Alpha Ideas

Corruption in the central government is gone. There is a tough message out from the Prime Minister’s Office that graft will not be tolerated.

There is an overall drive against black money with various schemes being tried to put a plug on it.

The same hard stand has been taken with bank loans and one place to start has been the process of selection of public sector bank chiefs.

A member of the committee who would interview candidates for public sector bank chairmen told me that after 2014, they stopped getting calls from the power centre on who to hire. The rate used to be fixed, he said, we were just told to pick the name told to us.

Who’d pay? Firms that would then benefit from easy loans and terms. Those calls have stopped.

The hardening stance of the state on black money shows up in the prices of real estate.

Real estate has been the sump of black money in India and the politician-builder-land mafia nexus had raised prices to a level that was beyond any economic logic.

People who bought their Rs.8 crore luxury floors in Gurgaon are unable to find a buyer at half the price.

The winter for real estate is going to last a long time—so if you are still holding on to an investment thinking it will recover, plan on bequests rather than profits in the near future-wrote Monika Halan

When Carl Icahn was a big investor in Apple, he wrote an annual letter to Tim Cook, its C.E.O., urging him to spend the company’s cash on buying back its own stock.

“There is nothing short term about my intentions here,” he wrote in the first letter, in October, 2013.

In October, 2014, he wrote that “Apple is one of the best investments we have ever seen from a risk reward perspective,” and that, while he was urging a share buyback, he was also eager “to preemptively diffuse any cynical criticism that you may encounter with respect to our request.”

In a letter of May, 2015, he said that Apple was “very much a long term growth story from our perspective.” The company represented “one of the greatest growth stories in corporate history, as well as one of the greatest opportunities ever for a company to invest in itself by repurchasing its shares.”

A year later, after the company had spent eighty-seven billion dollars buying back its stock, Icahn announced that he had sold most of his Apple shares, for an over-all profit of around two billion dollars.

Fool me once, shame on you. Fool me twice, and you’re starting to develop a business model.

-from New Yorker