Here is Aswath Damodaran Narrative on why markets are going up and it is very insightful to watch.
Watch were you plan to live and be prepared for any events that might arise in a lifetime …
This video delves into the:
- Impending debt servicing crisis for many small and emerging economies, who borrow heavily in foreign currency
- How the massive quantitative easing, cash transfers and bond buying by the US Govt. and Fed won’t help stoke consumer demand.
- How the marginal impact of stimulus packages has been going down over the years.
- Weakness in the commodity markets prior to the COVID crisis. How the crisis is just accelerating damage to companies/countries dependent on commodities (Eg. Brazil - top 5 exports are commodities).
- For many small businesses, operating on a think margin, a ~20% drop in revenues is the difference between a profit and a loss. Consumers will tighten their purse strings, companies will reduce wages and lower CAPEX in anticipation of lower revenues in the immediate future. So the speakers think that a credit crisis is on its way.
- We may see deflation + drop in consumer demand. That would be disastrous for companies/countries with leverage.
What stuck with me the most is:
For many small businesses, operating on a think margin, a ~20% drop in revenues is the difference between a profit and a loss. So the speakers think that a credit crisis is on its way.
If you think about it, once the lockdowns are lifted we will start seeing headlines like ‘XXX demand is back to 80% of pre-COVID levels’. But that may not be sufficient to keep many businesses or some sectors solvent.
What’s pumping up the market?
181 pages of Peter Lynch’s Articles for Worth Magazine from 1993-1999
Vijay Kedia: Beware! A new breed of gamblers has taken over D-Street, warns Vijay Kedia - The Economic Times Vijay Kedia: Beware! A new breed of gamblers has taken over D-Street, warns Vijay Kedia - The Economic Times
Similar view from billionaire Cooperman…
India Consumer Sector
The big city problem: COVID’s uncontained spread extends hit to consumption
Recent webcast Monish Pabrai recommended book which is recommended to him by Li Lu (Other half of micro economics) written by Richard Koo. Pls watch his old interview( 2010) very insightful and match with current situation.
Neeraj Marathe CFA Practioner insight it is really good listening https://www.youtube.com/watch?v=F2N4Eve3XNQ
THE ALPHA SERIES
EPISODE 15 Free
Forensics in Investing
Ashwini Damani, Senior Analyst, Ratnabali Investments
Ashwini is a Finance professional with 10 years of experience in a wide variety of roles such as the Finalisation of Accounts, Due Diligence, and Corporate Law. He has been cutting teeth in Equity markets since 2007 being an Independent analyst primarily managing personal/family investments.
https://indianinvestingconclave.com/recordings/78
Agenda
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Common Characteristics of Wealth Destroyers
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Potential Red Flags in Annual Reports
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A Simple Checklist to Identify Potential Frauds
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Analyzing EPC Co.s & their Accounting
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Case Studies
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Best Books on Forensic
It is human nature to want to avoid signs that show we’re wrong or contradict prior views – confirmation bias also and for the same reasons leads us to see evidence that confirms we were right and to revolt against or be blind to evidence confirming we are wrong. It is technically the tendency to “accumulate pride” and “shun regret” to motivate us to be more confident and keep trying….which worked great for our far distant ancestors hunting gazelle for the high payoff protein justifying many failures. But it hurts us in markets going up against The Great Humiliator, of which I’ve written so often.
1) The innings that changed Indian cricket forever
One of the greatest innings of modern times began 18 minutes past 11 o’clock with no television camera to record its brilliance. A bareheaded Kapil Dev, in a full-sleeve sweater and droopy moustache, “squinted up at the sun”, wrote R Mohan in Sportstar, as he walked in to bat.
In his hands a Slazenger V12. On his mind thoughts of survival. A few minutes on, Yashpal Sharma’s dismissal left India at 17 for 5.
Walking in at No.7, Roger Binny remembers Kapil saying: “We’ve got 53 overs to go.”
