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Friday 29 October 2021

When in doubt, go back to first principles


Whenever you are in doubt of what to do with your investments, or scared of the market fall, or fearful of the market topping out, just ask yourself these two questions.

1) What is my investment objective?

2) What is my investment time horizon?

I have found that if you keep asking yourself these questions during moments of doubt, there is a lot of clarity that emerges. Last few days, the markets have seen some correction and the narrative amongst people has changed. 

The last few days the rocket emojis and the “I-told-you-so” tweets & WhatsApp messages have gone missing and a large number of vocal participants, are observing a deathly silence. All this is because the fear of money is real. Prospect theory or loss-aversion theory is at play here. It is far more painful to lose money than to gain an equal sum. 

So, when you have a fall in the prices of shares you hold, there is a real fear. The fear of losing the gains. Or the fear of losing your capital. That is when the answers to the two questions help you get centered back to what you really want. If you are investing because you want to build up a retirement nest egg or if your time horizon is 10 years or more then reacting to every 10% rise and fall is meaningless.

For example, here are my answers to those questions.

1) My investment objective is to generate an absolute positive return without losing capital permanently. The additional goal is to generate 10x in 10 years by compounding at a rate of 26%. Now that may seem low with respect to how the market has turned out in the last year, but I know if I am able to do this consistently over a 10-year cycle, I will be okay.

2) I don’t need the money in the near foreseeable future, so the main objective is to be able to compound the capital for as long as possible at as high a rate as possible without taking the risk of permanent capital erosion. So, it is safe to say, that my time horizon is 20+ years.

Every time I clarify to myself these answers, the short-term urge to do “activity” reduces. It pushes me to look for stock ideas or investment strategies that align with my objective and time frame. This is also why I don’t do very short-term trading or use quant systems to do so. Because it gels with neither my objective nor my time horizon.

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. If you like this collection, consider forwarding it to someone who you think will appreciate it.

1. Why do people believe in conspiracy theories so easily?

Information that is interesting and attention-grabbing is easier to mentally process than information that is boring (such as realistic yet not particularly exciting information revealing that, on most days, politicians simply work on new legislation in their offices). Greater ease of processing, or fluency, has been found to promote truth judgments. This fluency heuristic likely exists because, in daily life, information that ‘feels right’ in this way is often true (eg, birds fly; fish swim). But the side-effect is that, when false information is easy to process, people more readily infer that the information is correct.


Additionally, the intense emotions triggered by conspiracy theories might suppress people’s capacity to think rationally about them. Emotions are part of a system within the human mind that produces snap judgments, while slower, more analytic thought is required for scepticism about conspiracy theories. The combination of fluency and suppression of rationality could promote the belief that there is truth in an entertaining conspiracy theory.



2. Writing as a means of generating new ideas

The best you can do is figure out what sort of work you have an "aptitude" for, so that whatever intelligence you were born with will at least be put to the best use, and then work as hard as you can at it. Whereas if intelligence isn't what matters, but only one of several ingredients in what does, and many of those aren't inborn, things get more interesting. You have a lot more control, but the problem of how to arrange your life becomes that much more complicated.


So what are the other ingredients in having new ideas? The fact that I can even ask this question proves the point I raised earlier — that society hasn't assimilated the fact that it's this and not intelligence that matters. Otherwise we'd all know the answers to such a fundamental question.


One of the most surprising ingredients in having new ideas is writing ability. There's a class of new ideas that are best discovered by writing essays and books. And that "by" is deliberate: you don't think of the ideas first, and then merely write them down. There is a kind of thinking that one does by writing, and if you're clumsy at writing, or don't enjoy doing it, that will get in your way if you try to do this kind of thinking.



3. Climate change is already here

Many people still think of climate change as a phenomenon that we will only face in the distant future. Perhaps that’s partly because climate change projections about rising temperatures and extreme weather events are tied to future dates: 2030, 2050, or 2100, for instance.


But it’s important to realise that we already are experiencing climate change, and have done so for some time now. Over the past century, global temperatures have increased by approximately 1°C. Sea level rise is already starting to affect certain low-lying coastal communities. The world is experiencing more frequent and intense extreme climate events.


These shifts have an impact on agriculture and tourism, but more importantly demonstrate that climate change is having an effect on the natural environment. These shifts in timing cannot continue indefinitely. Plants and animals have thresholds beyond which the stresses of climate change will result in at least local extinction.




