Friday, April 28, 2017

30,000 is Just A Number

So a lifetime high for the Indian markets !!I have stopped counting.A lot of other stockmarkets across the globe are also at or near historic highs.

The last Two Years have seen a sustained drive to new highs matching the spread of the BJP in the political landscape of India.

This is also that time when even those with no relation to stocks or financial news talk of great things and how they have started investing too and how things look really truly positive which actually is never true.There are always some dark clouds on the horizon.

It does not presage to be totally pessimistic.More dangerously,it does not pay to be outstandingly positive either !

Liquidity by Central Banks has driven stock prices higher and it does not seem that this tap will be quickly turned off.Keynes was always for deficit funding but I dare say not at the cost of  fiscal discipline which many keynesian supporters seem to be forgetting.Valuations have gone up with earnings yet to catch up and I see many IPOs lined up at exorbitant sums and the demand to lap them up continues?

As a Fundamental value investor I may feel negative about (a)valuations (b)prices (c)PE ratios but the trader in me wants to follow the old dictum of 'THE TREND IS YOUR FRIEND".

Right now the trend is positive and any dips should be an opportunity to invest.But opportunities rarely stay the same.A small slip by the US armada or a moment of madness by North Korea's mad dictator could turn geopolitics into the World War III.China's issues with almost all neighbours,Spratly island,Syria,Iraq all hold the seed of a terrible future.

Details of Tax cuts announced by president trump,British relations with EU post BREXIT,the bonhomie between Russia and China are to be watched.

In India with interest rates very low,many companies are raising a lot of capital without any visible avenues of deployment or rising sales?yet I am heartened by the Startup bubble leaking and the over the top values toning down although I see many startups without a disruptive idea still commanding(or pretending to command)high prices.

Even well known ones like BigBasket and Grofers do not have enough manpower to service demand as I found out myself post demonetisation in the November - December period.Yet they have recieved millions of $ in funding but the services are pathetic.Will skeletons tumble out of startup founders cupboards because some of them have started thinking that they are beyond questions and can burn cash any way they feel as with the Stayzilla case.

I have been slightly positively surprised by Adityanath's handling of the Chief Minister's chair in Uttar Pradesh but this harsh rhetoric and 'hard hindutva' is disappointing.

In a democrasy it so often becomes the Tower of Babel,yet,every citizen has the right to choose what to eat,drink,wear of SAY.That is non negotiable.That is what separates this idea of India as a Nation from Pakistan or China or Libya or Saudi Arabia.

And we should keep it thataways.Keep investing in solid businesses,Infrastructure looks like picking up.India will always need good roads,warehouses,resthouses for its vast hinterland and topography composed of mountains,deserts,tropical jungles and plains.

It is our responsibility to uphold that legacy.

Monday, April 3, 2017

Brand Resurrection.....Can it Really happen ?

The middle of the 20th Century,post independence,few companies and fewer brands jostled for mindspace.I mean,you could count the brands with the digits of both hands.As recently as the 1980s.

Most people drove an Ambassador(or Amby for short),wore HMT watches,drank Campa Cola and cooked with Dalda or Postman oil !!

Offcourse there were many others besides but in each sector there were not more than THREE top brands.

Ambassador owned by C K Birla group recently sold itself to Peugeot of France for a pittance.Dalda is long forgotten and more remembered as an unhealthy vegetable oil that gave Indians coronary disease.HMT is bankrupt. Campa Cola dead.

Murphy, Konica , Premier Padmini , Dyanora ,Binaca.....the list is endless.

Yet some businesses have refused to give way,change with the times and manage a toehold.An Onida is trying to revive flagging sales,Nirma still has marketshare,Lifebuoy by HindLever re invented.

As an investor looking for 'value picks',are there some other brands that could revive and become competitive,win marketshare,sales and ultimately give their companies a stronger balance sheet?

Many Tata,Birla,Hindusthan Lever and ITC brands have prospered with time.

Internationally too there was Compaq and Enron and TWA and Arthur Anderson and Woolworths and General Foods....

What is it about brands like Amul,Maggie,Glucose D and Maruti that have endured.Majority have disappeared from view that within two generations people are unable to recall.

Hidden in each story is a lesson.That is not what this blog is about.We want another Bata that staid banal shoe company that not just survived but thrived and diversified and the stock price went from  Rs 72 on 3rd January 2000 to Rs 561 on 3rd April 2017(I have not accounted for dividend,Bonus or split)

I am looking at brands that survived and might even have the capacity to resurrect themselves(offcourse with help from their promoters) and us as investors enjoying a windfall.

One can be a stock market "SHERLOCK" sometimes  !!!!