ANP301191

@formthirteen you made my week, I have it on repeat

Speaking to family in Mumbai (who thankfully are safe), the situation in Dehli is replicated in Mumbai. Even in April/May 2020 at the peak of it in Mumbai, there was some availability of oxygen or beds, today even doctors are unable to get family members admitted. While respecting the need to keep politics out of it, the gross incompetence shown by officials in opening up India and declaring victory so early while not replenishing oxygen or other necessary healthcare supplies has really shown a weakness in governance in India from public health officials/politicians. What frightens me even more than the actual case counts in India is the food inflation, which has begun to skyrocket, which will lead to a vicious cycle of people who are hand to mouth needing to work to feed their families and then getting sick and spreading the disease even further. Another question I have been asking: where else has this strain migrated to? I have read of cases in Belgium, HK, France, UK all linked to India via people who have travelled in the past few days. I would guess its only a matter of time till it starts showing up in local populations or other countries.

Trimmed RBC, CAT and bought ATM puts on HON, DE, FITB.

@LC - I agree with you, i think the question isnt so much AI or even what the world looks like in 2100, but what it looks like in the nearer term. I think automation will kill so many millions of jobs that the developing world will struggle to maintain social order. I remember taking a history of empires class in college, and one of the key ideas (or so the professor argued) behind the fall of empires was social unrest and the inability of the "elites" to continue to maintain social order. I would argue that the same could take place today if there were millions of people who could not find jobs because a robot could build the same item at a fraction of the price with a fraction of the mistakes. I guess this is when people will start screaming for a universal basic income to ensure that everyone can "survive", though I think there is a solid argument to be made that it already exists in parts of Europe. So then my question becomes, at what point do we stop existing as a capitalist society and turn into something else? And if we become something else, following on from @tede02 question, do we even need growth?

Great question. Noticed a lot of BRK as part of the allocation - is there no management risk in the future? Not wishing ill on anyone but Warren Buffet and Charlie Munger may not be around for the full 15 years, Berkshire has not gone through a transition in its current form. For me its MSFT, DIS and TCS (Tata Consultancy in India). No idea of what the returns would be, but I am pretty confident they wont be anything like the last 15 years so will be happy with high-single digits.

Added some LVMH (EPA: MC)

Not that I am extremely active in India, but I have done a few small start up/VC investments there and I would ask the following questions: 1) as you alluded to, industry is in a bit of a mania so prices will be extremely high, but also the VC/angel scene in India is a bit of a mania as well. The money that is available to invest is exponentially larger than 3-5 years ago. More and more founders are actually asking people what the "x" factor they can bring with their money is. And in such a hot industry, I would be asking "Why me?". If the idea is good, there should be a line around the block to invest in it. 2) In terms of culture - I would ask a couple of things - where is the business located and who are the advisors (official and unofficial) that the business is using to help them grow. I have invested mainly in the Bangalore and Mumbai/Pune ecosystems. I can tell you from experience, the difference between those two ecosystems is pronounced and from my discussions with friends and other investors, the differences in other parts of India are even more pronounced. I tend to put a large value on this variable due to previous experiences. 3) In terms of fraud/checking if the company is what it says it is - I would approach it in a couple of different ways. If it is a very small company, chances are it will have a link to an incubator/accelerator or angel network if only to help it raise capital. Most of the companies I invested in were from these ecosystems, which gave me the ability to speak to other people who had previously invested/looked at the business. If the company is a larger company, then it probably has raised money from somewhere, I would look for someone on the cap-table to speak to. I would specifically look for smaller/non-traditional VCs where I could potentially speak to the person leading the investment (in the larger firms, they tend to be more guarded about any investment knowledge they garner). In my opinion the market in India has gotten too hot over the past two years (though I know of people who have been saying the same thing about the Valley for several years as well), so I would tread with caution. I would also ask how/when you will get the money back? Liquidity events in India have tended to be buy-outs by larger companies rather than large IPOs, which puts in additional cyclicality into your exit strategy and may impact your timeline. Finally I would ask whether the founder is actually capable of making this a success, because in India IP rights are not as strong as they are in the West, and if this is successful, you should bet that one or more of the motorcycle manufacturers are going to make a similar product and economies of scale theory suggests it will be cheaper. Does the person you are investing with have the necessary foresight/vision to outcompete on a very uneven playing field. What I have found in India is that its often the service start-ups that are more competitive than the manufacturing ones simply because of the speed to market/distribution issues. That being said, you only need to be right once so this may be that case. Best of luck either way.

