Investing

The decision to allocate capital

~ premsagark ~ Leave a comment

Last year, in June, I liquidated most of my debt investments thinking that I would invest it in my own company.

outsiders

In that period, I also read this book – “The Outsiders”. I really liked the modus operandi of the entrepreneurs featured in the book. They were all capital allocators and had done very interesting things – many a time going against conventional ‘grow big’ logic. Those guys often would ask themselves,  “which is the best option to put my next Rupee into?”. They would always seek an edge. And got out of businesses with leaky-boat economics. And invested heavily into businesses where they could build more competitive advantage.

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Economics of setting up small businesses-1: Lending library

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Quite a few times, I bump into people who want to start their own small business. And many are clueless about how much they would need to start a business.

It’s not rocket science. Also, you don’t have to know everything to start some business – you can learn on the job. That said, here is a short post on what it could take to setup a small business such as a lending library.

I am talking of a small lending library, one that is unsure of its future and hence is starting small with barebones inventory, interiors, etc. No frills. No jazz. No freebies. Continue reading →

My arguments against bitcoin & other digital currencies

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I have been following BitCoin and few other digital currencies for a while.  The prices continue to hit stratospheric levels – today I sat down to note down my own thoughts on it. Of course, am no currency expert, treat everything with a pinch of salt.

What is a currency?

A store of purchasing power. Simply put, its a middleman for a transaction in a society.

Qualities of a good currency:

  1. widely accepted
  2. can be stored safely (unlike salt, which too was once a currency 🙂 )
  3. reasonably stable in value and doesn’t fluctuate too much
  4. retains purchasing power over long periods
  5. when all else fails, the currency itself has some value

In olden days we used gold, silver as currency which satisfied all the points above. Most rulers issued gold & silver coins. But, when Nero in Rome had only x amount of gold coins and his expenses were high, he simply reduced each coin by 20% to make more coins. Effectively, he was among the earliest guys to introduce currency related inflation.

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Thoughts on Mahindra holidays business model

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I have been following Mahindra holidays for quite a while.

They do have an interesting business model.

  • Customer pays upfront for timeshare ownership
  • Mahindra holidays builds resorts
  • Customers get to stay at these resorts for 1 week every year for 25 years (it was 33 years few years ago)
  • customer also have to pay an annual fee (increases with price index) and for food and beverages at resort creating an additional recurring revenue stream
  • unused rooms are rented to non-members

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Rental business: Big is not better

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The idea behind the blog post is to explain why our goal at Tapprs is NOT to be the biggest rental house, but to be the most profitable one. To seek the most efficient use of every rupee in our business. That needs a different approach – we are going that route.

Note: It’s not a post against being big. Being big is a factor of effective capital allocation. It’s an added benefit. However, if you’re a poor allocator of capital, you’re not better off being big.

In the last 1 year, our strategy at Tapprs has been anything but aggressive.

In fact, we have consciously slowed down & expanded lesser than planned. It’s a fun business, though it has its share of negatives.

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Money, banking & economy – 2

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I have been trying to understand how money, our economy and banks work on a deeper level.

I had written previously about it here.

Today, I found an excellent video that attempts to explain the concepts in a very crisp manner. How the economic machine works by Ray Dalio.

Watch it. You wont regret spending 30 minutes on it. I watched it twice.

PS: Usually, one thing leads to another. I noticed a lot of people talk highly of “Principles” – the manual Ray wrote to share his life and business management principles with his employees. I found it here and here (Kindle). Will be reading it soon.

 

Letters from a self-made merchant to his son – 2

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This is the 2nd part of my notes from the book “Letters from a self-made merchant to his son”. You could read the first part here.

Graham on the art of selling:

A salesman has to talk, but before that he ought to know when to talk.

“A real salesman is one-part talk and nine-parts judgment; and he uses the nine-parts of judgment to tell when to use the one-part of talk.”

Never badmouth competition, never give up your dignity. Yet, be humble enough to sell.

“Never run down your competitor’s brand to them, and never let them run down yours. Don’t get on your knees for business, but don’t hold your nose so high in the air that an order can travel under it without your seeing it. You’ll meet a good many people on the road that you won’t like, but the house needs their business.”

3 steps to making it big in sales.

“First—Send us Orders. Second—More Orders. Third—Big Orders.“

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Letters from a self-made merchant to his son – 1

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Recently, I casually picked up a free Kindle copy of “Letters from a Self-Made Merchant to His Son” when I was feeling bored. Boy, I kept it down only after I finished it.

It’s a brilliant book – witty, simple, wordly advice from a wealthy father (Howard Graham of Graham & co, a meat packing company) to his son Pierrepont. It covers nearly everything that a man goes through in his life – management, business, money, education, college, women, love, work, speculation, etc. Most of it is solid advice applicable even today.

I realized late that this was actually written by George Horace Lorimer and there never was any Howard Graham. Still, every page is realistic and on the money.

Must read!

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Money, banking & economy

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Of late, I have been reading quite a bit on economics, inflation, banking, etc. Am listing out a few that I found useful.

1. The mystery of banking

A good resource I recently found also happens to be free (which makes us value it lesser – I have read only 1 book and few other, I just scraped through).  Those are the ones from the Ludwig Von Mises institute – which is a strong proponent of the Austrian school of economics.

Amongst a pile of free books there, I enjoyed reading Murray N Rothbald’s book – The mystery of banking. And I recommend it highly.

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Books I’ve liked: Personal finance, investing & entrepreneurship

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Every now and then, a friend asks me for a book recommendation, especially on personal finance, entrepreneurship and investing. Not because am an investing guru (which I am not), but because I read a ton of them!

I thought I will note it down here as well.

All these are books that I have read and liked a lot.

Few like One up on Wall street gave me the confidence that I too can be an investor in the stock market, which until then was crocodile infested space to me. Few like Intelligent Investor have been a huge huge help on almost everything finance. Few like Where are the customers yachts? changed my opinion on the stock market quite abruptly and changed my style of investing drastically.

And yet, few like Richest man in Babylon made me realize that simplicity and a principled method matters. A few like Extraordinary popular delusions helped me stay away from making costly mistakes.

Perhaps, there have been a few that have led me astray as well. Rich dad poor dad? Could be!

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