Firstly, our best wishes to you all for a Happy and Prosperous 2024! It’s a new year, and like all years, it’s a new beginning.
2023 has been quite sensational for returns in the Capitalmind Portfolios, as evidenced by the bars in this chart. Surge India and Momentum both did 40%+ in the year, eclipsing the Nifty’s impressive 21% gain:
But enough about performance. Our goal is to ensure you’re getting to where you must be, longer term, and the longer term is where the performance matters. And we’ve done well, thanks to a lot of luck and our emphasis on getting as much of that luck as possible.
The year seems to have a flavour of what Steve Jobs called the Crazy ones. In an Apple ad, his advert said:
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.
The crazy ones. The underdog. The thing that you didn’t think had a chance, but it demonstrates that your thinking was wrong. That thing that doesn’t have the pedigree, the taste, the sensibility…the everything that you’ve made a wall of, around you, it doesn’t have, and then, it goes on to become the thing you want to be.
The year was about the crazy ones. In so many ways.
On the portfolios, who would have expected that the best performing stocks would be PSU biggies – PFC, REC, Mazgaon Dock and the like. PFC and REC have been cheap for years, and usually got cheaper – a P/E of 6 went down to a P/E of 2 – even as the E (earnings) went up, the P (Price) went down. Waste of time? Not in 2023 – both stocks tripled in this year. When you least expected them to.
Silicon Valley Bank – which was about the size of HDFC Bank – nearly collapsed after owning just government bonds. Credit Suisse went belly up. The war in Ukraine continues. October saw the middle east break out in flames, and a horrendous situation has emerged. Interest rates in the US rose to points where their mortgage interest rates were nearly as high as India – and real estate prices mostly stayed up. Even the US markets were up 20%+ and the Nasdaq, a cool 43%. It was almost like the year of the crazy.
Melbourne, where I’ve spend the Christmas/New Year holidays, has some incredible stories, just like every city has incredible stories. There was a woman named Caroline Hodgson, born in Prussia. She came to Melbourne in 1871, and proceeded to own a number of “boarding houses” (another word for brothels) within two years and ran them for 33 years, well known as “Madame Brussels”. At a time when women weren’t allowed to own properties, or in fact do anything of significance, she was the most well known owner of multiple such houses, and her husband was a policeman. It was at the time the only profession that women could do, and Madame Brussels is a famous name (and a restaurant) today. It must have been crazy, that time.
There are the crazy ones everywhere. Akio Morita, who pioneered the Walkman at Sony, famously said he didn’t ask customers what they wanted. He’d be ready with what they needed. The big music device maker after him was Steve Jobs, said “A lot of times, people don’t know what they want until you show it to them”. Henry Ford was in another era, but had the same take: “If I had asked my customers what they wanted, they would have said a faster horse”. Don’t ask your customer what they want? Crazy.
Ray Kroc envisioned McDonald’s when he was 52. Morris Chang started TSMC – the most astoundingly large chip maker – at age 54. Colonel Sanders started Kentucky Fried Chicken at age 62. Bernie Marcus was 50 when he opened the first Home Depot. Leo Goodwin started GEICO, the now-Buffett-owned car insurer, at age 50. It’s not just the young that are crazy. In fact, starting a company in your 50s and having it become a world famous, ludicrously popular company? That’s crazy.
We keep talking about keeping it simple. There’s a dialogue in “Bleed for this” where a reporter asks a comeback boxer, Vinny:
Reporter: What was the biggest lie you were ever told?
Vinny: It’s not that simple.
Reporter: Why not?
Vinny: No, that’s the biggest lie I was ever told: “It’s not that simple.” And it’s a lie they tell you over and over again.
Reporter: What’s not simple?
Vinny: Any of it. All of it. It’s how they get you to give up. They say, “It’s not that simple, Vinny.”
Reporter : [pause] So, what’s the truth?
Vinny Pazienza: That it is. That if you just do the thing that they tell you, you can’t, then it’s done. And you realize it is that simple… And that it always was.
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It’s not easy. It’s hard, and we have to uncomplicate and unlearn. But it’s simple. All you have to do in the financial industry is not do really stupid things that kill you. It’s that simple. It’s always been that simple.
At Capitalmind, we’re a motley crew. Started by a guy with no banking or financial sector experience. Most of us here, they come from non-finance backgrounds. We have people who have backgrounds in technology, fashion technology, textile operations, e-commerce sales, pharma retailing, and we all do different things than we’ve had a “degree” in. Pedigree is earned through blood and sweat, in our book, and in that little way, we are the crazy ones. We’ll keep the crazy. And in that same vein, we’ll keep the simple.
There’s a famous Irish wish for a new year:
May love and laughter light your days and warm your heart and home.
May good and faithful friends be yours, wherever you may roam.
May peace and plenty bless your world with joy that long endures.
May all life’s passing seasons bring the best to you and yours.
That’s for you. From all of us at Capitalmind. It’s that simple. Here’s to the crazy ones.
Happy 2024!
Deepak and all of us from Capitalmind
