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Life is a highway
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Life is a highway

... with ghats

Shyam Sunder
May 29
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Life is a highway
stockviz.substack.com

In my younger days, I used to take the night bus between Bangalore and Mangalore while visiting my folks there. The toughest part of the 6-hour journey was crossing the “ghats” - a dozen vertical hairpin bends in the middle of the night with oncoming traffic.

Ghat Roads - Wikipedia

The bus operators typically run the route with two drivers. One of them is the ghats specialist and the other one handles the rest. Driving the ghats is all about intense focus for a couple of hours - think of it as a sprint. The rest of the stretch requires someone who can manage traffic for 4-5 hours - a marathon, if you will.

Investment management is a bit like the Bangalore-Mangalore road trip. You spend most of your time on straight highways - bull markets where stocks drift higher. But for a short period of time, you’ll have hair-raising hairpin bends - bear markets where stocks go crazy.

Since markets spend most of their time in bull markets, most managers are experts at highway driving. When it comes to navigating a bear, the best they can do is hang onto their jobs. i.e., not crash.

As an investor, it is important to know what you are paying for. Managers who outperform everybody in a bull are unlikely to survive a bear. Its just not in their DNA. Similarly, those who come out on top of a bear rarely go on to outperform when the market turns.

The most glaring example is Wood vs. Buffett.

Wood’s probably not going to survive this bear but Buffett is never going to “ride the next wave.”

Investors should know what they are getting into before they pick active fund managers. It is a three way bet on the driver, the bus and the road.

Markets this Week

It looks like the flavor of the season are export bans and windfall taxes. India banned the export of wheat, restricted the export of sugar and rice is probably next. Oil producers, who were staring at the abyss of negative oil just two years ago, are now the new villians who are making obscene profits at the expense of the common man and should be taxed.

This madness will continue until something breaks.

Links

Covers of The Economist and Time Magazine that point in a direction for a particular asset class are contrarian. They work as contrary indicators in both directions. (mbrentdonnelly)

Twitter avatar for @TCII_BlogThe Conservative Income Investor @TCII_Blog
In 1902, the NYSE began trading stock in Philip Morris & Co. Ltd. This was the greatest investment opportunity in the history of the United States, with 247,500,000% returns to date. The dividends have been so extreme you'd own the company 5x over if you tried to reinvest.

May 26th 2022

75 Retweets690 Likes
Twitter avatar for @ecommercesharesWasteland Capital @ecommerceshares
@pachos The only thing an investor truly controls is risk. You have no influence of where something trades or how a business develops after you buy it, but you are (in public markets at least) fully in control of how much you lose.

May 29th 2022

5 Likes

The Delhi smog was caused by farmers burning stubble. (indianexpress)

After the plague, comes famine. (wapo)

Meme of the Week

Twitter avatar for @RammityCapRammityCap @RammityCap
It's the Game of Loans

May 26th 2022

399 Retweets1,545 Likes
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Life is a highway
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