Trends - Macro, Price, Culture, Fundamental


(phreak) #1

There are trends all around us - Some dying, some thriving, some busy being born. It could be macro trends, price trends, culture trends or just fundamental shifts in thoughts and ways of life.

For Eg.

Macro Trends

Globalisation - Pharma & IT Outsourcing, Chinese Manufacturing
Interest rate trajectory

Price Trends

Commodity price trends - The recent Carbon products - CTP, CPC, Graphite Electrodes, Paper, Sugar cycles
Crude oil
Basmati rice
Renewable Power - Per Unit cost

Culture Trends

Netflix watching middle-class
More Air-conditioners in middle-income households as Per-capita nears $10k USD
Frequency of families eating out
Content consumption on mobile devices
Pre-school education
How often did you eat Biryani a decade ago vs now?

Fundamental Shifts

Blockchain and the shift from central ledgers to distributed ones - Distrust & difficulty in watching the watchers.
Offline to Online commerce
Electric Vehicles
Protein vs Carb consumption as economy grows

I might be a bit all over the place here so please excuse me. The idea is to capture trends - short/med/long and ideas to see what markets are expanding, what new markets are being born and which ones are contracting beyond repair.

I couldn’t find another thread generic enough to capture trends although such discussions happen in the Commodity & Cyclical plays and sometimes in the Nifty P/E and the recent LTCG threads and some just are non-existent. It may not be a bad idea to have one thats a container for trend ideas and related discussions. I have started off with some which were swimming in my head.


(phreak) #2

Here’s one which I penned today for my blog that sort of triggered the idea for this thread.

Is it just me or have the protests/riots of late declined/declining YoY? I expected stone-throwing/bus-burning after the cauvery verdict. Now that 48 hours have passed, I guess the critical time for leverage has passed and the amount of money that went into the protest/riot business has come down. It is understandable because the same money is now powering online protests/riots. If Social media was blamed for Muzaffarnagar riots - it was a sort of an online business aiding an offline business. Now the entire business has moved online. Call it the uber-isation of riots.

See it from an investment standpoint - People who would hesitate to throw a stone at a riot can post memes with unverified facts, sometimes hiding behind anonymity from the comfort of their living room without downside risk (you could get arrested in a riot). People participation is higher and there is a significant network effect. More influence in thought per rupee spent.


#3

I don’t think, the protest/riots are declining in India or anywhere, only the triggers are changing.

It is also depends on education level and culture of the receiving end of the effect of particular event or verdict.
So we must take that into consideration while predicting events.
A politician will spend his money, if he knows he can benefit from the rioit. If he thinks he will not get desired result he doesn’t spend.


(Claude Sylvanshine) #4

Good points. Just wanted to mention that Amazon Prime’s proliferation within middle class India would appear more relevant than Netflix considering a greater proportion of regional and local programs content. I saw some market share data recently which showed that Prime has overtaken Netflix on the market share front.

Regarding EVs there are challenges galore in a country like India as firstly the EV stations need to be backedup with power and if you are going to continue to use fossil fuel based inputs to power these EV stations what does that do to already precarious environmental standards? Alternatively some might pitch solar power as a fast emerging prospect but then again volumes tend to be highest during the mid point of the day and then tail off towards the end of the day (as you would expect) so it isn’t really a sustainable 24/7 option to power these stations. Be interested to see how things change for the better on the EV front.


(Gaurav Agarwal) #5

(shreys) #6

@phreakv6
I came across this discussion today. And, I genuinely appreciate the quality of the thoughts penned by you. India is, without an iota of doubt changing, some changes are for the better, some for the worse. India’s growing economy has led to the improvement in the lives of millions of people. But, societies on the whole are becoming unequal.
Unequal societies lead to poor health and an overall state of negativity.
The major reason being the psychosocial element. An unequal society leads to a lower social capital. By social capital I mean the collection of trust, cooperation, reciprocity. And a reduced social capital leads to stress. Increased stress levels are known to cause various problems which don’t warrant elucidation. And, high stress levels lead to stress induced aggression displacement. Also, increased inequality leads to secession of the wealthy from the average person. Secession of the wealthy will lead to tax avoidance. The reason being that government spending for the average person won’t benefit the rich. They wouldn’t want to participate in any action that doesn’t benefit them. Hence, they’ll look for ways to avoid taxes.
So, basically, prosperity will bring with itself stress and increased violence in the not so prosperous sections of society.


