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Friday 12 July 2019

Weekly Reading - Some Interesting Stuff

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

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

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

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

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

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Friday 5 July 2019

Weekend Reading - Some Interesting Stuff


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

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

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

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

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

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Friday 28 June 2019

Weekly Reading - Some Interesting Stuff


1) One business where Amazon failed
Amazon plans to shutter its four-year-old Amazon Restaurants delivery service in the US this month. Amazon started the food-delivery service as on-demand meals were becoming big business for tech startups, with companies like Postmates, DoorDash, Caviar, and Uber Eats competing to deliver food from restaurants to consumers. Others, like Sprig and Maple, went further, vying to both prepare and deliver freshly cooked meals. In the US, Amazon Restaurants was available for free to customers with a $119-a-year Prime account.
Restaurants aren’t the first delivery-based business to evade Amazon, which is otherwise a master of logistics. The company has famously struggled to make online grocery-delivery work, with Amazon Fresh still a niche player more than 10 years after its launch.
Food delivery is a tough business with complex logistics, labor practices that are often poor, and notoriously thin margins. Many of the hottest delivery companies in Silicon Valley just a few years ago have since gone out of business.


2)  A real simple guide to the controversial paper by Arvind Subramanian
This is a very well-articulated, yet simple article on what Arvind Subramanian has talked about in his paper on GDP mis-representation. A must-read.


3) Chennai is facing an unprecedented water crisis; and it can spread to all of India, unless we start acting fast
Rains have become more erratic because of climate change. That, coupled with a delayed arrival of the seasonal monsoon, which usually comes in June, has all but dried up Chennai's water supply. Government data show that the storage level in the four lakes combined is less than one-hundredth of what it was at this time last year. A severe heat wave gripping most of India, including Chennai, has aggravated conditions.
What's happening in Chennai could easily happen anywhere across India
Public institutions are suffering. Hospitals and nursing homes are charging more for services to cover the increased cost of water, according to the local press. There are also reports that toilets at schools are dirty due to a lack of water.
One thing that could have possibly averted this acute water shortage? Rainwater harvesting.
In 2002, the government of Tamil Nadu passed legislation that mandated rainwater-harvesting structures on all buildings, including private homes, in the city. The goal: to capture rainwater and store it for later use. It was a revolutionary idea. When the city got hit with heavy monsoon rains a few years later, rainwater harvesting raised the water table enough to last the city until 2016.


4) Understanding the psychological drivers behind the mistake made by Bill Ackman on Herbalife
Although this article does not deal with the psychology, it does provide the narrative of what happened in the Herbalife deal. I was thinking on the errors made by Bill Ackman. Incentive caused bias, endowment bias, commitment and consistency bias scream at me. That is why it is never a good idea to take a public stand on a stock and make its success a matter of one's own ego.


5) JP Morgan's view on how to navigate a cycle which may be peaking
JP Morgan is not suggesting that US is getting into a recession yet believe that investors should start taking precautions. Moving to higher quality bonds and equities is the first and most important step. Looking at investments from a yield perspective and moderating capital appreciation expectations is the next. The third is to look where the growth is. Trade war, global manufacturing slowdown and liquidity in markets are all marked as risks.

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Tuesday 18 June 2019

[ET Markets video ] Things to look at before buying a stock

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Friday 14 June 2019

Weekly Reading - Some Interesting Stuff


1) No more laundry - how will detergent companies handle this disruption??!!
Unbound is part of a broader wave of startups designing clothes that require less laundering. An eco-friendly brand called Pangaia, which launched late last year and already counts celebrities like Jaden Smith and Justin Bieber as fans, creates $85 seaweed fiber T-shirts that are treated with peppermint oil to keep the shirts fresher longer between washes. The brand estimates that this will save about 3,000 liters of water over the course of a lifetime, compared to a regular cotton T-shirt. Then there is menswear label Wool & Prince, which creates everything from $128 oxford shirts to $42 boxer briefs out of wool, all designed to be washed infrequently. Last year, the company launched a sister womenswear brand called Wool& that makes dresses that can be worn for 100 days straight without washing.

2) Alpha in investing is derived from behavioral psychology
Alpha is finance-geek speak for an investor’s skill that allows her to outperform an index. In a sense, all alpha is behavioral. Whether you follow an algorithm (set of automatic rules) to select investments, decision rules, gut feeling or all three. It is a human who is making the trading decisions. (Even an algorithm is programmed by humans, with all their biases and skills.)
The most direct thing individuals can do to reduce their negative alpha, is to trade as little as possible, minimize costs and above all, keep it simple. Behavioral alpha is about building our skills and knowledge about both the financial markets and our own decision-making processes. The first job is to avoid the costly mistakes.

