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Friday 30 September 2022



Multidisciplinary learning is one of the best ways to improve our investment acumen. Here is a summary of some of the best learnings of the week. If you like this collection, consider forwarding it to someone who you think will appreciate it.
You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.
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Stoicism and Investing
Stoicism and Investing
In my experience, investing is 9% theory, 1% execution, and 90% managing your emotions. That’s why I’ve been applying the philosophy of Stoicism to my investing strategy—it helps me to manage the most important part: Emotions.
At some point, you must take action. But we tend to keep searching for that special piece of wisdom that makes the difference. So we keep reading more books, listening to more podcasts, and following the different investing sages.
As a result, we never take action, and we become our own worst enemy.
Until you take your own money and put it on the line, you never know what it feels like to invest. I can say that I’ve made nearly all the investing mistakes one can make.
But Stoicism has helped me to become a better investor because it made me more level-headed.
Every time you invest in something, you’re taking a risk with your hard-earned money, which will always remain scary. But no matter what happens, don’t talk yourself out of investing. You can’t afford it.
In the long term, markets still move in one direction: Up. You either take the ride up, or you stay where you are.
The history of memes
Richard Dawkins, the evolutionary biologist, coined the term “meme” in his 1976 book The Selfish Gene, likening discrete bits of human culture that propagate between people to genes. Dawkins shortened the ancient Greek word “mimeme” – with an apology to his classicist colleagues – to meme, to rhyme with “cream”. He suggested that memes were melodies, ideas, catchphrases or bits of information that leap from brain to brain through imitation, expediting their transmission.
He coined the term to highlight just how human culture can replicate itself. And in that sense memes have been around probably since humans have had cultures they have shared. But we can also see the kernels of what makes modern internet memes so successful in ancient forms of popular culture.
Incentives are the most powerful force in the world
No matter how much information and context you have, nothing is more persuasive than what you desperately want or need to be true. And as Daniel Kahneman once wrote, “It is easier to recognize other people’s mistakes than our own.” What makes incentives powerful is not just how they influence other people’s decisions, but how blind we can be to how they impact our own.
A big thing here is recognizing that people are not calculators; they are storytellers. There’s too much information and too many blind spots for people to calculate exactly how the world works. Stories are the only realistic solution, simplifying complex problems into a few simple sentences. And the best story always wins – not the best idea or the right idea, but just whatever sounds the best and gets people nodding their head the most. Ben Franklin once wrote, “If you are to persuade, appeal to interest and not to reason.” Incentives fuel stories that justify people’s actions and beliefs, offering comfort even when they’re doing things they know are wrong and believe things they know aren’t true.

Thursday 29 September 2022

PROFILE: Bernard Arnault - The LVMH man


I have always been fascinated by businessmen. In this post, I write to highlight a brilliant businessman and corporate investor, who although amongst the world’s richest men, is not very well known or talked about.

