Thought for the day
"The butterfly counts not months but moments, and has time
enough."
-
Rabindranath Tagore (Indian, 1861-1941)
Word for the day
Collywobbles(n)
A feeling of fear, apprehension, or nervousness.
(Source: Dictionary.com)
Teaser for the day
Why do e-commerce firms need to advertise so much on
conventional media like TV and newspaper?
Opportunity vs. threat
People scouting for opportunities to buy or sell stocks in
secondary market based on political changes or policy related developments need
to exercise extreme caution, in my view.
The policy changes emanating from the changes in political
regime, legal interpretations or social developments do create once in lifetime
opportunity and threat for the entrepreneurs who are invested or who wish to
invest in a particular business opportunity.
The changes usually also create opportunities for the workers
who could preempt the likely technological, financial and managerial
changes well in advance and develop the
necessary skills to avail early mover advantage in the new paradigm.
These changes sometime also create opportunities for speculators
who could rightly preempt the opportunity in the resource shift and place the
bets well in advance.
For traders who buy and sell stocks in secondary market for a
brief period, the opportunities arising out of political or legal changes are
mostly a function of luck. Anecdotally, I have found the luck mostly not
favoring the people seeking to make a quick buck from something that has
already grabbed the headlines in pink papers.
This leaves us to my community, i.e., people who are interested
in investing in good businesses, but for the paucity of time, skills and/or
resources we are contend with owing some share of these businesses rather than
controlling the ownership and management of these businesses.
Our commitment to these businesses is usually limited the good
times and rational market.
We do not usually stick to these businesses if they show any
sign of losing leadership in the spheres of market share, product quality and
acceptance, financial management efficiency, technology, innovation, etc.
We should not usually stick to these businesses when the market
participants show irrational exuberance towards the future prospects of such
businesses and start affording valuations that one would not normally associate
with such a business.
The question is whether the policy changes that are taking place
currently, due to changes in political alignments, legal interpretations and
social pressures present any investment opportunity for investors.
Before answering the question it is critical to understand the
changes that are taking place in the environment. We need to identify the
changes and assess whether these changes are sustainable to result in a
business and/or investment opportunity.
In my assessment, the changes that are currently taking place
present more threats than opportunities.....to continue
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