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Tuesday, December 23, 2014

Fear Is The Third Derivative

I have been reading the brilliantly lyrical Running Money by Andy Kessler,listening to Reshma sing 'Challa' while looking at the green and red ticks on the NSE - BSE terminal.

The First Derivative is Speed.The Second Derivative is acceleration.
- Andy Kessler

The mighty economies of the west are a shadow of their ersatz glory.The Bengalurus and Mumbais are creating wealth.Moving away from the  barrier broker by the Industrial Revolution.When a Facebook's valuation is almost equivalent of the Top 5 Fortune 500.


From huge machinery led fabrication units called factories to diode lasers and packet switches that help speed up the internet traffic and leading to the increasing networth of companies whyou have never heard of!

Is creating wealth in this century easy?Could I take my Harley out for a spin across a continent or two a la Jim Rogers and find investment opportunities?Oil hunters in Russia?Or find a product to sell to C K Prahlad's 'bottom of the pyramind'who earn less than $4 an hour?

With expectations from the Indian markets high on new political equations,isn't it the time to ask ourselves where the next great investment opportunities will come from?An Indian Tobacco Co(ITC) that has 70% of its balance sheet revenue from things other than tobacco products!

Businesses have become complex organizations with different products.

And FEAR(sorry to disappoint cause it aint an acronym for anything just Fear....fright...!!)

Fear drives innovation.Fear of other competitors,fear of market share,fear of becoming irrelevant.

And the biggest fear of all.....Off not being able to predict the future.But then who really has?

Are the real innovators,innovators?Or Historians?

The Harappan civilization,5000 years before the birth of Christ had a working knowledge of trigonometry and engineering.Go to Dholavira in Gujarat and see for yourself if you do not believe me!So who can claim inheritance to discovering the sciences.

We take a thing,we mould it,put it to a different use and voila.....a new product!Is Uber and Ola....taxi services or aggregators?

"An exception does not prove the rule.It breaks a generalization".

Yet so much still happens by accident,partners meeting on a suburban train and building a Fortune 500 company.Forgetting about a stock in your portfolio for 15 years and finding that its become a mega multibagger due more to happenstance and less to 'intelligent investing'.

In violence was Earth created and that remains in our genes.90% of the brands of our childhood have vanished.The typewriter,the mouse,the landline telephone are obsolete.But do things really change or do they come back in a new form.The Mathematician has his own theories and the Economist his own.

Everything changes.Nothing lasts in the same form.

CHANGE is certainly the third Derivative.