China’s largest steel group notched a 770 per cent annual increase in its net profit for 2016, as higher prices, a major merger and cost cutting combined to suggest the ailing industry is forging a recovery. State-controlled Baosteel announced the unaudited figures in a filing to the Shanghai stock exchange. Net profit attributable to shareholders in 2015 was Rmb1.01bn ($148m), suggesting 2016 net profit of about Rmb8.8bn, according to Financial Times calculations. The profit surge is a positive sign for the debt-saddled legacy industry of Chinese steel, which collectively lost some Rmb60bn in 2015 and faces agonising capacity cuts in an effort to control prices. Due largely to an excess of supply and slumping demand over the past few years, Chinese steel has been targeted with anti-dumping penalties by a number of countries as mainland producers have tried to export their excess output. While Baosteel’s internal strategy did play a role, last year’s profit surge was mainly due to a massive improvement in overall industry conditions in 2016 as steel prices nearly doubled over the course of the year, says Wang Jianfu at Steelhome, a Shanghai-based steel market consultancy. That is partly due to supply-side reforms: China’s government announced it had eliminated 50m tonnes of capacity in 2016 and is set to flush out more in 2017. However, according to an HSBC research note, much of the eliminated capacity was already idle or obsolete, and the effect on actual supply was small. China produced about the same amount of steel in 2016 — 805m tonnes — as it did in 2015. HSBC noted that government stimulus measures for the steel industry in 2016 included an expansion of credit to the sector as well as a relaxation of property policies. Related article Chinese steel: those blasted mills Beijing needs to ensure that steel capacity keeps falling in the new year Hu Yanping, editor in chief at CUSteel, a steel industry service platform, said the steel industry as a whole “benefited significantly from the strong growth of commodities”, pointing to a rise in domestic steel consumption including demand from burgeoning Chinese auto sales. Baosteel’s listed arm, Baoshan Iron and Steel, last year was merged with the listed arm of rival Wuhan Iron & Steel as part of Beijing’s effort to consolidate the industry and improve efficiency. That nearly doubled Baosteel’s asset base, but Baosteel says Wuhan has not yet been consolidated in Baosteel’s balance sheet. The company maintains that the increase in profitability last year was mainly the result of a “boost of performance from the execution of reform initiatives”. State-owned steel groups including Baosteel have large work forces that they have found difficult to reduce due to political pressure from local governments. Baosteel said no cuts had been made in its workforce.
Friday, January 27, 2017
My kids’ faces often light up with wonder. They’ve made me realize adults are doing something wrong. We must reprogram ourselves.
The fix, says improv god Keith Johnstone: focus on the obvious instead of the clever. This changed me, and I think it will change you too. Here’s Johnstone:
“I began to think of children not as immature adults, but of adults as atrophied children… “I decided just before my ninth birthday not to believe anything the grownups said. The next day, I decided to always see if the opposite could be true. I think it changed my life, I’ve been doing it ever since. It taught me to be looking for the obvious and not the clever. The obvious is really your true self. The clever is an imitation of somebody else”
Clever thinking is outside-in: thinking and acting based on external conditioning or expectations. WHAT WILL THEY THINK?
Obvious thinking is inside-out: instinctual, common sense, no-one-is-watching thinking. WHAT DO I THINK?
“What would you do if you had $100MM.” This common question gets you thinking about your obvious path. But we screw up.Clever thinking dominates. (You can spot a cleverest people easily: they use fancy, complicated language)
When you start looking, you realize that there are many things we say or do that you’ve never questioned. We’ve been conditioned. We say “bless you” after people sneeze, and we thank people for saying “bless you.” Origin stores vary… one says a sneeze was a way of ejecting evil spirits. One, that YOUR spirit might fly out during a sneeze. All explanations are nuts. But even knowing that, try to stop saying it! That difficulty you’ll find reveals how powerful “outside-in” thinking/behavior can be. You may think, that’s just a harmless custom. Ba-humbug! It allows you to realize how easy it is to be a customary thinker in other areas.
Successful improv is about removing these conformity filters and exploding from the inside out. Society watches and judges, so we self-program little judges into our intellect. The judges start watching our ideas, sorting out the insane.
Society favors the norm, the known. Heroes are heroes because they’ve survived trips to a forbidden land, the unknown. The hero’s gift is often permission to be insane, or different. Or just yourself. Their gift comes in the form of the examples they set.
Permission is one thing, action another. So here are two ways to be more obvious: 1) listening, and 2) “Fire. Ready. Aim.”
Listening to yourself is hard to do, because often the obvious is “strange,” or outright forbidden. And because we are distracted. The obvious thing’s voice is often buried under layers of convention, so you can’t hear it. Imagine a typical conversation. Most conversations are about 1) collecting information and/or 2) influencing. We hear a fraction of what’s said. If we weren’t so distracted, we’d be better conversationalists. Because listening is so important, here is my conversation w/ the best listener I’ve ever met. You can use his method of listening to listen to others and to yourself.
