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Zeal to Read

Weekly Newsletter

Zeal to Read

Weekly Newsletter | by 2 | on 2021-01-24 06:00

At Zebu we spend a lot of time reading news and articles that cover a wide range of topics, including investment analysis, psychology, technology, etc. We have been sharing our favourite reads with clients under our weekly ‘ Zeal to read ’.
 

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” It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”     
— George Soros

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News you may use

Bank-Like Regulation for Top 25-30 NBFCs – RBI Discussion Paper Suggests

Consumer durables makers see growth across the sector

Defaults in Auto-debit fall in December – Transaction failures were 200 bps lower, at 38% of total auto-debits

Economic revival seeing phoenix-like rise, says RBI paper

Morgan Stanley Infra invests Rs 180 crore in LEAP India. The timber pallets and plastic utility boxes are used by companies in FMCG and beverages sectors, it said, adding auto companies use FLCs and crates.

NSE Acquires Market Data Terminal Firm Cogencis

Online retail majors focus on sprawling small retailer base to boost reach. Small retailers are chary about integrating digitally with larger players on grounds that it will give them access to their customer bases

Power demand touches new high of 187.3 GW as economic activity gains pace: Govt

Turnaround hopes for rupee fade over RBI’s stance on forex reserves. The rupee is under pressure to rise on heavy foreign inflow

Urban Demand for FMCG Up, finally– After 3 straight quarters of decline companies see strong growth in discretionary categories

Views may be of use

Charlie Munger on Change and Patience

“I’ve read Barron’s for 50 years. In 50 years, I found one investment opportunity in Barron’s, out of which I made about $80 million. For almost no risk. I took the $80 million and gave it to Li Lu, who turned it into $400 million or $500 million. So, I have made $400 million or $500 million out of reading Barron’s for 50 years and following one idea. That doesn’t help you very much, does it? I’m sorry, but that’s the way it really happened. If you can’t do it, I didn’t have a lot of ideas. I didn’t find them that easily, but I did pounce on one.”
Source: (https://novelinvestor.com/charlie-munger-change-patience/)

Personal Finance Philosophies

It can happen to you. Job loss, divorce, a string of disastrous investments, succumbing to your emotional flaws, being a victim of fraud, getting hit by a risk you didn’t see coming – to people in good financial shape these tend to be viewed as things that happen “to other people.” But they can happen to you. And given enough time, at least one likely will. Some are more susceptible than others, but no one is exempt from being humbled. (1) Save like a pessimist and invest like an optimist (2) No one is as impressed with your possessions as much as you are (3) Managing lifestyle can have the same impact on your net worth as increasing returns (4) Extreme adherence to an investment strategy is dangerous in a world that changes all the time (5) Most financial mistakes come when you try to force things to happen faster than is required (6) Investing ability is unproven until it’s survived a disaster
Source: (https://www.collaborativefund.com/blog/PF/)

Founders & Management Alignment

If you’ve ever founded your own business, you’ll know how important they become to you. For many business owners, their companies become like one of their own children; they nurture and guide them and then watch them grow, and feel every triumph and failure far more keenly than others who are not as emotionally invested within the business might. Some few decide to sell their businesses after a while, yet many others choose to stay with them, remaining with their ‘child’ over time to see it grow to maturity.
I’m sure you’ve heard the saying, ‘no one works as hard as the owner’, and this is largely true. No one does. Where other managers and employees might come and go over time, it’s the founder who is there, quite often seven days a week, plugging away at their enterprise, steering and guiding and leading it towards success. And it’s this commitment to the cause that often leads to remarkable levels of performance.
Source: (http://mastersinvest.com/newblog/2019/11/13/founders)

Creating a Decision Journal: Template and Example Included

Your Product is Decisions
In most organizations today, your product is decisions. By and large, your success will be the sum of the decisions you make over your career. The problem is it’s not easy to get better at making decisions. Bosses would be the easy solution to helping you improve. After all, they have the best view of the problem and you. They should be able to point out strengths and weaknesses in your decision process as well as your judgment. All of this is known at the time you made the decision. This is hard and subjective and requires people doing a lot of thinking. So bosses tend to default to resulting, a process by which the outcome of the decision is attached to the process used to make that decision. Under resulting good outcomes are the product of good decisions and bad outcomes are the product of bad decisions. The problem isn’t that people don’t want to get better at decisions, it’s the system that’s preventing them from doing so.
Source: (https://fs.blog/2014/02/decision-journal/)

Valuation analysis and the market capitalization
When we speak of valuation-indifferent investors, we mean investors for whom valuation is not part of the process. They either will not, cannot, or choose not to consider valuation as a factor.

Will not: Index funds are the most obvious valuation-indifferent investors.  In fact, to the extent a stock is overvalued, index funds are required to buy even more of it.  Passive investing has become so prevalent that passive index investors are no longer price-takers, buying at the prevailing price set by active investors engaging in a vigorous effort to determine the correct value, but rather price-makers. Their demand sets the price. From our perspective, price-making rather than price-taking calls into question the entire premise of passive investing. 

Cannot:  A second group of valuation-indifferent investors are the new masses of retail investors, who simply have no training or competency in valuation.  Historically, their influence has been limited by stock-brokers or financial advisors who determine suitability and provide advice.  Today, no advice or suitability is needed.  Download an app and start trading, commission free. Log onto the app and it will give you a “free” share in a highly speculative stock to get you going. Many in this group think an “expensive” stock is one that trades at $100 a share and a “cheap” stock is one that trades at $5 a share.

Choose not to:  A third group of valuation-indifferent investors are professional investors who have decided that valuation is not part of the process. As Howard Marks described in his recent memo “Something of Value,” the attitude is to “hold on as long as the thesis is right and the trend is upward.” This investor group thinks it’s unproductive to consider if the market capitalization exceeds even the best-case estimates of the present value of future earnings by an order of magnitude. This goes far beyond buying growth at a reasonable price or even growth at any price. It takes the traditional advice of letting your winners run to its logical extreme
Source: (https://www.valuewalk.com/wp-content/uploads/2021/01/Qlet2020-041.pdf)
 
50 Most Influential Seniors
Doing a list is fun. Though often thankless. But once he had the filters ready, it was simple. So we were only looking at people above 60 years of age, as on January 1, 2021. We were looking at people who we believe had a significant influence on not just their own industry in general but the world at large. And, yes, we didn’t consider politicians and those in government.
Source: (https://seniorstoday.in/other-stories-for-seniors-citizen/50-most-influential-seniors)

Note: the above material is neither investment research, nor financial advice. Zebu Share and Wealth Managements Private Limited [SEBI Registration No: INZ000174634] does not seek payment for or business from this email in any shape or form.

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