Friday, January 22, 2010

Conversation with an Indian hedgefund manager

I sat next to a gents from India who lived in the US for a few years and then moved back to India. He bought distressed Indian companies and turned them around.

Of course, I was interested in cracking the Indian analysis marketplace and one question I asked was if the growth we hear in the financial press is for real. His answer was a fantastic analogy.

If you give an undernourished child food, he will grow very quickly. India has been, for the lack of a better and less disparaging term - backward for years. The new injections of capital, brainpower and opportunity are sparking zooming growth because when you start low the percentages are huge.

4 comments:

TradeDog said...

Great observation and so true. Look at the US...the exact opposite....give an spoiled generation food, they will become lazy. The US has been over consuming, over entitled, and dependent on "easy money" and greed. The unrealistic growth, "free money" and artificial growth fueled a recession. Because when you start "high", the percentages are huge (on the down side). This is a good cleansing of America and will make us stronger. Now is the time for the rest of the world to catch up, stand up and be recognized for their full potential. What an exciting time to be alive and witness "children: fail and succeed. Onward!!

DJ said...

True, India has starved and for the next 10-15 years India will be on the rise. Some of the reasons why

a) India is now led by second generation after Independence. This is hardworking, has educated elite, knew the hardships of poverty, values money and more importantly seen the color of money. This generation from India is similar to the one of the generation after world war II and has capability to do wonders

b) The money coming into India is cheap money at high valuations and getting sunk into infrastructure be it roads, power, buildings or factories and any exchange rate cannot take it back to the country of origin (of money)

c) India's entrepreneurs are mature enough to take on competition and can stand. Earlier they got smashed by the MNCs due to their premium perception. Ex Coke and Pepsi killed Thumbs-up & Co, a local brand and which had near 90% market share. Similarly Sony, LG, Samsung killed the local consumer electronic companies. Whereas if you look other industries, Indian brands are thriving eg. Maruti, Bharti, ICICI, HDFC, Infosys

What can screw this up big time

Politicians, since they are the most corrupt and right at the top poisoning all the other branches.


-DJ

Quick Takes Pro said...

TD,
Parallels to Rome, unfortunately. At least we have the history from which to learn.

Quick Takes Pro said...

DJ,
I'm trying to stay non-political here but the system of leadership is way flawed. Career politicians motivated to stay in power and not do what's right.