Another very interesting interview of Kenneth with Nirmal Bang. Apart from what I mentioned in the previous post, here are the new insights that I garnered.
- Be scared when the smallest guy in a booming industry is making money and if the industry is becoming more and more fragmented
- Don’t try to find cheap stocks in an overvalued industry as that stock is probably cheap for a reason, and if industry dynamics mean revert, this guy will be killed
- Three major costs apart from material cost and their trends over the next decade:
– Salary: Believes that wage inflation is not coming back over the next decade
– Interest: Believes that interest rate will be lower over the next decade
– Electricity, power & fuel: Steeply declining and believes that it will stay lower
– All this might lead to a mean reversion in profit margins