3) A new digital bank in Brazil is shaking up the traditional banking industry
Not many people are familiar with Nubank, a digital bank that has become the most valuable startup in Latin America by extending credit cards to the unbanked and challenging the financial system of one of the world’s biggest markets, Brazil. Brazil is a particular opportunity — 55 million people there don’t have access to a bank, primarily in the country’s poorest households. Even Brazil’s own government has criticized the country’s banks for gouging locals for “excessive” profits, with the country’s economic chief saying this week that insufficient competition had led to a “cartelized” economy. The top five banks in Brazil, led by Itaú Unibanco, control about 82 percent of assets that are banked. Nubank announced last month that it was expanding to Mexico, where it plans to launch credit cards later this year. The company envisions serving millennial customers all across Latin America and possibly could represent a way for younger, internet-connected customers to avoid the bureaucracy found commonly in their home countries.

4) I have been wondering why I see a lot more bearded men all around these days. Two interesting articles giving a perspective on this.
The razor industry nervously recorded a 5 percent decline in sales last year as men’s shaving frequency has continued to decline; producers of shaving accouterments have tried to cut prices and diversify into new grooming products, having apparently accepted that our beards are here to stay.
We can thank the Global War on Terror and the reluctance of military leaders to impose discipline on special operations forces.The war on terror widened, and more tactical operators—Green Berets, Seals, Rangers—got explicit or tacit approval from military higher-ups for their beards while on missions in the Middle East and Southwest Asia, once-unheard-of exceptions to the services’ longstanding grooming regulations, which had posited that facial hair might run counter to good order and discipline. The evidence of this is the proliferation of beards in the military, which now extends to civilian society. We worship the post-9/11 military operator.

5) An investigative report on Eros International
Eros’s key Indian operating subsidiary had its credit rating lowered 10 notches to “default” by CARE ratings, the second largest Indian ratings agency. The issue, according to CARE was “a slowdown in collection from debtors”.
After extensive on-the-ground research in India, interviews with multiple former employees, and a detailed review of Indian private company filings, we believe the underlying problem is that a significant portion of Eros’s receivables don’t actually exist.
We have uncovered details of highly irregular related-party transactions. For example, Eros has directed $153 million to a supposed production company based in tiny office located in a residential Mumbai slum. The entity is operated by the brother-in-law of Eros’s Chairman and CEO.
We have also documented what we believe to be multiple undisclosed related-party transactions that appear designed to hide receivables.
It is hard to imagine Eros’s equity makes it out of this scenario intact. We expect the price of both the BSE and NYSE stock to end up worthless, barring some sort of bailout from a friend of Eros’s leadership.
In our opinion, this situation has arisen due to a complete failure of Eros’s auditor, Grant Thornton, to apply even basic scrutiny to Eros’s financials.

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Thursday 6 June 2019

Weekend Reading - Some Interesting Stuff

1) The chocolate we eat is produced by child labour and no one is doing anything about it
Mars, Nestlé and Hershey pledged nearly two decades ago to stop using cocoa harvested by children. Yet much of the chocolate you buy still starts with child labor. The farms in Ivory Coast  form the world’s most important source of cocoa and are the setting for an epidemic of child labor that the world’s largest chocolate companies promised to eradicate nearly 20 years ago.
About two-thirds of the world’s cocoa supply comes from West Africa where, according to a 2015 U.S. Labor Department report, more than 2 million children were engaged in dangerous labor in cocoa-growing regions.
One reason is that nearly 20 years after pledging to eradicate child labor, chocolate companies still cannot identify the farms where all their cocoa comes from, let alone whether child labor was used in producing it.


2) Puncture-proof tires, at last
Michelin is developing a tire called the Uptis (or Unique Puncture-proof Tire System), which is a tire that cannot ever go flat or blow out because it doesn’t require oxygen to stay rigid. Instead, the Uptis features an internal system of flexible spokes that support the tire.
Airless tires are not an entirely new idea. They already exist in the world of cycling, and even Michelin sells something called the Tweel for lawnmowers. The Tweel looks a whole lot like a mini version of the Uptis, with the same rubbery spokes in the middle of the tire. As the Tweel’s marketing materials explain, those spokes don’t merely replace the need for air, they work like mini shock absorbers, deforming to bumps to ensure a smoother ride than a bouncier, inflated tire offers today. Yet the car industry has been shy to adopt airless tires because, when properly contained, air is in many ways the perfect material for a tire. Air is virtually weightless, so it doesn’t impact a vehicle’s performance and efficiency. Air can also be hit with bump after bump and it doesn’t lose any structural integrity. After all, it’s just air.


3) We are eating microplastics!
Every day we are ingesting tiny, often microscopic pieces of plastic -- "microplastics" -- with our food, beverages and with the very air we breathe.
Those who exclusively drink bottled water rather than tap water can add up to 90,000 plastic particles to their estimated annual total.
The full impact on our health isn't known. Research shows some particles are small enough to enter our tissues, where they can trigger an immune reaction, or release toxic substances and pollutants absorbed from the environment, including heavy metals.