4. Starting from scratch is usually a bad idea

Too often, we assume innovative ideas and meaningful changes require a blank slate. When business projects fail, we say things like, “Let's go back to the drawing board.” When we consider the habits we would like to change, we think, “I just need a fresh start.” However, creative progress is rarely the result of throwing out all previous ideas and innovations and completely re-imagining of the world.


We are mostly blind to the remarkable interconnectedness of things. This is important to understand because in a complex world it is hard to see which forces are working for you as well as which forces are working against you.


When you are dealing with a complex problem, it is usually better to build upon what already works. Any idea that is currently working has passed a lot of tests. Old ideas are a secret weapon because they have already managed to survive in a complex world.


Iterate, don't originate.



5. Stop reading the news

Most of what you read online today is pointless. It’s not important to living a good life. It’s not going to help you make better decisions. It’s not going to help you understand the world. It’s not dense with information. It’s not going to help you develop deep and meaningful connections with the people around you.


Like a drug, the news is addictive. Not only does it alter your mood, but it keeps you wanting more. Once you start consuming news, it’s hard to stop. The hotels, transportation, and ticketing systems in Disney World are all designed to keep you within the theme park rather than sightseeing elsewhere in Orlando. Similarly, once you’re on Facebook, it does everything possible, short of taking over your computer to prevent you from leaving. But while platforms like Facebook play a role in our excessive media consumption, we are not innocent. Far from it. We want to be well informed. (More accurately, we want to appear to be well informed.) And this is the very weakness that gets manipulated.


Thursday 21 October 2021

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. If you like this collection, consider forwarding it to someone who you think will appreciate it.

Maldives creates a floating city

The atoll nation of Maldives is creating an innovative floating city that mitigates the effects of climate change and stays on top of rising sea levels.

Such a development is particularly vital for countries such as Maldives – an archipelago of 25 low-lying coral atolls in the Indian Ocean that is also the lowest-lying nation in the world.


More than 80% of the country’s land area lies at less than one metre above sea level – meaning rising sea levels and coastal erosion pose a threat to its very existence.


Maldives thrives on tourism and the same coral reefs that attract holiday makers also provide the inspiration for much of the development. The hexagon-shaped floating segments are, in part, modelled on the distinctive geometry of local coral.



The dream of animal-to-human transplants or xenotransplantation is a few steps closer to reality

Scientists temporarily attached a pig’s kidney to a human body and watched it begin to work, a small step in the decades-long quest to one day use animal organs for life-saving transplants.


Pigs have been the most recent research focus to address the organ shortage, but among the hurdles: A sugar in pig cells, foreign to the human body, causes immediate organ rejection. The kidney for this experiment came from a gene-edited animal, engineered to eliminate that sugar and avoid an immune system attack.


Surgeons attached the pig kidney to a pair of large blood vessels outside the body of a deceased recipient so they could observe it for two days. The kidney did what it was supposed to do — filter waste and produce urine — and didn’t trigger rejection.



When in doubt, copy

From infancy, we learn by copying others. It’s also how we navigate uncertainty throughout our lives. Copying is what people have always done because it’s not only easy, it’s effective. If it weren’t, we wouldn’t still be doing it because we wouldn’t be here.


Copying is so effective that all sorts of animals, even fishes, copy each other’s behavior in order to adapt. When real people rather than computers play games, they don’t doggedly follow tit-for-tat or some other mechanical algorithm. They copy other people’s winning strategies.


 Copying is pretty safe, too, since at least you will be doing something that has succeeded to the point of becoming visible to you. The easiest thing to do, even by accident, is to copy something popular and successful. In the social world, popularity is success, so you’ll be doing fine.



The challenges of the worker in a gig economy

Platform work is precarious by nature. Even though more than half of all gig workers rely on it for most of their income, 40% of them make less than minimum wage. But it’s not just about the money. It’s about fragility and insecurity. Day to day, gig workers worry about their health, their safety, and whether or not they’ll make enough to cover their costs. More than 60% want to quit within a year.


Digitally-mediated gig work has surged over the past decade. The International Labor Organization counted 489 active ride-hailing and delivery platforms worldwide in 2020, ten times the number that existed in 2010. The fluid nature of the workforce means there are few consistent estimates to how many people are now engaged in this kind of labor, but some researchers believe that as much as 10% of the global workforce now engages in some kind of gig work.


