"It is not enough to be
busy. So are the ants. The question is: What are we busy about?"
—Henry David Thoreau
(American, 1817-1862)
Word for the day
Nimiety (n)
Excess; overabundance. E.g.,
nimiety
of mere niceties in conversation.
(Source: Dictionary.com)
Malice towards none
Will Congress both Assam
& Kerala; and with that the claim to be a National Party?
First random thought this morning
Five key takeaways from the recently concluded T20 World Cup: (a)
The shortest version of the game is inarguably the benchmark now (purist may
please excuse me); (b) West Indies has definitely re-emerged as a major force
in the international cricket (Is basketball declining in the Caribbean?) ; (c)
Bangladesh has restored the balance in sub-continent, that got disturbed with
decline of Pakistan (look forward to more bi-lateral business with the eastern
neighbor as Mirpur emerges as new Sharjah); (d) Afghans are strong and look
natural at the game (get some of them in IPL); (e) India will have tough times
ahead.
These views are personal and very strong. Arguments are not
welcome.
Strategy
Continuing from last week (see here
and here)
I would like to share my thoughts on the investment strategy for the likely
next economic and therefore market cycle.
I have mentioned it earlier that in my view this cycle is likely
to be much longer both in terms of time duration as well the distance benchmark
indices would be covering through the cycle.
(a) Consumption
will remain the dominant theme in my equity investment portfolio. However, I
would focus more on consumable services, e.g., telecom, transportation &
logistics, health, education, organized retailing, entertainment, banking etc.
On product side, I
will continue to focus on discretionary products, especially aspirational one.
The complication here is that while the strategy may sound good
for academic discussions, there are few actionable ideas to implement the
thoughts.
There is no denying that on society level, we are still not used
to pay for services. The cases of complaints and agitation against free (or
very cheap) non-basic services are not uncommon. Given this complication, there
are very few private service providers of some scale. These service providers
are (a) either expensive (being in short supply) or unviable (due to
overregulation).
I would look at some market leaders in retailing, entertainment,
service oriented banking, transportation & logistics, and healthcare sectors.
On product side, I would like to focus on aspirational products
like lifestyle drugs, beer, premium liquor, household upgrade (lighting, tiles,
plywood), luxury housing, premium automobile, packaged food (non-basic), etc.
(b) Technology will also remain
a core theme in the portfolio. However, focis will be on innovators, designers,
and engineering services. I would mostly avoid body shops.
(c) I would completely
avoid SME players in industry and construction space, unless they own some
niche IPR or designing capabilities.
(d) Global inflation trade
shall be back during this cycle. A balanced portfolio would therefore require
commodities to be included. I am inclined towards commodity processors rather
than resource owners at this point in time. For resources, in due course I
would prefer to trade directly in respective commodities, rather than buying
the equity in the resource owner.
(e) A stable INR and rate
regime may guide this economic cycle. I therefore do not see any material
investment opportunity in currency and bond markets. Though there might arise
occasional trading opportunities.
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