Skip to main content


Showing posts with the label Thoughts

Great Businesses Stay Great

Great businesses continue to be great and not so great businesses continue to be not so great.  When we look for businesses to invest in and find these great businesses that gained market share over the years, grew strongly, stayed highly profitable, and generated handsome shareholder return, most of us doubt whether these businesses will continue to perform the same way it did in last decades or so.  We ask whether they have reached a point of maturity and are set to decline from here. But most research suggests that, these great businesses continue to be great longer than we normally estimate. And most not so great businesses continue to be not so great.

Economies of Scale in Biology 🐘 and in Businesses πŸ—

Economies of Scale in Biology 🐘 and in Businesses πŸ— I am currently reading a πŸ“™ book titled "Scale" by Geoffrey West who draws a parallel between how organisms and buisnesse/economies/cities grow and evolve.  The following ideas are taken from that book. 🐘 Elephants are roughly 10,000 times heavier than πŸ€ rats and they have roughly 10,000 times as many cells. So, how much energy ⚡ do you think the elephants would need to stay alive compared to that of rats? If you think linearly, you would say, 10,000 times what the rats need. But in reality, the change in energy needed as per the change in size of the animal doesn't go linearly. For elephants to stay alive, they only need 1,000 times the energy needed for rats, even though elephants are 10,000 times larger than rats. This represents extraordinary economies of scale as size increases, implying that the cells of elephants operate at a rate that is about a tenth that of rat cells. Businesses also operate in a simil

Everything Changes, Some Things Repeat

We are currently living in an extraordinary time. Three years back the world was shaken by a pandemic that forced people to stay inside, keep their businesses shut and mourn lost lives. With time we figured a way to gradually get back to normal. Billions of people got vaccinated. People started going out. Businesses started running as usual. But we truly did not get back to normal. Many economies around the world were still struggling to recover from the shockwave. Supply chain was disrupted. Suddenly there was surge in demand worldwide but not enough supply. Prices shot up from the bottom. Then Russia invaded Ukraine causing another major blow to the already wounded supply chain. Fuel price skyrocketed, wheat price broke record, a new kind of crisis emerged. We saw zero interest rate and record level money printing from the big economies. From there we are now experiencing inflation at a new high. Central banks all around the world are now raising interest rates at a pace never seen b

Floating and Focused Attention in Writing

While reading the book "How to Take Smart Notes" by SΓΆnke Ahrens I came across this distinction between two types of attention: Floating and Focused. In the steps of writing, be it a long thesis or a short article, keeping the whole process distraction free (or at a minimal distraction) is a key prerequisite. The environment we put ourselves in make a big difference. The setup, the surroundings and the steps we follow dictate our efficiency in putting up a good piece. We need to take good care of our attention. But different steps in our writing process demand different types of attention. For many of us, writing starts with floating attention. We start working on a particular topic. We read from different sources on the same or relevant topics. We take notes. We play with different ideas and look out for interesting connections and comparisons. At first, these ideas seem distant from each other. Playing with these ideas on the desk or off the desk, we find connections among

Investing: A Curious Journey

My investment goal (here mostly talking about equity) is to make money and build wealth and more importantly own shares of businesses that I am keenly interested in and find value in owning them. I don’t see any point of owning the shares of the businesses I don’t understand regardless of the upside potential people seem to see in them. In the beginning of my investment journey, I did own businesses I didn’t understand or care to understand. I didn’t have patience and enough urge to practice curiosity in the journey of investment. There was no strategy. It was a real test and I learned the hard way. Gradually as I maneuvered through the investment world, I started getting the fun of owning businesses that I understand and can keep track on. I also understood what was important and what was not for being a good investor. Being a sell-side equity analyst for last three and a half years, I realized that the excel models and granular processes to derive the forecasted numbers are less im