Gig work is worse for women, who earn less on the platforms than men. Meanwhile, even though the biggest gig platforms are disrupting the global workforce, few of these companies have shown they can sustainably make a profit, relying instead on investors to fuel their growth.



The forgotten scam

Abdul Karim Telgi, the kingpin of a multi-crore counterfeit stamp paper scam, began as a furniture sales executive with a salary of Rs 3,800 in Mumbai. It is alleged that between 1993 and 2002, he cultivated officers in the government security press in Nashik and purchased machinery at government auctions to print counterfeit stamp papers. He then sold them at a discount to bulk purchasers such as banks, insurance firms and stock brokerage firms.


Investigators estimated Telgi’s personal worth at his prime exceeded a hundred crores and he owned about 36 properties across the country.


Telgi allegedly bribed his way to run his scam. After the racket was uncovered, investigators searched for authorised vendors who had sent bogus papers to the stamp duty officials. Politicians and police were also accused of being complicit in the scam.


“Across 72 towns and 18 States and over a period of 10 years, the counterfeit stamp paper scam has dealt the Indian economy a shattering Rs 32,000-crore blow. The figure is official. Apprehensions are that it could be much higher,” Frontline magazine reported in November 2003. That’s the damage Telgi and people who helped him in the scam had done.



Tuesday 19 October 2021

Building Financial Resilience


Every bull market hides within it the seeds of a bear market. The market, as a whole, is mean reverting. So, a bulk of what goes up tends to come down, if not fully but to a large extent, wiping out all the temporary gains made in the process. And in between this going up and coming down investors make their reputation and fortunes.

By virtue of running an advisory, I get an opportunity to speak to a large cross section of investors. On Monday, I was speaking to one such person. He was extremely concerned about investing at “such all time high market levels”. He said that it had taken him many years to get to where he is today financially and he did not want to risk a large part of his networth should there be a large market crash. What was left unsaid was that he was also loath to let go of the opportunity in case the market kept going up. So, here is a classical dilemma.

This conversation got me thinking in multiple directions – the role of asset allocation, the need for a robust investment philosophy suited to oneself and of course where one is in one’s financial journey. All of this led to “financial resilience”.

Covid has taught us that resilience is crucial – whether in one’s physical or mental health or finances. So, how does one build financial resilience? As my guru Charlie Munger says, “Invert, always invert”. So, inverting the question and asking myself, how do we make our finances more fragile?

Here are some ways. None of this is rocket science. It’s mostly common sense but if you get it right it helps tremendously in building your financial resilience and will help you in facing a market downturn whenever it comes. These are as true for individuals as for families and also companies.

No savings

If you are working for some time and haven’t built up an emergency fund or some cash reserves that can cover expenses for a few months, then your financial life is fragile. The first thing to do is to build up some cash reserves for the rainy day.

Inadequate insurance cover

The biggest unplanned expense tends to be a medical emergency. You need to have adequate medical insurance for self and family to cover the costs. Having to pay for expensive medical treatment could derail, and at times completely ruin, your financial plans. The worst is if it happens during a time when you are otherwise financially weak.

Large debts

100% of all bankruptcies happen due to inability to service a debt. Basically, if your income (P&L) does not support your debt (balance sheet), then you are in trouble.

If you are taking a loan to create an asset like a home, it is still understandable. But you should have sufficient cash savings and medical cover before you take a home loan.

Taking a loan for consumption should be a strictly no-no unless you have a reasonable amount of savings to cover for the loans. The problem is people who need loans for consumption are the ones who should not take it and those who can afford to take loans don’t because they already have the cash.

Similarly in a market crash, the stories you hear of people going bankrupt are those who are leveraged. You can at most lose a large part of your capital in stocks but in derivatives, if you don’t know what you are doing, you can get wiped out.

Single source of income

If you are dependent on a single source of income you are fragile. If your job or business is your sole source of income then you are financially fragile. Try to diversify your income stream. One reason I started investing was to be able to have another source of income over time. This is true for nearly all part-time investors who have a steady job or business. If you keep adding to your portfolio, over time it builds up into a nice source of income through dividends and interest payments

Inadequate diversification

A lot of people have all, or large parts, of their networth in one single asset class or asset. Indians primarily have a house which dominates their networth. Others may have gold or fixed deposits or equities. At an extreme case, having investments in only one company like that of a promoter of a business, is also a cause of fragility. Adequate diversification into multiple asset classes, especially ones which are not correlated, and assets may reduce your returns sometimes, but has the definite benefit of enhancing resilience.