Second, try this method: Fire, Ready, Aim. Historian Jacob Bronowski said, “We have to understand that the world can only be grasped by action, not by contemplation. The hand is more important than the eye” I find that carpenters are often more interesting than professors.
When you start in the traditional way, with “Ready,” you are designing. You are trying to control the future.
“It’s this decision not to try and control the future which allows the students to be spontaneous.”
If “Ready” is about the future, “Fire” is about the present. When you start with “fire,” you are getting in there and seeing what works. This leads to what we think of as failures, But they aren’t failures! To even think that failure is possible is to miss the point. Failure doesn’t exist if you don’t let it.
Fear is about failure. “Fear is the mind-killer. Fear is the little-death that brings total obliteration.” It is dangerous to conceal fear, but we are taught to do so! @cshapiro told me, “don’t shine the turd.” Don’t be controlled by fear. Let fear pass over you. Fear is about the future, but beware the past too. Bragging is about the past. I struggle with this.
“When we tell people nice things about ourselves, it is usually a little like kicking them.”
In the Foundation series, Asimov said, “past glories are poor feeding.” Can you imagine five more true or useful words? So cleverness is about the past and future. Obviousness is very much about the present. It is of-the-moment. The present is wondrous. We don’t live there often enough. The past and future are “important.” We spend too much time there.
By trying to be clever you become boring. By listening to and sticking to the obvious, you become interesting. So ditch cleverness, seek out the obvious. Listen. Get in there and tinker. Fire first. Remember, this is how evolution works… It tinkers (mutation, etc.), it “listens” to what works without preconceived notions, and then it amplifies. We should do the same.
At dusk, my three-year-old son said to me “when you turn on the lights it gets darker.” “Huh?” “when you turn on the lights it gets darker outside. Turn off the lights so we can see more trees.” I think we really are atrophied children!
Tuesday, January 24, 2017
I believe God has created us with the ability to achieve our dreams. It is up to us to dream big. Everyone is born with a spirit of courage but as we age slowly develops into a spirit of fear. The quickest path to a mediocre life is to give in to your fear of failure.Do not let doubt and negative thoughts creep into your head. Do you hang out with negative people? People that are constantly complaining about their spouse, their job, their life, etc. Don’t they just suck the life and energy right out of you? Get rid of them, let them live their mediocre lives. Do you ever hear really successful people complaining? No, because they are too busy doing. The only difference between you and the people you admire is they have zero doubt where they are headed. You have to train your mind to have zero doubt. Your thoughts influence your words, and your words influence your actions. If you want to be a great investor, know that you will be one.
I get asked quite often, “I want to be a full time investor someday, how do I get started?” First and foremost, investing isn’t for everyone. If you want to be great at something, it must be your passion. Many mistake greed for passion. Greed and passion are two completely different things. Here is a little test to find out if you are passionate about investing. If you invested all your money and lost it all would you still have the same drive and desire to invest? Would you dig yourself out of that hole or would you just give up and move onto another way to make money? If it’s the former you have passion, and you are ready to succeed.
When I was in my early 20’s managing a meager sum of $10,000 my dream was to become a full time private investor. I would reach my goal, and I would have my freedom. If I can do it, you can too. Every day I would wake up with an unapologetic, fierce, and unwavering passion to reach this goal. I had many naysayers try to push me towards getting a job on Wall Street to “gain experience”, and so many people just looked at me and said, “Why don’t you get a job like everyone else?” The truth is I didn’t want to live like everyone else. Remember when I said get rid of negative people from your life? I actually decided to move away to get away from all negative influences. In most cases to reach your goals you can’t think the way the world thinks.
If you ever want to become good at something you have to immerse yourself in it. If you want to learn a language, you immerse yourself in it. If you want to learn Spanish, go to Spain for a few months. If you want to be a great investor, yes you know what’s coming, immerse yourself in it. When I moved away I was living on my own far away from my friends and family. I had a lot of time on my hands, so I just started reading every investment book I could get my hands on. I wanted to find out what everyone else was doing. It took thousands of hours of reading and researching before I started putting the pieces together. It was really important for me to understand what worked in the past so I could start to develop my investment philosophy for the future.
As a small retail investor just starting out, success might seem like an insurmountable challenge. Even Charlie Munger is quoted by saying, “The first $100,000 is a bitch”. He is right, the first $100,000 – $200,000 – $500,000 is a real grind, but that is when you learn the hard lessons. The knowledge you gain in those years will give you the expertise to make $1 million – $2 million – $5 million a whole lot quicker. Investors generally overestimate what they can do in the short run but greatly underestimate what they can do over a lifetime. There is no reason you can’t make $10 million, $20 million, $50 million or more starting with a very small amount of capital. Other investors have done it, and there is no reason why you can’t either.