4) Overtourism is a new phenomenon
Late in May, the Louvre closed. The museum’s workers walked out, arguing that overcrowding at the home of the Mona Lisa and the Venus de Milo had made the place dangerous and unmanageable.
This phenomenon is known as overtourism. That has led to environmental degradation, dangerous conditions, and the immiseration and pricing-out of locals in many places.
The root cause of this surge in tourism is macroeconomic. The middle class is global now, and tens of millions of people have acquired the means to travel over the past few decades. International-tourist arrivals around the world have gone from a little less than 70 million as of 1960 to 1.4 billion today: Mass tourism, again, is a very new thing and a very big thing.
A number of places have implemented or expanded or proposed tourist taxes, among them Amsterdam, Bali, Edinburgh, Ireland, Rome, and Venice. These levies on hotels and day trips both reduce the number of visitors to a given place and provide it with revenue to improve infrastructure and defray the damage that tourists inevitably cause. Governments are also rolling out regulations, such as bans on tour buses in Rome and gating-and-ticketing in Barcelona.


5) Away, creating Instagram-friendly luggage, bets on the overtourism boom
The startup world has a new unicorn, and its name is Away. Away joins the ranks of other “unicorns” — private companies worth over $1 billion— like Slack and WeWork.
The global industry for luggage will be worth nearly $55 billion by 2025, according to one estimate by Hexa Research.
Away boasts a direct-to-consumer model that helps them stay out of the red. “We’re profitable on each suitcase that we sell,” Rubio told Yahoo Finance. In just over 3 years in business, Away has sold over a million suitcases— and is on track to make $300 million in revenue this year. It has plans to open 50 more stores in the next few years.


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Friday 31 May 2019

Weekend Reading - Some Interesting Stuff


1) Can cancer be treated by bioelectricity?
The human body—including the brain—runs on electricity - the movements of mostly positively charged ions of elements like potassium, sodium, and calcium.
Two recent meta-analyses concluded that amplifying the natural wound current with electrical stimulation prevented them all from getting worse, and even healed some of the worst ones completely. Electrical stimulation almost doubles their healing. Similarly intriguing results have been obtained for non-healing diabetic wounds—the kind that lead to the amputation of limbs, which usually leads within a few years to death.
Cancer is beginning to be viewed increasingly as a failure of communication; a misregulation of the field of information that orchestrates individual cells’ activities towards functioning as part of a normal living system. Individual cells “forget” they are part of a larger whole and treat the rest of the body as an environment whose resources can be exploited to feed themselves.
In 2013, Levin’s group showed that they could prevent or reverse some tumors in tadpoles by using drugs to target their bioelectric signaling. The same drugs could turn cancer on and off at a distance, by treating the environment, not the cells themselves.
The broader implication still is that within the next decade, we could learn enough about bioelectricity to change how cell networks communicate and make decisions about how they grow and develop. New computational modeling tools will be a major factor here.


2) China's food delivery app boom has an odd fallout - plastic
The astronomical growth of food delivery apps in China is flooding the country with takeout containers, utensils and bags. And the country’s patchy recycling system isn’t keeping up. The vast majority of this plastic ends up discarded, buried or burned with the rest of the trash.
Scientists estimate that the online takeout business in China was responsible for 1.6 million tons of packaging waste in 2017, a ninefold jump from two years before. That includes 1.2 million tons of plastic containers, 175,000 tons of disposable chopsticks, 164,000 tons of plastic bags and 44,000 tons of plastic spoons.
More plastic enters the world’s oceans from China than from any other country. Plastic can take centuries to break down undersea.


3) Sustainable growth is more important than PE multiple
The reason that Wal-Mart produced a fantastic return from 1974 to now is not that it was cheap relative to its present or near-term future earnings.  By the standards of 1974, it was actually a growth stock–priced at almost twice the market multiple.  In the current market, an equivalent valuation would be something like 30 or 40 times earnings–for a business with uncomplicated earnings that had already been in operation in Arkansas for three decades.  It produced a fantastic return because it was a fantastic business, with miles and miles of growth still in front of it.


4) The way to master more things is to simply focus on one thing right now
When you begin practicing a new habit it requires a lot of conscious effort to remember to do it. After awhile, however, the pattern of behavior becomes easier. Eventually, your new habit becomes a normal routine and the process is more or less mindless and automatic.
The counterintuitive insight from all of this research is that the best way to change your entire life is by not changing your entire life. Instead, it is best to focus on one specific habit, work on it until you master it, and make it an automatic part of your daily life. Then, repeat the process for the next habit.


5) Walk 5000 steps a day, not 10,000 for the health benefits
There's nothing magical about the number 10,000.
In fact, the idea of walking at least 10,000 steps a day for health goes back decades to a marketing campaign launched in Japan to promote a pedometer. And, in subsequent years, it was adopted in the U.S. as a goal to promote good health.
In fact, women who took 4,400 steps per day, on average, were about 40 percent less likely to die during the follow-up period of about four years compared with women who took 2,700 steps.
The benefits of walking maxed out at about 7,500 steps. In other words, women who walked more than 7,500 steps per day saw no additional boost in longevity.

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