“The Terminator”
Bernard Arnault is France’s richest person and is the chairman of the world’s largest maker of luxury goods, Moet Hennessey Louis Vitton. He controls about half of LVMH, which had revenue of 64.2 billion euros ($76 billion) in 2021. 
In 1984, Arnault, then a young real estate developer, heard that the French government was set to choose someone to take over the Boussac Saint-Frères empire, a textile and retail conglomerate that owned Christian Dior.
With the help of Antoine Bernheim, he acquired Financière Agache, a luxury goods company. He became the CEO of Financière Agache and subsequently won the bidding war for Boussac Saint-Frères, buying the group for a ceremonial one franc effectively taking control of Boussac Saint-Frères. 
 He laid off 9,000 workers in two years, after which he acquired the nickname “The Terminator”
He then sold nearly all of the company’s assets, keeping only the Christian Dior brand and Le Bon Marché department store
By 1987, the company was profitable again and booked earnings of $112 million on a revenue stream of $1.9 billion dollars
The billion-dollar idea
In the 1980s, Arnault had the idea to create a group of luxury brands. He worked with Alain Chevalier, CEO of Moët Hennessy, and Henry Racamier, president of Louis Vuitton, to form LVMH in 1987.
In July 1988, Arnault provided $1.5 billion to form a holding company with Guinness that held 24% of LVMH’s shares. As a response to the rumours of creating a “blocking minority”, Arnault spent another $600 million to buy a 13.5% more stake in Louis Vuitton.
Arnault’s views and mission by then greatly differed from Henry Racamier, Louis Vuitton’s president. In January 1989, he spent another $500 million to gain control of a total of 43.5% of LVMH’s shares and 35% of its voting rights.
With the new stake, he was able to reach the “blocking minority” and was successful in dismantling the LVMH Group.
He then turned on Racamier, stripped him of his power and ousted him from the board of directors, He subsequently became the unanimous chairmen of the company.
Ambition, Strategy, Drive & Growth
Upon Arnault’s takeover, in eleven years, annual sales and profit rose by a factor of 5, and the market value of LVMH increased by a factor of 15. 
What followed was a string of strategic acquisitions. In July 1988, Arnault acquired Céline. LVMH acquired Berluti and Kenzo in 1993. 
Arnault bought out the French economic newspaper La Tribune in 1993. Despite the 150 million euros he spent on acquiring the company, he sold it off in order to buy another French economic newspaper Les Échos, for 240 million euros.
In 1994, LVMH acquired the perfume firm Guerlain. In 1996, Arnault bought out Loewe, followed by Marc Jacobs and Sephora in 1997.
Five more brands were also integrated into the group: Thomas Pink in 1999, Emilio Pucci in 2000 and Fendi, DKNY and La Samaritaine in 2001.
In the 1990s, Arnault decided to develop a centre in New York to manage LVMH’s presence in the United States.
The result was the LVMH Tower which opened in December 1999.
M&A to preside over the biggest rivalries
In 1999, Arnault turned his attention toward the Italian Luxury Brand, GUCCI.
He discreetly amassed a 5% stake in the company before being detected.
When Gucci responded claiming it to be a hostile takeover, Arnault upped his stake to 34.4 percent while insisting he wanted to be a supportive and unassertive stakeholder.
Domenico De Sole, the CEO of the Gucci group, discovered a loophole that allowed him to issue shares with only board approval, and for every share LVMH bought, he created more for his employees, diluting Arnault’s stake.
The fight dragged on until settlement in September 2001. After the legal ruling, LVMH sold its shares and walked away with $700 million in profit
The luxury behemoth
On 7 March 2011, Arnault announced the acquisition of 50.4% of family-owned shares of the Italian jeweller Bulgari, with the intention to make a tender offer for the rest, which was publicly owned. The transaction was worth $5.2 billion.
In 2011, Arnault invested $641 million in establishing LCapitalAsia.
In February 2014, Arnault entered into a joint venture with the Italian fashion brand Marco De Vincenzo, taking a minority 45% stake in the firm.
By January 2018, Arnault had led the company to record sales of 42.6 billion Euros in 2017, 13% over the previous year, as all divisions turned in strong performances.
Under Arnault’s leadership, LVMH has grown to become the largest company by market capitalization in the Eurozone, with a record of 313 billion euros ($382 billion) as of May 2021
For a very brief period on 24 May 2021, Arnault temporarily became the richest man in the world, surpassing Jeff Bezos with a net worth of 187.3 billion dollars

Monday 26 September 2022

Thoughts on the Market: Interaction with ET Now


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Thoughts on the Market
Thoughts on the Market
I shared some thoughts on the current markets and the sectors I am finding interesting.

Friday 23 September 2022



Multidisciplinary learning is one of the best ways to improve our investment acumen. Here is a summary of some of the best learnings of the week. If you like this collection, consider forwarding it to someone who you think will appreciate it.

You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.

To subscribe to any of Intelsense Research services, visit www.intelsense.in. If you wish to know more about our PMS offerings, mail us atequity@intelsense.in

Blood tests for detecting cancer
Doctors have told health services to prepare for a new era of cancer screening after a study found a simple blood test could spot multiple cancer types in patients before they develop clear symptoms.
The Pathfinder study offered the blood test to more than 6,600 adults aged 50 and over, and detected dozens of new cases of disease. Many cancers were at an early stage and nearly three-quarters were forms not routinely screened for.
Beyond spotting the presence of disease, the test predicts where the cancer is, allowing doctors to fast-track the follow-up work needed to locate and confirm a cancer. “The signal of origin was very helpful in directing the type of work-up,” said Schrag. “When the blood test was positive, it typically took under three months to get the work-ups completed.”
Humans never change. The stock market never changes.
I don’t mean that in a dismissive way as in, “Oh, people are so bad. That will never change. We’re doomed.” When I talk about human behavior, I talk about it in a non-judgmental way. I try to understand what we usually do, and not necessarily whether it’s good or bad.
To be a good investor, we should not only focus on learning the fundamentals or technicals of investing, we should also learn about the behavior of humans. Not just in the stock market but in life.
When you let go of your expectations to get rich in the stock market, you can focus on the beauty of the market. It’s truly one of the most fascinating inventions of the world.
Where else can you go to learn about money, businesses, psychology, history, and most importantly: About yourself. The stock market is a ruthless system that punishes your mistakes with a vengeance. But it also rewards you when you do the right thing.
That’s what makes it so beautiful; because it’s honest.
Determination is fueled by ambition
Most people don’t know how ambitious to be, especially when they’re young. They don’t know what’s hard, or what they’re capable of. And this problem is exacerbated by having few peers. Ambitious people are rare, so if everyone is mixed together randomly, as they tend to be early in people’s lives, then the ambitious ones won’t have many ambitious peers. When you take people like this and put them together with other ambitious people, they bloom like dying plants given water. Probably most ambitious people are starved for the sort of encouragement they’d get from ambitious peers, whatever their age.
Achievements also tend to increase your ambition. With each step you gain confidence to stretch further next time.
So here in sum is how determination seems to work: it consists of wilfulness balanced with discipline, aimed by ambition. And fortunately at least two of these three qualities can be cultivated. You may be able to increase your strength of will somewhat; you can definitely learn self-discipline; and almost everyone is practically malnourished when it comes to ambition.