The challenge with personal finance is that it is personal. It cannot be generalized. You have to take a hard look at your financial situation and decide what you want. And then work out a plan to solve for it. What you want will also change over time as you age and life situation and priorities change. That is the way it is.

The important thing to remember is that you need to stay in the game for the long term. Resilience is key. Plan on every plan not going according to plan.

This post appeared in CNBC.

Thursday 14 October 2021

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. If you like this collection, consider forwarding it to someone who you think will appreciate it.

1. After plant-based meat, we now have seaweed based seafood

First Vuna salad was added to the menu, now Vrimp is on there too as the world’s biggest food company capitalises on the growth of vegan and vegetarian diets with a new faux-seafood product.


Nestlé describes Vrimp, made out of seaweed and peas, as an exciting innovation, with the alt-seafood having the “authentic texture and flavour of succulent shrimps”.


The company has even managed to mimic the distinctive shape using special moulds, meaning they can replace the real thing in a salad or poké bowl. The orange sweep of colour on the body has been replicated using paprika and carrot.


Nestlé is keen not to miss out on sales to the growing number of people who are cutting their intake of animal products or giving them up altogether. It has already launched vegan versions of some of its high-profile brands, including its famous KitKat.


Last year Nestlé started experimenting with plant-based fish – it already sells plant-based burgers and sausages – with the launch of its tuna alternative Vuna



2. Even some of the richest people on the planet have awful relationships with money

Davis was so good at compounding money in the stock market that he turned a few thousand dollars into millions of dollars in his children’s trust funds. And when he found out his daughter was marrying someone he didn’t approve of, he tried to use that money as leverage. Listen, money is great and all but when it begins to impact your family, what’s the point? Is it really worth it?


Money can provide many things — comfort, peace of mind and convenience. But it can also provide stress, jealously and resentment. Creating vast sums of wealth often comes at a cost.


It’s fun to daydream about creating enough wealth to become one of the richest people in the world. Just remember there are always trade-offs with these things.



3. Airless tyres are next

Michelin is one of several tiremakers that have been developing airless tires but they seemed as improbable as GM's early vision of self-driving cars. Now, however, the two companies are putting a pin in the calendar to have airless tires on the market by 2024.


The first thing you notice about the airless Michelin Uptis, or Unique Puncture-proof Tire System tires is that you can see through them. Glass fiber reinforced plastic vanes support the tread rather than air pressure.


From there, the benefits tumble forth: Nails become minor annoyances and sidewall cuts that usually render a tire unrepairable are no longer possible. There would be no need to check tire inflation (you've probably ignored my admonitions to do that anyway) and we'd say goodbye to spare tires, jacks and inflation kits that most drivers view as mysterious objects anyway. Blowouts that cause thousands of crashes a year would be impossible.



4. Lessons from Barca to the world of business

Barcelona’s fall from grace offers lessons for companies that lead or aspire to lead their sectors. The club fell into the trap set for every company that’s number one: it got lazy while its rivals copied its best ideas and built on them. It failed to create a sustainable succession plan for its aging players, and it was profligate with its finances. Barcelona failed to understand that greatness is always a moving target, not just on the pitch.


Meanwhile, every rival club was studying Barcelona. They followed the lead of the long-running advertising slogan of rental car firm Avis, which was number two in the market: “We try harder.”


When you’re number one, you also tend to get careless with your spending. While the money pours in, you stop counting every penny.




5. The world's growing concrete coasts

With three tonnes of concrete per year used for every person in the world, there are few parts of the planet that concrete hasn’t reached. The production of concrete is also a huge emitter of CO2. At least 8% of humanity’s carbon footprint comes from the concrete industry, mostly from the production of cement – one of concrete’s principal components. The cement industry generates around 2.8 billion tonnes of CO2 per year – more than any country other than China or the US.


In the oceans, concrete is the main construction material, accounting for more than 70% of coastal and marine infrastructure such as ports, coastal defence structures and waterfronts. In China, for example, around 60% of its coast is effectively concrete. Similarly, more than 14,000 miles of the US’s coastline is covered in concrete.


