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Reads: Synchronized Tightening, Buffett Letter, Marketing Amortization and more


Think before you buy with a credit card: The taxman will track individual spends. (SmartInvestor)

Buffett’s annual letter to investors. A lot of stuff there I don’t agree with, in the sense that it’s not the only way to invest. But it’s made him a substantial amount of money, and good for him! As usual though, great investing letter. Remember, read what Buffett says, but don’t bullshit yourself that it applies to anything beyond just that; unnecessarily broad usage of statements like “don’t lose money” have lost people more money than dear old Noida Toll Bridge. Do what works for you.

Professor Bakshi talks about the relative unattractiveness of Relaxo footwear after it went up nearly 65% in about six months when he first pitched that it’s a cool company. The Bakshi Effect? Can’t underestimate the power on a low volume stock!

(Note: I went through the analysis and wasn’t very confident about amortizing ad spends over three years. That’s very dangerous territory for me – amortising marketing spends is what gets EVERYONE in trouble because there is hardly any evidence that marketing in year x has an impact in year x+3 if there is no spend in years x+1 and x+2! If you ignore that and do the same calculations, you get a roughly 3x return, a 12.5% potential return for the 10 year risk of making incorrect assumptions. But nice momentum on that stock!)

Maruti Suzuki shares have been falling after it tried to convince investors that getting cars made in a factory owned entirely by one promoter, Suzuki, was a good thing. My view: It is a good thing if there is no evil in this world, but there is.

The emerging world is making a huge mistake by contracting monetary policy at the same time, says Ambrose Evans-Pritchard. (HT @goyal_ash) Synchronised Tightening (sounds like an Olympic sport) is okay for a country in isolation, but a hugely negative thing when done in coordination, he says. I still think it’s a better thing for emerging markets than runaway inflation, which is the fire to Synchonised Tightening’s frying pan, if you will please excuse the idiom abuse.


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