Thursday 23 April 2015

Steel Authority of India - 22.43% gain, Tata Steel - 10.41% gain and Tata Motors - 30.57% gain. I think the most potential for growth is in India. I think their is scope for massive investment in power and transport infrastructure, and in housing. Also a growing lower middle class who will want affordable motor vehicles. Surely it possible to build basic cars with basic engines but with comfort for $500. Would electrical engines be cheaper to make and also lower pollution. Labour has very low levels of bargaining power in the economy so wages are low and this lowers consumption, encourages the informal economy from which no tax can be raised; India does not have the financial muscle and foreign exchange reserves of China to fund a construction boom, however, there is a lot of cheap available labour to lower the cost of building it.

National Grid - 5.6% Loss. I think it is opportunistic buy a stake in what should be a state monopoly. A defensive stock because its revenue it guaranteed. The market has probably valued it correctly, but it should appreciate with the rest of the market on the back of increasing savings caused by a demographic bulges in the third age group

Netflix - 47.85% Gain. I am always thinking of selling this. Producers could have the ability to withhold supply if they started a rival, like Tidal in music to Spotify. However, there is no competitor at the moment and I hope I will be able to choose the correct moment to sell. I will look out for signals of sentiment within the market. If Disney offered their own subscription service could they out-bid Nertflix for content, or in the bidding process drive up costs and eat into margin or they will have to increase subscription fees and this will test the elasticity of demand for a product that is almost a ubiquitous unconscious payment every month; would an increase in price increase the visibility of this charge and the consumer might question its value.  

Starbucks - 24.16% gain. I think it is an easily exportable model and it has not penetrated India, China or Africa to a great extent. I think a careful approach to the strictness of imposing a corporate culture is less important new revenue streams and growth. Coca-Cola is the example to follow in using a low tech supply chain, and low tech product to infiltrate low tech markets.



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