When I was on my own and trying to build a capital base, I watched every penny. I was a scrooge. I viewed one dollar I spent as ten dollars I wasn’t going to have in a few years. I got very efficient with eating, buying clothes, etc. My extravagance wasn’t going to the pub and spending $40 on beers and dinner, it was going to Taco Bell and spending $2.48 (yes I still remember) for two beef baja chalupas for dinner. I remember being able to make ends meet on $1,080 per month. You do what you have to do during these crucial capital building years.
New investors like to use the excuse of lack of resources for not getting started. They say, “I don’t have enough money, I don’t have 6 trading screens, I don’t have the right screening software, I don’t have the right technology, I don’t, I don’t”. First, stop using words like Can’t, Don’t, and Won’t. Losers use these words. The truth is you will learn far more without these resources because it will force you to be resourceful. The only resource you need is between your ears.
Be patient. You can’t become a great investor overnight because the most important lessons can’t be taught. They have to be experienced. You are going to make mistakes and lose money. You might lose most of your money a couple of times, like I did, but that is how you learn. Every time I took a loss I never doubted I was going to make it back. In most cases you need to fail so you know what will work the next time. Failure is often the first step toward success. Some of my best investment decisions were right after a big loss. I found that the loss (failure) often times refocused me on what was important and it honed my skills.
“There are two ways to receive wisdom: mistakes and mentors” – Mike Murdock
Mentors are very important in business and personal development. Don’t take advice from someone who has never done what you are about to do. I had a mentor early in my investment career, and it rapidly increased my learning. Mentors are rarely your best friend because they only care about your success, not your comfort. I learned how to effectively communicate with management teams from my mentor. It was irreplaceable.
“As iron sharpens iron, so one person sharpens another” – Proverbs 27:17
Turn off the mainstream financial media outlets. All they do is alert lemmings to investment opportunities that are in their last leg. A great investor and friend of mine Paul Andreola tweeted the other day: “It’s no coincidence that my portfolio returns improved dramatically when I stopped listening to mainstream financial media”. He is 100% correct.Nothing new that is actionable is ever going to come from the mainstream. If the opinions of the herd make zero impact on you, then you are ready to make money.
So now we are at the conclusion. Conclusion? I didn’t even tell you how to invest or what to invest in. The truth is I have no right to do so. You might be a value investor, growth investor, GARP, heck maybe it’s not even stocks. It isn’t for me to decide. Your investment philosophy will be shaped by your experiences. You have to create your own path, your own success story. I’m just here to tell you everything that you dream is possible. Now get started.
Monday, January 23, 2017
The impact of demonetisation on sales of FMCG categories in urban markets has been more than double as comapred to rural markets. The dip in volume of sales in the overall urban FMCG category was at 24.37 per cent, compared to the overall rural FMCG category, where the drop was at 7.47 per cent between the pre- and post-demonetisation months of October and December, according to data from Brickworks Media (a concern of Chrome DM), a research and data analytics company.
In the urban markets, it was a non-seasonal category like noodles, which felt a greater impact where sales dropped to 33.23 per cent – while tea remained the least impacted at 10.77 per cent.
But it was soft drinks which had a double whammy at a 36.8-per-cent drop in sales, as it was a seasonal category when consumption was low in the winter months and the added impact of demonetisation led to an even further fall in volumes.
Low-ticket size categories like biscuits and candies also faced a double-digit drop in sales at 24.77 per cent and 24.13 per cent respectively. Non-food categories like detergents dropped at 16.46 per cent, and discretionary categories like personal care products were down by 27.93 per cent. Toothpaste and soaps were also down in urban markets by 16.17 per cent and 18.5 per cent respectively.
In rural markets, it was the soft drinks category that faced the maximum drop in sales at 13.8 per cent, followed by the chips and snacks category at 10.9 per cent.
Noodles also dropped 7.41 per cent, while tea sales were lower by 6.86 per cent. Low-value food categories like biscuits and candies suffered a drop at 5.13 per cent and 4.13 per cent, respectively.
The volume of sales of non-food categories like detergents also dropped 9.46 per cent while toothpaste (9.17 per cent), soaps (8.79) and personal care products(6.93) also declined in the rural markets between October and December. According to Pankaj Krishna, Founder and CEO, Brickworks Media: “The products of daily usage in the food category has seen a lower impact in the rural markets due to continued purchase on credit. Distributors and stockists have also been buying products on credit, which has helped the movement of FMCG products across the supply chain.’’
