Food for Thought

Food for thought

Centurian way to a Successful Life

Charlie Munger on What you should not do to have a fairly sucessful life?

Simple Few Points Summary
Top 5 companies in USA by Market capitalization

1. Apple
2. Microsoft
3. Amazon
4. Alphabet (Google)
5. Facebook
They constitute 20% of the total S&P 500.
They are also 42% of the total market of NASDAQ.
From 23Mar2020 low of 18592, Dow Jones is at 26672 as on 17July2020 (Up by 43%)
Gold vs Sensex - Surprise Winner is Gold

In the last 15 years from 1Mar05 to 25Jan20, Gold returns in INR terms stand at 13.3% CAGR as against Sensex returns at 13.2% CAGR for the same period.
Considering the yearly returns, Gold has outperformed Sensex in 8 years out of the last 15 financial years.
Power of Compounding
Box Office Collections CY2019

Avengers: Endgame = 366

War = 318

Kabir Singh = 278

Uri - The Surgical Strike = 244

Bharat = 209

Housefull 4 = 206

Good Newwz = 201

Mission Mangal = 200

Total Dhamaal = 154

Kesari = 153

Chhichhore = 150

The Lion King = 150

Dabangg 3 = 150

Saaho = 149

Super 30 = 146

Dream Girl = 140

Gully Boy = 139

Bala = 116

De De Pyaar De = 102
Putting Growth Into Perspective

1) Usually, companies that grow are usually more valuable than companies that don’t.

2) In the case of a company that earns below its cost of capital: The faster it grows, the lesser it’s worth.

3) Companies that earn more than its cost of capital, create value.
Rewarding Shareholders

Shareholders reward come from

"Dividends and Capital Gains"

Capital Gains = Sale - Purchase

Selling can be done through

exchange, buyback, open offer, delisting

Buying can be done through

exchange, IPO, rights issues, OFS
What is Free Cash Flow?

It is simply the money available with management to do one of the following:

1) Buy back stocks
2) Pay down debt
3) Acquire other business
4) Pay Dividends

This is one of the very important parameter of investing.
A sustainable fall in interest rate?

The interest rates in India are declining consistently due to lower inflation domestically and globally.
This brings opportunity for entrepreneurs whose capital cost will come down but may create problems for investors seeking fixed returns.
Predicting with consistency? Give up please

From 1945 to 1991, the US economy went through nine recessions. How many investors would have predicted even some of them with any degree of consistency.

"Forecaster may tell you a great deal about the forecaster; they tell you nothing about the future" -WB
Demand-Supply bearing on stock prices

The prices of companies in stock market more often get affected by the demand vs supply as against it fundamentals in the near term.

As an example, today Bandhan Bank rose by 20% on news of it being included in the MSCI Index.
Fact-based worldview

Though the world faced huge challenges, we have made tremendous progress. However, it is the overdramatic worldview that draws people to the most dramatic and negative answers to fact questions. Peolpe constantly and intuitively refer to their worldview when thinking, guessing or learning about the world. So if your worldview is wrong, then you will systemnatically make wrong guesses.

Overdramatic worldview is so difficult to shift because it comes from the very way our brains work.

- Factfulness
World Population

Population Across Time Periods

Year 1800: 100 cr
Year 1930: 200 cr
Year 2030: 800 cr (est)

It took 11800 years for the population to reach 100 crores. However, from year 1800, in less than 200 years, population would have crossed 750 crores
Highest Rate Cuts by RBI in 10 Years

RBI has further cut Repo rate for the 5th time in CY2019 and cumulative rate cut of 135 bps (1.35%). It is certainly a relief for the borrower but depositors may have to explore other options as Real rate of interest is very low.
Efficiency From Technology

HDFC Bank grew its revenues from Rs 60000 crores in FY16 to nearly Rs 100000 crores in FY19. A jump of nearly 60%.

But, the number of employees of the bank remained nearly the same.

Why? Adaptation of techonology and improvement of processes
Is the money in bank intact?

Checking bank account balance is a global phenomenon. This behaviour may be prevalent as people want to periodically reassure that their money is safe. With the advent of tele & mobile banking along with ease of internet, this has become even more impulsive.
Top 10 oldest Stock Exchange In The World

1. The Amsterdam Stock Exchange, 1602

2. Paris Stock Exchange,1724

3. Philadelphia Stock Exchange, 1790

4. London Stock Exchange, 1801

5. Milan Stock Exchange, 1808

6. New York Stock Exchange, 1817

7. Frankfurt Stock Exchange, 1820

8. Madrid Stock Exchange, 1831

9. Toronto Stock Exchange, 1861

10. Bombay Stock Exchange, 1875
World Pin Code 1-1-1-4

The world population in 2017 is said to be distributed as:

Americas = 1 billion

Europe = 1 billion

Africa = 1 billion

Asia = 4 billion
Top Box Office Collections CY2018

Sanju = 343 crores

Padmaavat = 302 crores

Simmba = 240 crores

Robot 2.0 = 190 crores

Race 3 = 170 crores

Bagghi 2 = 166 corers

Thugs of Hindustan = 146 corers

Stree = 130 corers

Raazi = 124 corers

Gold = 110 corers

Sonu ke titu ki sweety = 109 corers

Raid = 103 corers

Andhadhun = 100 corers
Education, Mothers & Mortality

It is not doctors and hospital beds that save children lives in low income countries. Beds and doctors are easy to count. Politicians love to inaugurate buildings. But almost all the increased child survival is achieved through preventive measure outside hospitals by local nurses, midwives, and well educated parents. Espcially literate mothers.

- Factfulness
What is DIPAM?

Department of Investment and Public Asset Management (Dipam) to carry out strategic sales of public sector units (PSUs)

We will keep hearing the word Dipam in media for the next 3-5 years as government looks to be taking some serious actions in terms of selling partial or full stake in some PSU.