There are potential solutions, such as bio-cement, which can be particularly useful for coastal hardening. Bio-cement is formed by taking sand, or other forms of aggregate, and then adding bacteria and urea, a component of urine. The urea triggers the bacteria to secrete calcite – a form of calcium carbonate – binding the mixture together into a solid material similar to limestone.


Not to be confused with bio-cement, is another alternative: bio-concrete. This is where bacteria called Bacillus pasteurii is actually encapsulated and added to the concrete, along with a form of starch that serves as its food. The bacteria stay dormant in the concrete until a crack forms and air gets in. This change wakes the bacteria up, and they begin to eat, grow and reproduce. In doing so, they excrete calcite, which bonds to the concrete, fills the crack and seals it up. So in essence, this type of concrete structure is capable of self-repair.



Sunday 10 October 2021

Toolkit for investing


Michael Lewis is one of my favourite authors. And Moneyball, also made famous by a film starring Brad Pitt, is a classic in its own right. The story revolves around Billy Beane, an oddball character who is appointed as the coach of Oakland Athletics, a lowly placed baseball team. Beane has a very different notion from other coaches about how to value a player and instead of following the traditional wisdom of betting on those players who have a great technique or look good while playing, he focuses on data about players.

Beane started looking for specific skills and abilities in players to fit the purpose instead of paying top dollar for getting some of the top players in the league. The story goes on to document the triumph of the Oakland Athletics under Billy Beane.

The whole idea of narrating this story today is to highlight the simple fact that like in baseball, or any sport, using data instead of widely held beliefs amongst professionals, are better for decision-making and subsequent success. The story also narrates that, outsiders to the system, Beane and his teammate data statistician with zero knowledge of baseball, can actually bring in a fresh perspective that insiders lack because they are too used to do things a certain way.

Now map it to our investing world and you will realize that very few small investors in India actually use data or know how to use them. They still rely on tips from friends, and increasingly from random people on social media!! The main reason for that is years back data was hard to get and there was no systematic way of getting and using it. Today, things are changing. With the advent of social media, fintwit (in some parts), forums like ValuePickr help bring in scuttlebutt data from across the country to the small investor. Sites like screener, chartink, investing.com and others have democratized access to both fundamental data and technical charts. Trendlyne, Researchbytes and others are doing a great job in bringing concalls to all. So, very quickly, data access is being completely democratized for free or for a small fee. The edge that large institutions used to possess are diminishing. Now, with Covid, even AGMs are being held online, again greatly enhancing access.

So, here are my suggestions on how to go about the investing process:

  • Understand the business and the industry you are planning to invest in. You should be able to explain to a layman in simple words what the business does to make money.
  • Read the last 2-3 years annual report. Start with reading the management discussion and analysis section and the director’s report section.
  • Go to screener and look at the last ten years financial results. Focus on a few things to start with: revenues, margins, profits, ROE, ROCE and debt-equity. See how these have changed over the years.
  • Go to trendline’s channel on YouTube or Researchbytes and listen to the concalls for the last 2 quarters and maybe for 1 quarter a year back. If you like reading transcripts, tikr.com seems to have them. They are also available on the company websites also at times.
  • Go to BSE or NSE site and look through all corporate announcements or investor presentations by the company.
  • Have a written down investment policy as if you are running a large investment institutional setup like a mutual fund. Having clear rules for how many stocks you will buy in the portfolio, what will be the minimum and maximum starting allocation for a stock, what is the risk management policy you will follow, how you will prevent catastrophic loss, when you will sell etc are all things you should write down and follow. Once in a while, you should review your rules and update them based on your real-life experience.

If you follow a systematic, data-oriented, disciplined approach to investing, you can reap far better and longer-lasting rewards than someone who is buying and selling on Twitter tips.

This article first appeared in The Economic Times

Thursday 7 October 2021

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. If you like this collection, consider forwarding it to someone who you think will appreciate it.

Dangerous Feelings

Success has a nasty tendency to increase confidence more than ability. The longer it lasts, and the more it was tied to some degree of serendipity, the truer that becomes. It’s why getting rich and staying rich are different skills.


