Thursday, February 02, 2006

God must really love crazy ....

My favourite scene in Rambo III (the one in which Rambo goes to Afghanistan to save a general) is where he participates in a horse race. The objective of the race is to pick up a dead sheep lying on the ground (while one is mounted on the horse) and carry it to the finishing line which is a good 200 metres from that point. Over 20 horsemen run around you, trying to snatch the sheep. In spite of a friendly guide's advice (where he says, that these people are all crazy) .. Rambo participates and wins the race. Then the rather aghast guide remarks - "God must really love crazy people, he makes so many of them."

We have crazy companies aswell .... Nike .....They are known for sub-segmenting categories to sell more shoes like golf shoes, tennis shoes, basketball shoes etc. But now they have brought to market, an exclusive "yoga shoe" (these shoes have no heels). I am enclosing a picture.

The most amazing part of this entire initiative is "YOGA IS PRACTICED BARE FOOT". Crazy, isnt it?

The learning here is - It is these things that more often than not, jack up the stock price rather than true fundamentals. Also words like diversification, cost-cutting, acquisition, restructuring, demergering etc.

For a better insight on the same read the document - "THIRTY-NINE REASONS WHY AMATEUR INVESTORS FAIL TO BEAT THE MARKET OVER TIME". The fancy words point comes under point #26 (Failure to Understand True Growth). The document is an essential guide for every amateur investors in equities.

One of the most excellent quotes on this was once said by Peter Lynch :

“Wall Street seems to favour restructuring these days, and any director or CEO who mentions it is warmly applauded by shareholders. Restructuring is a company's way of ridding itself of certain unprofitable subsidiaries it should never have acquired in the first place. The earlier buying of these ill-fated subsidiaries, also warmly applauded, is called diversification.” – Peter Lynch, the highly successful fund manager and author of “One Up on Wall Street.”


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