While I dont share your time horizon for investments in general (though it is a goal of mine) - I think culture is a key attribute for longer-term investments as well. I agree with SD that culture matters much more when the company is private or if the management is under the control of larger shareholders. Many of my larger positions are in the Tata group of companies in India (Tata Consultancy and Titan being amongst the largest). While there have been many companies in India who have done better than these companies from a simple total return perspective, the value add that management brings is undeniable. In my personal experience, management guidance are typically more grounded in reality (especially when comparing with direct competitors in India). Investor questions, feedback, ideas are taken on board, whereas in other enterprises there is a lot more pushback. And when you speak to lower-level managers or employees they value their positions at these businesses more and as a result I imagine will work harder for the company. But all of this is partially due to the fact that Ratan Tata retains a significant influence on the operations of all the businesses (even though he does not have anything like a majority stake). One only has to look at his actions with regards to employees in the aftermath of 26/11 or during the Covid crisis. I do not think that the culture would be as strong, as unified, or as deeply rooted were it not for a member of the Tata family having such influence. I would add that while culture is important everywhere, it is more important in opaque markets where there are weaker regulators. I think the culture impact of a TCS for example is a higher value variable for me as compared to culture in an American/European/Japanese/Australian company, simply because of the opacity of the Indian market and the weakness of regulators in Mumbai to control the markets. I sleep sounder at night knowing I am a Tata shareholder than I would if I was a shareholder of the same exact company without the Tata culture.

Bought Ping An (HK 2318)

Bought some CURI as well. LC can I ask whether you truly believe the ancillary businesses add value for the next 2-3 years, I was seeing it as a pure "Non-Fiction Netflix"/content creator, as far as I can tell they havent actually signed anyone up for the "sponsorship" business yet. Also picked up some Reliance and Infosys (ADRs). Surprised that all the EM "hype" hasnt led to stronger demand in Indian bluechips, but expecting it to come at some point. And market is significantly undervaluing the Jio platform and the ability of Mukesh Ambani to extract every once of value out of the Indian consumer base. What ticker are you buying for Reliance Industries ADR? RIGD - London based I think (GDR not ADR sorry but still traded in USD).

Bought some CURI as well. LC can I ask whether you truly believe the ancillary businesses add value for the next 2-3 years, I was seeing it as a pure "Non-Fiction Netflix"/content creator, as far as I can tell they havent actually signed anyone up for the "sponsorship" business yet. Also picked up some Reliance and Infosys (ADRs). Surprised that all the EM "hype" hasnt led to stronger demand in Indian bluechips, but expecting it to come at some point. And market is significantly undervaluing the Jio platform and the ability of Mukesh Ambani to extract every once of value out of the Indian consumer base.

Looking at this from a completely different perspective - both the EU and Japan are actively buying corporate bonds. Just this week the ECB basically restated that last week. I think the BoJ is still buying equity ETFs (can't verify it as the last articles I found were from Jan). Yet both countries don't seem to have much (if any) inflationary fears. I understand that the US economy is bigger/far more robust/has a more diversified core than either the EU or Japan. However, I think the current causes of inflation (as far as I have read) seem to be raw material prices which lead to higher prices of manufactured products leading to general inflation. The EU and Japan import the same sorts of things that the US does, from the same countries, with the same raw materials prices. So if inflation does strike the US, shouldnt the market just weaken the dollar versus its trading partners and reregulate itself? And a little bit of inflation would probably help the US government and the average American with 92K of personal debt (https://www.cnbc.com/select/average-american-debt-by-age/). I am not so much a student of economics as you can see from above, but logically, with declining labor and automation making things cheaper, shouldnt the fear be stagflation? In fact, just speaking anecdotally, I know of tons of businesses who are relooking at their workforce requirements (mine included) because the pandemic proved that we can work from home/automate certain roles, without much disruption. I appreciate the concern about rampant or high-inflation, but honestly, dont see it happening today with the mentioned risks above (maybe being a little bit stupid or naive).