A dangerous situation is when your goals (achieving enough success to relax) counter your skills (focus, paranoia, persistence). It hits you when you feel like past hard work entitles you to a break without realizing the cost of that break, however much it might be necessary and deserved. It’s part of why people who quit while they’re ahead are so admirable – it’s often not so much that they gave up, but that they’re aware of what made them successful and when that trait begins to wane.



A pacemaker for the brain holds promise of treating depression

Researchers at the University of California, San Francisco surgically implanted a battery-operated, matchbook-sized device in Sarah’s brain — a “pacemaker for the brain” some call it — calibrated to detect the neural activity pattern that occurs when she is becoming depressed. It then delivers pulses of electrical stimulation to stave off depression.


Twelve days after Sarah’s device was fully operational in August 2020, her score on a standard depression scale dropped to 14 from 33, and several months later, it fell below 10, essentially signaling remission, the researchers reported.


Sarah’s is the first documented case of personalizing a technique called deep brain stimulation to successfully treat depression.



Gig work is a more imminent and transformative force than mass automation

Uber is one of the biggest companies to use networks of freelancers, rather than contracted employees, for its primary business operations. It isn’t a small company by any means — it has more than 20,000 employees, none of whom are drivers. Yet for every full-time employee, there are nearly 200 drivers working anything from a few hours a week to 10 hours or more a day. Uber has demonstrated that platform-based gig work can function at an enormous scale. These new working arrangements, rather than automation, raise the trickiest questions relating to employment in the exponential age.


If gig work is generally more flexible and less formal in richer countries, the reverse is true in poorer ones. In emerging economies, a gig working platform may offer more security, more employment options, and greater freedoms than casual or day labor. In India, for example, the sheer size of the informal labor market gets in the way of the government’s ability to spend on health and education. Casual laborers, hired daily, paid in cash, rarely pay income taxes. Nor do their employers contribute to payroll taxes. Lower tax participation means less booty in government coffers to fund social programs. For highly casual labor markets, the gig economy could be a route to a large, more formal sector with more protections for workers and a more robust tax base for governments.



The story of the Parsis in India

Always a tiny drop in India’s vast population, the Parsi community adapted quickly to British colonial rule. Its merchant class built connections with India’s diverse communities. After independence, they filled key roles in science, industry and trade. Parsi trusts bankrolled affordable housing projects and scholarships and propped up important institutions like the Tata Institute of Social Sciences and the National Center for Performing Arts.


Prominent Parsis include the founders of the vast Tata conglomerate, plus early members of the Indian independence movement and the Indian National Congress, once the dominant political party. The most famous Parsi outside India might be Freddie Mercury, the Queen singer, who was born Farrokh Bulsara.


But the community’s population, which totalled 114,000 in 1941, now numbers around 50,000 by some estimates. The drop has been so drastic that — even as India considers measures to discourage more children in some states — the government has incentivized Parsi couples to have more children, to apparently little effect.


Ratan Tata blames the influence of the orthodoxy over institutions such as the Bombay Parsi Punchayat, the body that manages the community’s affairs as well as thousands of apartments and other properties owned by Parsi trusts. They strictly define who counts as Parsi: those who have a Parsi father. Community leaders estimate that up to 40% of Parsi marriages are with outsiders, but women who chose that are often ostracized. In some parts of the community, they lose privileges as basic as attending the final rites of loved ones. They also lose the right to live in affordable Parsi housing, a big advantage in Mumbai, where property prices keep rising. Parsi leaders fear outsiders will work their way into the community to take advantage of those benefits, diluting Parsi culture.




Space debris (space junk) is a real problem and needs real solutions

Now we’re at the point where about 70,000 satellites could enter orbit if proposed plans come to fruition. Even if all the proposed constellations fail to deploy, many more satellites will be in space. Unless actively deorbited, they will remain there for months to hundreds of years, depending on the altitude.


Today, there are about 27,000 pieces of debris,2 most of which are over ten centimetres in diameter. The trajectories of the rest—and what they might hit and when—are uncertain.


Active removal of space debris may finally be possible in some cases. One start-up recently began a test mission to prove that it had the capabilities required for space debris docking and removal.11 Other debris mitigation efforts will likely focus on the removal of inactive satellites and larger intact objects, at least initially. OneWeb, for example, has announced plans to collaborate with Astroscale on debris removal, and SpaceX has also discussed the possibility of using its Starship craft to clean up space debris.