Curiosity@Intelsense
Weekly dose of learning
1.
Kiril Sokoloff on his belief that it is now time for India
In 2017, we put out a recommendation that we thought the Indian stock market would be the best-performing market in the world over the next ten years. That is coming to pass. There’s probably more excitement and energy here than anywhere in the world. I was present at the opening up of China, and I saw how a civilisation that had been suppressed for hundreds of years and all of a sudden it opened up the floodgates gates and said “it’s all right to make money, go for it.” A similar thing is happening here in India. This is India’s time, India’s moment.
I think India has a unique opportunity to lead the world. The West has led for hundreds of years, and their time in the sun is over. It’s eroding in Europe. It was eroded with two World Wars, and America is consumed with disunity and dissension. Its foreign policy is struggling and India has an opportunity to come and to lead the Global South specifically. 88 per cent of the world’s population has not had access to the economic power that the 12 per cent had for the hundreds of years. I think India should be non-aligned and take advantage of what China can offer, what the US can offer. It is the fastest growing major economy in the world, and I think that’s going to continue. If the US is slowing down and capital flowing into the US diminishes, as I think it’s going to sometime next year or so, more capital will flow to India.
2.
Real life is different from the classroom
There is a certain category of decisions that work well in the classroom but not in real life. I call these chalkboard decisions. These decisions tease us because the math always seems correct.
The problem is that most decisions are less about the math and more about judgment. The math always points to the optimal immediate decision, which is rarely the best long-term decision.
Consider paying off your mortgage. With 2% interest rates, the spreadsheet will tell you it doesn't make sense to pay off your mortgage. Instead, put the money you would have used to pay off your house in the stock market. Assuming an 8% return, you'd be much better off.
The math in chalkboard decisions is irrefutable. And yet, the best decisions are often based on positioning yourself for things you can't see.
What if we have a pandemic? What if the stock market drops 20% or 30%? What if mortgage rates rise 10%? Can you handle these events with equanimity, or will circumstances force you to do something you don't want to do?
I see the same thing in business all the time. The math says lever up, reduce inventory, pay your employees as little as possible, charge your customers as much as possible, and take advantage of the weakness of your suppliers. You don't need to look far to see companies who take this approach. In the short term, these decisions almost always seem optimal. In the long term, they almost always fail.
If it helps to visualize chalkboard decisions, imagine standing at the base of a 2000m mountain with two paths in front of you. You can only see the next 100m of each, and one path looks easier. If you only consider what you can see, you'll choose the easier path. Only after you walk the first bit do you realize that choosing the easiest visible path leads to a cliff and doesn't take you where you want to go.
Our ability to predict the future is never as certain in the real world as in the classroom. No matter how compelling the math, the best chalkboard decision might not be the best overall move.
Pic of the Week
Thought of the Week
“The highest form of wealth is the ability to wake up every morning and say, ‘I can do whatever I want today.’ People want to become wealthier to make them happier. Happiness is a complicated subject because everyone’s different. But if there’s a common denominator in happiness—a universal fuel of joy—it’s that people want to control their lives. The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.” ~ Morgan Housel
Video of the Week
Intelsense Insights
DISCLAIMER:
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
SEBI Registered Research Analyst - Cupressus Enterprises Pvt Ltd - INH000013828.
Registration granted by SEBI and certification from NISM does not guarantee the intermediary's performance or provide any assurance of returns to investors.
Good one as always. Thanks for sharing the curation.