"Flowers are restful to
look at. They have neither emotions nor conflicts."
— Sigmund Freud (Austrian,
1956-1939)
Word for the day
Eldritch (adj)
Eerie; weird; spooky.
Malice towards none
In a country where even the
statements of senior ministers are often brushed aside as "personal
view", not the official stand of the party or the government, why a map
published by some sundry publisher should be a matter of "national
interest" or "sedition".
First random thought this morning
In one of the popular David Dhawan flicks, the heroine initially
falls for the bad guy. She would not listen to any sane advice, not even her
father. It was only towards the climax that she realizes her mistake. All ends
well but not before a great deal of drama is enacted. There is no suspense. All
viewer could exactly anticipate the endgame; and there are no surprises in the
end.
The traders in Indian equities are much like the front row
audience of that movie. They are clapping and whistling at the good, enjoying
the rhetoric of the bad, showing no nervousness of anxiety - anticipating that
all is inevitably gonna end well.
But what if this script has some twist in the tail?
Colletral damage
In my view, the bigger ecommerce story is unfolding in B to B
segment. This story is likely to grow much bigger in the times to come.
Unlike the mostly half baked and over-enthusiastic ideas in the B
to C space, the enterprises in this space are founded on strong ideas based on
innovation and commercial viability. Intellectual property is a key valuation
element in this segment and forms a major entry barrier.
Unfortunately, I do not find any investing opportunity in this
segment where a small investor like me could fit in.
I was perhaps little early in anticipating the colossal damage
that would eventually be caused as we approach the day of judgment in the whole
ecommerce mania. Like a stupid who reaches the venue of an Indian wedding well
in time, I have been subjected to uncharitable adjectives and ridicule. But
being a veteran of NBFC mania of mid 1990s, Dotcom bubble of late 1990s and
cheap credit fueled bubble in reality and infra space in mid 2000s, I still
prefer to be early than being late.
Undoubtedly, this time the direct exposure of household investors
to this mania is not significant. To this extent one could argue that bursting
of this bubble may not hit financial markets with same intensity as the
previous ones.
I am really not sure about this at this point in time. But, I
certainly see huge collateral damage whenever this bubble bursts. For example,
consider the following:
(a) The sector has emerged
as one of the largest provider of incremental employment, particularly to
semi-skilled youth. A burst in this bubble will leave many of them unemployed;
with little chance of alternative employment. Most of these are contract
laborers with no social security, little savings, relatively higher personal
expense level and high aspirations.
The pain will be much
higher as compared to burst of first dotcom bubble where the unemployed were
mostly middle class skilled people and employable elsewhere.
(b) Though the business
model is equity based, many of these companies might have working capital and
equipment loans from banks with little or no realizable value.
(c) The stability and
growth in commercial real estate space in past couple of years is mostly driven
by ecommerce ventures. The burst will surely hurt the sector, and consequently
the lenders too.
(d) Fancy salaries and
perks in the sector might be driving a part of sales of luxury housing, big
cars and other premium articles. Expect a material slowdown there.
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