Invert, Always Invert
In a recent podcast, Howard Marks recalled his chat with a pension fund manager who said that his fund was “never above the 27th percentile or below the 47th percentile. It was solidly in the second quartile.” The net result of that consistency during a 14 year period was to move the fund into fourth […]
Why is China smashing its tech industry?
Just as India is celebrating its first big consumer tech IPO in Zomato, China is smashing its hugely successful tech industry. For those who haven’t been following, the Chinese government is clamping down on exactly the sort of businesses that are enjoying increasing monopolisation in the rest of the world – starting with the last […]
The Network Effects Manual: 13 Different Network Effects (and counting)
With Zomato’s listing, Indian investors are required to get their head around how to value businesses which don’t yet make money yet are being sold the long term story around ‘winner takes all’, thanks to network effects. Whilst it is increasingly clear that in the digital age, network effect is perhaps one of the stronger […]
Ending shadow banking means ending modern central banking
In last week’s ‘3 Longs & 3 Shorts’ we had quoted the great strategist Russell Napier’s point of view that in the decades ahead Western Central Banks will deliberately keep interest rates (short term and long term) below the rate of inflation (i.e. negative real interest rates) thus allowing their sovereigns to: (a) borrow money […]
Leaving burnout behind: the pain and pleasure of starting a new career in my 50s
For decades Lucy Kellaway was, as a famous FT columnist, an assured source of weekly wit and wisdom for many of us at Marcellus. And then four years ago she quit the FT to become a Maths teacher. She has now written a book on her transition titled ‘Re-educated: How I Changed My Job, My Home, […]
High Inflation Helps the Strong Get Stronger
Across the world, supply vs demand mismatches are fuelling inflationary pressure. In such circumstances, contrary to the popular notion of high-quality stocks taking a beating, history shows that such companies have outperformed the broader market even more strongly (when CPI inflation exceeds 6%) on revenue growth, profit margins and shareholder returns. This construct bodes well […]
How Susceptible Are You to the Sunk Cost Fallacy?
How many of us find it difficult to let go of a project even when it’s clear that there are better uses of our incremental time and effort, simply because we feel the time and energy already invested will be wasted. That time and effort already invested is sunk cost, a critical concept in management […]
The true extent of America’s food monopolies, and who pays the price
The winner takes all business models built on network effects in the new age tech businesses are driving monopolisation at an unprecedented scale altogether. However, even preceding them there existed a whole host of monopolies in more traditional sectors such as the one that this piece spotlights – the food industry. The article is more […]
Russell Napier: We Are Entering a Time of Financial Repression
When it comes to stepping back and looking at the big picture through the lens of financial history to see patterns that can then be used to understand where we are currently, few come close to Russel Napier. What makes Napier even more interesting is his willingness to make big bold calls, which when combined […]
Reviews of Michael Lewis’ new book, “Premonition”
Michael Lewis is the best non-fiction writer of the past 30 years. Not only does he write a book every other year, not only do these books sell by the millions, not only are these turned into blockbuster movies starring Brad Pitt and Christian Bale, the books achieve something far more important – they take […]
The Impact of Intangibles on Base Rates
In our first two pieces this week, we highlight the latest publications of the two of the very best writers of the past 20 years (albeit in completely different fields). First, we discuss Michael Mauboussin’s latest piece on a subject which is close to our hearts in Marcellus: the impact of investment in intangibles on […]
Staying on the Top of Everest is Harder than Getting There
In every decade, typically 50% of Nifty companies are ejected from the benchmark index leaving in their wake disappointed shareholders. Jim Collins’ bestseller “How the mighty fall…” provides a framework for assessing how companies get dislodged from their market leadership positions. We twin this framework with our proprietary ‘Lethargy’ & ‘Succession Planning’ frameworks to improve […]
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