicians start by looking for blind spots, edges, vulnerabilities and limits of people’s perception, so they can influence what people do without them even realizing it. And this is exactly what product designers do to your mind. They play your psychological vulnerabilities (consciously and unconsciously) against you in the race to grab your attention.


Here is another reason for trying to be wealthy ;-)
According to a new study, wealthy men and women don’t only live longer, they also get eight to nine more healthy years after 50 than the poorest individuals in the United States and in England. Though education level and social class had some effect, neither was found to be nearly as significant as wealth. Additional study is required to understand why wealth in particular is such a strong indicator of how long someone lives unimpaired, but it was most likely a function of having access to funds when you have ill health. Additionally, poverty has been linked to higher stress levels, which has implications for health.


How to lose a monopoly? Learn from Microsoft and IBM
A big rich company, a company that dominates the market for its product, and a company that dominates the broader tech industry are three quite different things. Market cap isn’t power.
IBM ruled mainframes and Microsoft ruled PCs, and when those things were the centre of tech, that gave them dominance of the broader tech industry. When the focus of tech moved away from mainframes and then PCs, IBM and then Microsoft lost that dominance, but that didn’t mean they stopped being big companies. We just stopped being scared of them.
For both IBM and Microsoft, market power in one generation of tech didn’t give them market power in the next, and anti-trust intervention didn’t have much to do with it. It doesn’t matter how big your castle is if the trade routes move somewhere else.


Thursday, 9 January 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.



Retailers are fighting back online returns
Some in the industry that created the monster are trying to put it back in its cage. They’re taking baby steps—not providing pre-paid mailing labels, requiring a receipt unless an unwanted item is carried to a store—but also threatening to cut off serial returners, the most troublesome of the offenders. Among the others: people who wait months (or more) before returning and the so-called wardrobers, who wear articles of clothing and then ship them back.
Reverse logistics — the transport from buyers to sellers — is not only costly on its own but creates a need for lots of room for storage. Return stock is thrown into an empty space in a warehouse to pile up until someone can get to it.


And fintech startups are getting into the space to facilitate returns
Consulting firm Newmine launched its Chief Returns Officer product. Newmine says that it processes data from multiple sources and uses “data science and AI principles” to determine the cause of returns in near real time. Retailers using the service receive actionable recommendations for resolving problems during the selling season.
Supply.ai’s ReturnSense is a returns prevention platform that learns customer behavior, detects the likelihood of returns, alerts the retailer and intervenes in the purchase process to mediate with customers about their product choices. The firm says its algorithm draws from over 1,000 data variables to predict which orders are likely to be returned. The company says that its service prevents returns and makes shoppers feel more confident in their purchase choices.
Other technology providers include Returnly, a fintech platform that turns product returns into repurchases by enabling customers to buy again with instant exchanges and refunds, before they have even returned their items. Appriss Retail’s Verify service is a consumer-based returns authorization system that uses predictive algorithms and statistical models to distinguish those engaged in fraudulent and abusive behavior and deny them the ability to make returns.


A real-life thriller in the making - the escape of Carlos Ghosn
One of the country’s most famous criminal suspects had slipped past the cameras trained on his house, past the police and border guards and the Japanese citizens who for the past year have followed his every move.
Carlos Ghosn, the deposed chief of the Nissan and Renault auto empire facing charges of financial wrongdoing, had fled to Lebanon, and no one in Japan — not the authorities, the media or even the auto executive’s own lawyer — could explain how it had happened.
It was a cinematic escape, carried out just before New Year’s Day, Japan’s most important holiday, when government agencies and most businesses close for as long as a week.


The search for a distraction free environment goes back centuries!
Medieval monks had a terrible time concentrating. And concentration was their lifelong work! Their tech was obviously different from ours. But their anxiety about distraction was not. They complained about being overloaded with information, and about how, even once you finally settled on something to read, it was easy to get bored and turn to something else. They were frustrated by their desire to stare out of the window, or to constantly check on the time (in their case, with the Sun as their clock), or to think about food or sex when they were supposed to be thinking about God.


Understanding the US-Iran conflict through the lens of history
From the CIA-orchestrated overthrow of Iran's prime minister in 1953, to tension and confrontation under President Trump, a look back over more than 65 years of tricky relations between Iran and the US.