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Thursday 25 August 2022

Weekend Reading


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One investment style does not work all the time
This learning is continuous but the basic framework of what kind of stocks you like would not change, at least in me. Every style will have its own time, every style does not work throughout. In ten years the same style will never work. So styles will go out of favour. Like the same cricket team does not work, what was top of the charts last year are bottom of the charts this year! Look at IPL, the top two teams are the bottom two teams.
If you get deep bargains and that happens in chaotic markets like what happened in Covid times, then the whole thing gets dislocated. The earnings are not right. The companies which are hugely profitable, were not having sales, profits or losses and all and then the market gets confused about how to value the company.
That is the point of time when if you have superior understanding of the companies, you can pile on. Even managements lose faith.
I know enough stories in Covid times where managements lost faith in their own companies and the investors and mutual fund managers had more faith in the story than the management themselves.
A legend on channeling her anger towards greatness
The winner of 23 singles Grand Slams, Williams is one of the greatest athletes the world has ever seen. She is also a black champion in an overwhelmingly white sport. A female champion in a space where the GOAT (Greatest of All-Time) discussion seems to be limited to three men, Roger Federer, Rafael Nadal and Novak Djokovic, all of whom have, so far, won fewer titles than her. In 2016, Williams said that almost all through her career she was “undervalued and underpaid”. Her greatness lies in the way she has been able to rise above, not just far above the competition but also the odds and the prejudices stacked against her.
“There were so many matches I won because something made me angry or someone counted me out,” she wrote in an essay for Vogue earlier this month, which served as her farewell note. “That drove me. I’ve built a career on channelling anger and negativity and turning it into something good.”
If Lithium is the new oil, then the governments of producer countries want control
A few years ago, Chile was the world’s largest lithium producer, turning out slightly more than Australia. While Chile has expanded output at its existing operations by 80% since 2016 to about 140,000 tons annually, it hasn’t opened a new mine in about 30 years. It now produces about half as much as Australia, which has quadrupled its output in the past five years, according to the USGS.
Unlike oil, which is produced all over the globe, lithium is less common. South America, Australia and China are the key locations. Outside South America, it’s extracted from hard-rock. In the region, lithium is found in salty, underground water that is evaporated by the sun after being pumped into large man-made ponds. South America’s lithium is less expensive to produce, but miners say the drawback is it takes far longer to build a mine—about eight years.
With economies battered by the pandemic and people grappling with soaring inflation, officials in some Latin American nations say robust state control over lithium will help boost local development and pad public coffers.
Knowledge compounds
The benefits of recognizing just a tiny more knowledge and skill gradually compounds over time. To read, exchange ideas with others, ask questions, be curious and open for opposite/contracting arguments are all contributing to compounding. A boat sailing one degree off-course will over short distances hardly be noticeable, but over long distances the mistake compounds and the boat misses its destination completely.
The benefit is not immediate, but gradual.
To compound knowledge, we need to refrain from confirmation bias. It’s all too easy to seek a group of people who share the same views as you, be it in investing or politics. Our views need to be challenged and destroyed from time to time to remove our biases. It’s hard to learn from history, experience and knowledge if you don’t get challenged. Therefore, be skeptical of information that agrees with your viewpoint. Empirical evidence suggests that we are biased to accept conforming evidence (confirmation bias) more easily than conflicting evidence.
Most investors have biases which lead to “wrong” allocations and thus less total returns: confirmation bias, anchoring, a rigid mindset, not willing to have an open mind or inflexible for other ideas to name a few.
The Covid-19 pandemic has turned sewage into gold
People who are infected with the coronavirus shed the pathogen in their stool. By measuring and sequencing the viral material present in sewage, scientists can determine whether cases are rising in a particular area and which variants are circulating.
People excrete the virus even if they never seek testing or treatment. So wastewater surveillance has become a critical tool for keeping tabs on the virus, especially as Covid-19 testing has increasingly shifted to the home.
The institutions and localities that invested in wastewater surveillance over the last two years are discovering that it can be used to track other health threats, too. The Sewer Coronavirus Alert Network has already begun tracking the monkeypox virus in wastewater.

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