Macro Understanding has been a typically weak area at VP, as in the initial days we made our mark from bottoms-up stock-picking. But as we mature as investors, we come to the realisation quickly that basic awareness/appreciation of Macro-Economic drivers and Market Cycles are an equally important part of our Investor Learning Curve. Probably the one last hurdle, that always keeps us humble! (as we strive to keep getting better & better at the investing game).
We can use this category to post articles and data-points and excerpts from leading Macro Investors. We are NOT trying to be Macro Investors ourselves, but looking to integrate some of the big picture top-down, thematic understanding of how the Economy & Markets are moving today, and sort of crystal-gaze a decade from now.
This is different from other categories in that the Actionables - will be more on drawing our attention to Thematic changes underway, medium to longer term indisputable trends/data-points, that we can hope to CATCH ON early, and validate through our independent and VP-wide pan India Scuttlebutts.
Thanks for starting this thread. I’d been looking for some thread around Macros in VP. This gives me an indication that there’s none. I’d love to understand the interplay of Macros and sectors in India. For the purpose of this thread, I mean macro to be beyond Macroeconomics and incorporate major factors that effect economic status-quo.
If we can use this thread to hypothesize our world view (and more specifically India view) for the coming 2-5 years, we can make more informed decisions across our value portfolios.
As a conversation starter, I’d love to understand scenarios for each of the following hypotheses of as E.g.
Hypothesis 1: Quantitative Easing → Inflation → Value stocks growing faster than growth stocks
-How likely are we to see QE vs raising funds through Disinvestment? What would be considered growth stocks in India? Higher PE ratio doesn’t necessarily point to back-weighted cashflow for a company, so are there any sector levelviews here?
Hypothesis 2: New wave of Tech stock IPOs will create a new breed of companies to track vis-à-vis NASDAQ tech counters.
-Can India’s tech IPOs create a huge mark in Indian Markets? With Zomato, PayTM, Delhivery, Mobikwik, Policybazaar and many other Pvt tech firms considering listing, how do we see value flowing? Will this new portfolio of companies attract new flow of investments into the market or absorb capital from existing stocks? Any particular sectors to bear the brunt of this replacement?
Hypothesis 3: Runaway commodities and WPI inflation?
Do we see another super-cycle? Is India better or worse of than rest of the world when it comes to the supercycle? How will sectors cope with higher input costs and which industries are worst suited to pass of the cost to consumers? Do commodities with net-export profile fare better than the net-import commodities?
Hypothesis 4: Covid is here to stay
-How does world evolve to accommodate Covid in the way of life? How do we see Air travel / Hospitality / Personal space services evolving?
Hypothesis 5: What does it mean to be China +1
How does that change the macro factors in India. How do labor / environmental factors / Trade deficit-surplus equations / Tariffs / Infra spending… get effected. How to make most of this undercurrent?
And many more…
If any VP veterans have a better framing of the Macro discussion, would love to hear your opinions.