Tuesday 20 September 2022

Monthly Q&A - August 2022


I do a monthly Q&A on topics related to investing posted by our subscribers. This month I cover interesting topics like investment checklists and using stop loss in investing.

Monthly Q&A - August 2022
Monthly Q&A - August 2022
A detailed post on using stop losses while investing - http://blog.intelsense.in/2020/04/using-stop-loss-in-investing.html
Booklist on Intelsense Blog: http://blog.intelsense.in/p/blog-page.html
To explore our subscription offerings, please visit www.intelsense.in
To enquire about our PMS, please drop us an email at equity@intelsense.in

Thursday 15 September 2022



Multidisciplinary learning is one of the best ways to improve our investment acumen. Here is a summary of some of the best learnings of the week.

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

You can sign up at https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.

To subscribe to any of Intelsense Research services, visit www.intelsense.in. If you wish to know more about our PMS offerings, mail us at equity@intelsense.in

The goal is to sit less
A study, which involved more than 3,700 men and women in Finland, found that many dutifully exercised for a half-hour, but then sat, almost nonstop, for another 10, 11 or even 12 hours a day. These were the study’s active couch potatoes, and their blood sugar, cholesterol and body fat all were elevated.
But the study found, too, that men and women who got up and moved around even a little more often, whether by strolling gently or fitting in more exercise, were substantially healthier than the active couch potatoes.
The results tell us that a single 30-minute, daily workout “might not be enough” to alleviate the downsides of prolonged sitting.
The lesson from the research is that in addition to a brisk workout, we need to move lightly and often, cleaning, taking the stairs, strolling the halls or otherwise not remaining still. The sweet spot in this study involved about 80 or 90 extra minutes of light activity, “but any additional movement should be beneficial.
Growth is good for stocks
Philip A. Fisher is well known as an advocate of investing in growth stocks, but he was no speculator. He counsels investors to avoid promotional situations and to be cognizant of the danger of paying a price that already discounts very high growth far into the future.
There is no doubt that Phil Fisher’s approach was more venturesome than the policies advocated by Benjamin Graham, but both men demanded rigor in their analytical process. Warren Buffett was clearly more influenced by Graham in his early years but came to appreciate Fisher as well. Charlie Munger’s approach tilts more toward Fisher and less toward Graham.
When asked about the distinction between value and growth during the 2001 Berkshire Hathaway annual meeting, Warren Buffett clearly explained the fallacy of thinking in such terms. Charlie Munger chimed in with the observation that selecting companies with growth prospects reduces the number of decisions that they would have to make over time.
The invention of the x-ray
There is no overemphasizing the profound effect that the discovery of the X-ray had on the broadest range of human existence. The finding was a scientific bombshell that warranted interest from scientists and laymen alike. Newspapers and magazines printed stories, true and false, about the newly discovered rays. Women were cautioned that handheld X-ray devices could peer through their clothes. Men were warned that police would adapt X-rays to spy on nefarious activities. There was even the suggestion that X-rays might be exploited to see through walls into private spaces and spy on people’s intimate activities.
By 1900, the use of X-rays passed beyond simple demonstrations of skeletal ab­normalities or detection of metal objects in the body. It became apparent that X-rays killed rapidly dividing cells, an observation that intrigued cancer researchers and brought about the beginnings of radiation oncology. Although surgeons would no longer be the only practitioners at the forefront of advances in radiology, their early appropriation of the new technology demonstrated that the X-ray machine was an indispensable medical and surgical device.

Monday 12 September 2022

Relative & Absolute Momentum

At Intelsense.in, we run our own proprietary quant based systems - Q10, Q30 and Quiver (only on smallcase).
You can take a look at https://intelsense.smallcase.com

We hear the term momentum investing a lot. Most of us don’t really understand it. What we understand is in momentum investing we buy stocks which are in momentum, meaning, stocks that are going up. But, there are different types of momentum. Absolute (Time Series) and Relative (Cross-Sectional) momentum are the two main types. Let us understand these two with two very simple examples.

