If you are reading this, you will know how to reach me. If not, twitter @rajspace
P.S – Due to issues with wordpress media library unable to add pictures to the post.
I was unable to attend a cousin’s wedding during Covid times in early 2021. The missed opportunity was the catalyst for this letter. It has been edited for public reading without diluting the essence. I review & update it annually since then. Here is latest one updated on 6-Aug-2022.
Check this out – http://bit.ly/5moneychoices / Download PDF version
You are welcome to share feedback and queries in twitter @rajspace
16 Oct 2021
Posted by: Rajiv in: Finance & Investing
Price of 1 share of ITC is Rs 257 (as of 14/10/2021)
The share represents part ownership in the business (not a piece of paper or line in the demat account)
In FY2019, the share generated Rs 7.60 in cash
In FY2020, the share generated Rs 9.90 in cash
In FY2021, the share generated Rs 8.70 in cash
All the cash generated belongs to the owner of the share. It is paid out as dividend or retained in the company. Difference is:
In FY2019, the share generated Rs 7.60 cash. 5.75 was paid out as dividend & 1.85 was retained by ITC. (7.60 – 5.75 = 1.85)
In FY2020, the share generated Rs 9.90 cash. 10.15 was paid out as dividend & 0 was retained.
In FY2021, the share generated Rs 8.70 cash. 10.75 was paid out as dividend & 0 was retained.
(In FY20 & FY21, dividend is more than cash generated. Where did the excess come from? It came from past retained earnings.)
In the 1980 letter, Warren Buffet explains “the value of those retained earnings is determined by the use to which they are put and the subsequent level of earnings produced by that usage”. Later in the 1990 letter, he calls it “forgotten-but-not-gone” earnings.
Majority in the markets are not happy with ITC’s use of the retained earnings. The perception is forgotten-and-gone, up in the smoke of a cigarette! Hence the stock price has under performed in the past 5 years.
What about the minority in the markets? They have, in Tom Russo’s words, the capacity to suffer. A necessity to win in auction-driven markets.
Disclosure: Invested since pre-Covid times.
15 Oct 2021
Posted by: Rajiv in: Finance & Investing, Opinions & Thoughts
Ram: Markets are at an all time high… so many stocks doing superb! Wish my portfolio was better
Shyam: What do you exactly mean by “markets are all time high”?
R: Look at the Nifty & Sensex. Nifty is up 26% in the past 6 months, 31% YTD. Sensex is up 26% in the last 6 months, 28% YTD. Just yesterday, it was up 1%!
S: So by “markets”, you mean the indices – Nifty & Sensex. Isn’t that good? We are all benefiting
R: Not really or at least I don’t feel that way. My portfolio is not.
S: ok, let’s draw an analogy. India is playing well and expected to win the world cup. Which of the 3 bets will you make?
If you bet on A, then you are being a contrarian. You may lose the bet this world cup but could be the winner in the next. (this doesn’t make sense in cricket and most things in life but in investing it does. This is one reason investing is simple but not easy. It “doesn’t make sense” to a centuries-evolved human brain)
If you bet on B, it’s your portfolio versus the index. (large majority of investors including fund managers struggle to win over the index consistently)
If C, betting on India as a team means betting on the Nifty or Sensex. If “markets” go up, you benefit. If “markets: go down, you lose. There is no dichotomy of markets (aka indices) v/s my portfolio. index = portfolio.
R: So, which bet has historically worked the most in investing?
S: There are no right or wrong bets. One can bet on all 3 options, equally or varying weights. World cup ends and a winner emerges. Markets are perpetual. Hence the winner is different in 1 day, 3 months, 1 year, 5 years, 10 years, 20 years.
The question is what is your time frame? T20 or one-day or test?
17 Jan 2021
Posted by: Rajiv in: Opinions & Thoughts
Last week I had the opportunity to share my thoughts and experience with about 70 students from University of Mysore. The theme was life in the Indian IT Industry in 2021 & beyond – emerging trends in the industry & how to stay competitive as a professional.
I enjoyed the journey through the memory lane to distill the highlights. Here is a short summary:
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I am fascinated by the shipping industry. 90% of world logistics happens through maritime. 100s of seafarers are held hostage at any given time and hardly any of us care! The TED talk I have watched the most times is Inside the secret shipping industry by Rose George. In a connected world, only 10% of freight ships have internet available for its crew. I subscribed to the Shipping Podcast by Lena Gothberg a couple of years back & happened to listen the interview of Reshma Nilofer last week. She is a maritime pilot (India’s first woman) at Kolkata Port (Syama Prasad Mookerjee Port Trust) & recipient of the Nari Shakti Puraskar in 2018 from the Indian president.
1 insight:
2 experiences:
3 ideas:
Link: https://shippingpodcast.com/154-reshma-nilofer-maritime-pilot-kolkata-port-trust-india/
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Micheal Saylor, CEO of Microstrategy, came up in my radar when I was developing deeper interest in bitcoin (reading this & listening to this). In Aug 2020, Saylor invested $250 million in bitcoins using Microstrategy’s cash in the balance sheet. An investor buying bitcoins is one but a business owner of a publicly listed company making a corporate treasury decision is serious.
1 insight:
3 ideas:
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31 Dec 2020
Posted by: Rajiv in: Opinions & Thoughts, What did I Learn
I have not watched a single episode of Seinfield nor his standup comedy. I did not know how popular he and his shows are! Then why did I add the Tim Ferris interview of Jerry Seinfield to the listen queue?
1 insight:
2 experiences:
3 ideas:
Following books were referred to: Is This Anything? by Jerry Seinfield, The Last Laugh by Phil Berger, Body for Life by Bill Phillips, Seriously Funny by Gerald Nachman
Link: https://tim.blog/2020/12/08/jerry-seinfeld/
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25 Dec 2020
Posted by: Rajiv in: Opinions & Thoughts, Technology & Internet, What did I Learn
In the 2000s, Contest2Win was a significant Indian internet success story & Alok Kejriwal was the brains behind it. I looked up to Alok in those days. Hence was curious to hear to his thoughts & what is he up to recently.
1 insight:
2 experiences:
3 ideas:
Link: https://www.youtube.com/watch?v=UKK5YbDP48k
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Founded in 1559 by Maharana Udai Singh II as a capital of Mewar kingdom. Surrounded by the Aravali ranges, the Jagdish Temple of Lord Vishnu, the City Palace, Lake Pichola are the places to begin your visit. Be at the city palace by 9am to beat the crowds.
Lake Pichola is man-made, built in 1362AD by a trader, not a king. It forms part of the sophisticated lake system of other artifical lakes such as Fateh Sagar.
If you like to include a cliché or two, use the public transport to reach Sajjan Garh/Monsoon Palace for sunset
Chittorgarh, 120km from Udaipur, was capital of Mewar kingdom until Akbar’s siege.
Will go again for:
– Hand-made art/crafts
– Lakes and forts
– Bhel puri
Will not go again for:
– The dust
– Expensive
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