In the case of consumer durables and mobile phones, the drop in sales has been sharper. For instance, in the home appliances category, demonetisation led to a 43 per cent drop in sales in the rural markets compared to a 54 per cent decline in the urban markets.
Explaining the trend in consumer durables, Krishna added: “Higher categories like consumer durables and mobile phones have been adversely impacted in rural markets, where all transactions happen in cash. In such categories, urban areas have seen comparatively lower impact as there have been cash-backs, credit card discounts, online offers and back-date billings.
Monday, January 16, 2017
It is clear that the projected population growth and urbanisation rates will have dramatic impacts on food security across the world by 2050. The impacts are multi-sectoral and extend well beyond food into infrastructure, healthcare, and technology.
However, technology has the potential to re-shape these trends for the benefit of society. Technology is disrupting all areas of agricultural value chain, driving countless opportunities and challenges particularly around profitably feeding the 9.6 billion people on Earth by 2050.
At the same time, the growing demand for food and shifting food security needs are driving innovation in the resource space. World is now more inter-connected, spawning massive data and exploration of these data can help to drive decision making that can transform the farm source-to-consumer value chain. Agri-businesses are subject to numerous regulations and consumer requirements across their supply chain. Of the several touchpoints along the agri-value chain, each hold critical information that can help businesses make the most of their resources, provide greater transparency in their processes and protect consumers.
Big Data has the potential to add value across each touchpoints starting from selection of right agri-inputs, monitoring the soil moisture, tracking prices of markets, controlling irrigations, finding the right selling point and getting the right price.
What data can do
Big-data businesses can analyse varieties of seeds across numerous fields, soil types, and climates. Similar to the way in which Google can identify flu outbreaks based on where web searches are originating, analysing crops across farms helps identify diseases that could ruin a potential harvest. The challenges and opportunities of data is immense in a country like India with 638,000 villages and 130 million farmers speaking around 800 languages with 140 million hectares of cultivable land under 127 agro climatic regions capable of supporting 3,000 different crops and one million varieties.
Self-driven vehicles can already drive themselves across fields using Global Positioning System (GPS) signals accurate to less than inch of error thus helping farmers plant more accurately, but the real potential is what happens when this data from thousands of tractors on thousands of farms is collected, grouped and analysed in real time.
Precision agriculture aids farmers in tailored and effective water management, helping in production, improving economic efficiency and minimising waste and environmental impact. Recent progress in Big Data and advanced analytics capabilities and agri-robotics such as aerial imagery, sensors, and sophisticated local weather forecasts can truly transform the agri-scape and thus holds promise for increasing global agricultural productivity over the next few decades.
Farmers need accurate weather forecasts and accurate information on the inputs they can use. Optimising input factors (e.g., nutrients, irrigation, and pest control) can help protect natural resources. The use of granular data (for example, data for every 100 meter square of a field) and analytical capability to integrate various sources of information (such as weather, soil, and market prices) will help in increasing crop yield and optimising resource usage, lowering cost. Since, climate change and extreme weather events will demand proactive measures to adapt or develop resiliency, Big Data can bring in the right information to take informed decisions.
Big Data and advanced analytics are streamlining food processing value chains by finding the core determinants of process performance, and taking action to continually improve the accuracy, quality and yield of production. Big Data is already being used for optimising production schedules based on supplier, customer, machine availability and cost constraints.
It can provide agri-business with greater visibility into supplier quality levels, and greater accuracy in predicting supplier performance over time. In India, every year 21 million tons of wheat is lost, primarily due to scare cold-storage centres and refrigerated vehicles, poor transportation facilities and unreliable electricity supply. Big Data has the potential of systematisation of demand forecasting thus reducing such losses.
Connecting the dots
A trading platform for agricultural commodities that links small-scale producers to retailers and bulk purchasers via mobile phone messaging can help send up-to-date market prices via an app or SMS and connect farmers with buyers, offering collective bargaining opportunities for small and marginal farmers.
India should look at establishing a systematic mechanism to capture the data that could offer additional value-creating opportunities. In particular, rapid proliferation of mobile technologies in rural populations could let farmers in these areas to improve productivity based on decision made backed by better information grounded on Big Data. It also has the potential to change the agri-business models including revenue models, as businesses will have the opportunity to offer new products and services thus developing sustainable revenue streams.
Proliferation of data offers unprecedented opportunities to understand consumer needs and preferences of farmers, and to deliver tailored services and products for organisations that can make sense of this data.
Given all this, today is right time for agri-businesses to lead on defining what better practices on data use are available. There is need to formulate a business model wherein value can be captured from the scale of data being captured by different players in the agri-supply chain. Companies must act now to focus, simplify and standardise big data through an enterprise-wide data management strategy as Big Data poise to deliver the next revolution of farming.