Imagine you are taking a train ride. Relative momentum is wanting to be in the fastest train. So it compares the train speed with all other trains and tells you the one which is running fastest and you jump on to it. Sometime later you check again. And find out if it’s still the fastest. If some other train becomes faster, you switch to the other train. So in relative momentum, we rank the stocks based on their speed and quality of momentum relative to other stocks and select the top ones. And keep switching by checking periodically. 

In comparison, absolute momentum just checks if the train is running and running fast. It doesn’t compare with any other train. If the train slows down, we get off. If the train stops we get off. This train may be among the top ones on relative momentum criteria or it may not be. We are okay as long as the train is moving ahead at a decent speed. If we can’t find such trains we wait. 

What does it mean in practical terms? The entry and exit points and holding periods differ basically. To take a simple example, in one of our strategies that I use, we will exit a stock even if it is going up but it has become slower than other stocks. Due to this difference in entry and exit and holding period, it is expected to give a diverse set of stocks and the equity curve is expected to behave differently providing us with a diversified combined basket of stocks which has a smoother equity curve. 

It may appear the same because in any case, we are buying stocks which have been going up. The first sentence of Leo Tolstoy’s novel Anna Karenina reads, “Happy families are all alike; every unhappy family is unhappy in its own way”. Stocks also behave in a similar manner. They all look similar when they are in their bull phase. But when studied deep, there are a hundred ways of filtering them with different results. 

Gary Antonacci’s book Dual Momentum is a good read to explore this subject in a bit more detail.

Friday 9 September 2022


Multidisciplinary learning is one of the best ways to improve our investment acumen. Here is a summary of some of the best learnings of the week.

This week onwards, I am changing the format of the newsletter. Instead of sharing 5 articles each week, now I will share 3 articles, 1 audio/video and 1 quotation of the week that I am thinking about.

Do let me know our feedback on the changed content.

Intelsense Updates
I shared my thoughts with The Economic Times on the markets and the possible sectors that are likely to throw up winners in the medium-to-long term.
1. It’s supposed to be hard
Every investor knows, or should know, the truth about money management: More than 80% of professional investors underperform their benchmark (more depending on how you calculate it). Those stats are used in an often cynical way to show how the industry is broken, crowded, and ineffective.
But wouldn’t it be weirder if it were different?
Wouldn’t it be strange if every slightly ambitious investor could pick a few stocks and earn returns capable of generating dynastic wealth with other people’s money? Or even most of them? How and why could that world possibly exist? The reason Warren Buffett is interesting is because there’s only one of him.
About 1% of college basketball players make it to the NBA. That funnel doesn’t seem odd – no one would say college basketball is broken, or a scam, or ineffective at developing great players. It’s obvious that getting to the NBA is really hard, and you can be talented and still not make it. The entire reason pro sports are exciting is because the players do someone almost no one else can do. Michael Jordan is interesting because there’s only one of him.
2. Truth-seeking is important for self-improvement
Most highly successful people have been really right about the future at least once at a time when people thought they were wrong. If not, they would have faced much more competition.
Self-belief must be balanced with self-awareness. I used to hate criticism of any sort and actively avoided it. Now I try to always listen to it with the assumption that it’s true, and then decide if I want to act on it or not. Truth-seeking is hard and often painful, but it is what separates self-belief from self-delusion.
This balance also helps you avoid coming across as entitled and out of touch.
3. A little inefficiency is wonderful
Psychologist Amos Tversky once said “the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”
A successful person purposely leaving gaps of free time on their schedule to do nothing in particular can feel inefficient. And it is, so not many people do it.
But Tversky’s point is that if your job is to be creative and think through a tough problem, then time spent wandering around a park or aimlessly lounging on a couch might be your most valuable hours. A little inefficiency is wonderful.
Nassim Taleb says, “My only measure of success is how much time you have to kill.” More than a measure of success, I think it’s a key ingredient. The most efficient calendar in the world – one where every minute is packed with productivity – comes at the expense of curious wandering and uninterrupted thinking, which eventually become the biggest contributors of success.
Audio/ Video of the Week
The metaverse explained in 14 minutes.
The metaverse explained in 14 minutes | Matthew Ball
The metaverse explained in 14 minutes | Matthew Ball
Thought of the Week
Huge sums have been lost by investors who have held on to securities after the reason for owning them is no longer valid. In investing it is never wrong to change your mind. It is only wrong to change your mind and do nothing about it.
~Seth Klarman