(phreak) #7

I was watching the video above and it reminded me of my short trip to the middle east early this year. I was surprised when I found that the locals preferred to dine at McD, KFC, Hardees, Pizza Hut and Dominos more than their local cuisines. No matter where you are in the city, you couldn’t be more than a 5 kms from a McDonalds. It is amazing how these American business which don’t really have a strong cuisine of their own like the Italians and French do, could do so well in the food business. But then this is not restricted to just the food business, they are the same way in pretty much every business they are in, be it tech, food or clothing.

Take Apple since 2003, Facebook since 2008, Google Since 2000, Amazon since about 2010 and the most recent in Netflix from about 2015. Its very, very apparent when Netflix entered India in 2016 that they are set for the same trajectory as a Coca Cola, Amazon or McDonalds. They had a bit of a sedate start but last year when the billboards for Stranger Things started going up all over Bangalore, it was even more apparent this company is all set for some phenomenal growth thanks to the 4G penetration, smartphones and disillusioned youth. What makes these businesses special?

Desirable Products engineered to satisfy the senses, Brands to hook, create and sustain habits, Network Effects to spread far and wide like flu within the society, Moats to protect the products, Expansion to make the whole world your market and over time the pricing power would follow as well. With US growth having matured and at steady state and US having the power to create money out of thin air (thanks to their Military) ever since the Gold standard was removed in the 70s, these businesses are able to borrow and expand as they wish, exporting their inflation outside their borders in return of returns. Most times they don’t even have to spend on advertising! The Hollywood films US has been exporting have familiarised us with most of these brands already. I still remember the mile long queues outside McDonalds when they first came to India. What more can a business ask for?

Why am I posting this here? This trend of American businesses taking over the world is compounding year on year steadily and is at a stage where the visibility of growth is very apparent in day to day life in the last 20 years - which is a small number of years when compared to where we are since the industrial revolution, and is nothing when compared to when civilisation dawned on the planet or when life itself began. Seen from that perspective, this is very much an emerging and evolving trend that can play out in many ways. Will the US continue to get a free rein on markets worldwide which has been crucial for their companies to expand or will other countries wall themselves like China and emphasise their own cultures (which makes it hard for businesses from outside the borders to thrive) and create their own businesses that imitate and compete? This is where business and trade meets geopolitics and the outcomes could greatly influence which businesses would be winners in the future.


(shreys) #11

In my opinion, the success of American brands begins with people’s aspirations. Life in America, a land of opportunities, is considered ideal by most people around the globe. In societies other than North America and Europe, those who’ve achieved success and reached the zenith of socioeconomic status, utilise American products and services to strengthen, reify the heairarchy in their native societies. Consumption of American products begins as a status symbol and later, thanks to a decent quality, becomes a necessity.
What I’m sharing is strictly anecdotal. No study corroborates my observation.
In the case of Starbucks, when it was initially launched in India, people flocked to Starbucks, clicked photographs, posted it on social media and relished the attention it garnered.
Eventually, a Starbucks coffee become a need.
So, graduated from a status symbol to a need.
And, this is a moat that’s hard to fight.
In this case people don’t care if they’re paying 3x as much for the coffee cup. It has occupied mind share that’s next to impossible to erase.


(Gagan) #12

Thank you @phreakv6 for starting many valuable threads on this forum! learning a lot :slight_smile:

here are my 2 cents

Digital Trends:

Thanks to Jio, India’s data consumption habits are developing rapidly, and India emerged 2nd highest data consumer in the world after China, although per capita consumption is still low as almost 60-70% of the population still don’t have access to 4G Mobiles(High-speed data), but 4G phones costs are falling fast & cheap phone are available, and left out population will also come online quickly.

Hence there is a huge runway ahead & trend is sustainable for few years(minimum 5-7 years), and to my understanding, digital consumption trends look recession-proof and political uncertainty proof.

Below are the companies which are part of my Digital basket.

  1. Shemaroo
  2. Saregama
  3. Matrimony.Com
  4. Quick Heal tech

Disc: Invested in all of the above-mentioned co’s, I intend to stay invested as long as the trend remains strong + companies remain profitable, it’s not a recommendation.


(rkveni) #13

Not sure if this is relevant here…

I came across this nice webinar by CARE Ratings on Aggregate Corporate / Industry Performance trend YoY… Thought will share here:
https://www.youtube.com/watch?v=pa7aobPRxD4