2) A sneak peak at the developments of manufacturing artificial organs, at scale
Betting on success for growing organs, Kamen compares scaling their manufacturing to the way Silicon Valley turned an understanding of semiconductors into creating transistors so small and cheap that the tech industry now churns out phones by billions. “So I thought, why don’t we do the same thing for living tissues,” he says. “There ought to be a way to make a high quantity of them, a high quality of them, and at a realistic cost for the American public that’s in desperate need when they have an organ failure.”
https://onezero.medium.com/the-segways-inventor-has-a-new-project-manufacturing-human-organs-7a6a2da7c8f4
3) The phenomenon called Robinhood
Robinhood took the trend to its logical conclusion — trades that cost $0 — and converted it into an opportunity to connect around money with members of a 90-million-strong generation. It was shrewd: Not only is it easier to reel in newcomers than to peel users away from other services, there’s an opportunity to make them lifetime customers, gradually adding new (fee-based) services. That’s why lots of businesses, including brokerage and financial firms, are interested in young HENRY — “high earners, not rich yet” — clients.
https://marker.medium.com/how-robinhood-convinced-millennials-to-trade-their-way-through-a-pandemic-1a1db97c7e08
4) The Big Cycles - Ray Dalio’s mega serial soap opera continues
I am not a fan of Ray Dalio. I think he tends to oversimplify complex situations and overcomplicates simple ones!!! Nevertheless, this storytelling on the long cycles is good learning. Also, would urge everyone to read Niall Fergusson’s The Ascent of Money or watch the documentary on youtube (link: - YouTube). The documentary does have some stunning visuals and shooting locations. Worth the 4-odd hours.
Chapter 4: The Big Cycles of the Dutch and British Empires and Their Currencies
5) Cyber-mercenaries on the rise
Israel is a world leader in private cybertechnology, with at least 300 firms covering everything from banking security to critical infrastructure defense. But while most of these firms aim to protect companies from cyberattacks, a few of them have taken advantage of the thin line between defensive and offensive cybercapabilities to provide clients with more sinister services.
The privatization of this offensive capability is still in its infancy. But it raises broad concerns about the proliferation of some very powerful tools and the way governments are losing the monopoly over their use. When state actors employ cyberweapons, there is at least the prospect of regulation and accountability. But when private companies are involved, things get more complicated.
“If you want to take down a plane, if you want to ground air power, you don’t go through the front door, the cockpit,” said Ben Efraim, a former fighter pilot. “You go after the airport. … You go after the logistics systems. You go after the iPads the pilots take home.” There are no “stand-alone entities anymore—everything is part of a network,” Ben Efraim added.
Chinese bond issuers have resorted to creative means to avoid defaults:
- Delaying coupon repayments
- Paying only interest and delaying principal repayments
- Reaching out to investors privately and urging them to take a haircut
- Issuing new debt (at a higher interest rate) to pay off old debt. In some cases the new debt is short term debt, which means the company would have to rollover the debt at the next due date or default on its payments, unless there is a drastic improvement in economic activity.
Technically points 1,2 and 3 constitute a default, but a formal default has been avoided.
https://www.euromoney.com/article/b1m2zp7kc6kpr7/chinese-bonds-issuers-cloud-the-meaning-of-default
Real default risk will surface out in December- March Qtr. US companies are in financial desasterous condition for which market keeping blind eye but buffet not!
https://www.fitchratings.com/research/corporate-finance/loan-default-rate-approaching-4-on-imminent-energy-bankruptcies-19-06-2020
In this context I recommend this documentary
It is about a software virus developed by (allegedly) Israel to destroy centrifuges in Iran’s nuclear facilities. The virus ultimately spread beyond Iran and was tracked down by private anti-virus companies. Until its discovery, the virus had managed to delay Iran’s nuclear program for ~2 years.
EDIT: Its available on YouTube https://www.youtube.com/watch?v=PJBBRUraKgo
Latest memo from Howard Marks - It’s interesting to read!
Great article on the rebound on the market and what it means for investors
Came across this article on pharma here. Not sure which thread to post it on. Moderators can take it off or post it to the right thread. Apologies for the inconvenience.