A last random thoughts for the year…

Note: This is a compilation of random thoughts jotted down over the past few months and finally, I have some downtime to compile them now.

~Interconnectedness~

  • We buy a mobile phone from a store, in a mall, which is rented by the shop owner from the landlord. The shop owner buys the phone from a distributor, who gets it from the brand. The brand manufacturers the parts in multiple parts in the world, has to reassemble in a certain location from which they export. They get the raw materials from multiple parts in the world. To develop this technology they hire persons in their home country and relevant brain centers globally to create this technology. along the way parts are on a bike, train, plane, ship, and this is all required to get this 1 phone into our hands…
  • Then take this basic flow and extend it further for the store owner, the landlord, the factories manufacturing, the banks providing financing in multiple countries, the raw material providers…
  • Next add in the software developer layers, the companies involved in each app, the capital required, the teams involved…
  • And finally add in the infrastructure for all this to happen to receive a mobile phone signal…
  • The world is a complex interconnected place and this is why I rarely bother with making general forecasts…b/c who the hell knows. (though watch me do it below)

~The growth of GULF~

  • Well the history of the individual and the company is rather straightforward.
  • Sarath’s father-in-law is a well-known Democrat leader in Tak, who got his son in law bunch of concessions. Then they were able to partner with the Japanese and win IPP projects at bidding prices that just didn’t make sense (interesting that JP Power no longer partners with GULF)
  • The contract between the government and the company will lead to us consumers and businesses paying far higher electricity prices (haven’t you felt it yet? more to come) as GULF makes a fantastic spread (as is BGRIM…)
  • Sarath is well-known to always be standing next to Prayuth on every international trip.
  • Now Gulf took over Intuch and thereby AIS. Effectively all the Singaporeans are gone from the company and with True & DTAC (TRAC), AIS is going to be able to increase prices, and it’ll go straight to its bottom line (same goes for TRAC)
  • The cartelisation of Thailand (and most places in the world) continues.
  • At one point I’ll get more data on the above background to prove it.
  • GULF is the perfect example of Crony Capitalism under the Prayuth government over the past 7 years.

~H. Marks~

Source: https://www.oaktreecapital.com/insights/memo/the-winds-of-change

The living legend continues with fantastic memos

My key observation is that China has had to navigate an unusually large number of transitions:

  • from farm to city,
  • from agriculture to manufacturing and services,
  • from mass poor to a significant middle class,
  • from economic reliance on exports to domestic consumption,
  • from growth based on capital investment to more organic growth, and
  • from emerging nation to world power.

….

The transitions listed above are already underway.  Tackling all of them simultaneously has to be seen as a daunting task.  But China has extensive resources as well as strong centralized control.  No one can prove they will pull it off or that they won’t – the best we can have on questions like this is a hunch.  Mine is that the Chinese economy will continue to grow faster than the rest of the world and may well become the largest economy.  I believe with time we’ll see all the above transitions take place.  The process just won’t be smooth and free of glitches

By the way, a few progressive Democrats have announced their opposition to the reappointment of Jerome Powell as Fed chair, because they think he’s not active enough in addressing climate change.  So now we have a Fed that’s supposed to control inflation, foster growth and employment, support markets, and fight climate change.  How many roles can one institution have and still maintain a coherent effort?

~No more PCR Tests~

This was announced a while ago, which is why I’ve found it amusing that I’ve been nasally raped a few times by this rubbish here in Thailand.

“After December 31, 2021, CDC will withdraw the request to the U.S. Food and Drug Administration (FDA) for Emergency Use Authorization (EUA) of the CDC 2019-Novel Coronavirus (2019-nCoV) Real-Time RT-PCR Diagnostic Panel, the assay first introduced in February 2020 for detection of SARS-CoV-2 only.”

https://www.cdc.gov/csels/dls/locs/2021/07-21-2021-lab-alert-Changes_CDC_RT-PCR_SARS-CoV-2_Testing_1.html

~Thai Crypto~

Good old fashioned insider trading exists in Thai crypto world and it’s been the most obvious with KUB. Before their “whitepaper” was released KUB went to the moon. The day before the announcement of SCB Securities buying a 51% stake in bitkub, KUB went to the moon. And after the announcement went to another galaxy.

I can apply the same to JFIN.

And so what? It’s a free market where buyers/sellers can participate, there’s no equity to speak of and therefore I’m all for it, why? It’s been a leading indicator for the movement in share prices for us this year (no different to the disclosures of management buying/selling of shares) so let it continue and I look forward to seeing more Thai listed co’s putting their coins into the market place (hello RS popcoin!) [insert link to my tweets]

What do I think? Sure I have both, realise they are momentum plays, and just like a Jackson Pollock, if there’s demand and a narrative, who knows where the price can go….though yes I do realise they are effectively created out of thin air.

~Changes to the SET50/SET100~

TH adjustment to SET50 and SET100 indexes effective Jan 2022

SET50

  • Add: AWC, BANPU, and TIDLOR
  • Out: BJC DELTA and STA

SET100

  • Add: AWC TIDLOR BLA BPP EPG KEX RCL SIRI STARK & TTA
  • Out: DELTA BJC PSL JAS PTL PRM ICHI AAV NRF & TKN

~Anutin and Friends~

I do wonder whether the Buddhist belief of karma will materialise regarding Anutin and Tom K. These two deserve to be hung by their testicles for the corruption that they were part of regarding the testing kits (amongst several others) that effectively postponed a recovery in Thailand from c-19.One can throw in Kingsford Securities for playing their part in all this.

~ARK~

if you want humorous reading, just go through this commentary, I have joked with friends that I want to be short everything she likes and long everything she doesn’t.

https://ark-invest.com/articles/market-commentary/innovation-stocks-are-not-in-a-bubble/

The thing is, she may be right…they may be value plays…but as written in there, it may take another decade before these names move…If anything, I’ve admired their ability to market so well, it caught our eye last year.

~Brain dump~

  • One of the best performers in Thailand during 2021 has been JMART & its subs. One has to tip their hat to K. Adisak, he’s a hustler, genuinely started with nothing and now owns a mini empire.
  • Omicron – if there’s no killer wave over the new year holidays, then its over, not looking forward to see the Thai administration bumble its way out of it. But elections are coming, time to please the populous, they can’t keep the majority of the population in fear and bankruptcy – well…they could…
  • Telco’s – had a good back and forth with my dear friend ML on this, I’ve said for the longest time that I just see the two remaining private players upping fees and making great margins and then she happily reminds me “Pon, look at the ARPU, they aren’t going up, constant decline, and don’t forget that True just wants to dominate as the new largest kid on the block”. To which I could only muse “well ADVANC is a small cap now, great upside!”
  • Always wondered what was a good public play on the glass vials’ that are used for the storing these flu shots (sorry vaccines) globally. Just think about it…they want 10 bn shots throughout the world, on top of what is already used for the usual vaccines/flu shots, which companies have benefitted from this? And will they continue to?
  • Still curious re position sizing for a Fund. What’s the right position size? 2-3%? 1-2%? 10-20%? We made +30% in USD terms (local currencies ~40%, yes yes should’ve hedged…) and that’s with an average position size of 2-3%. In my younger days (2005-2013) I would happily whack in a 10-20% position, and average 30% p.a., though this hurt during the years of 2016-2018, don’t have the answer, I think stock picking is straightforward but the key element in investing is the position sizing more than anything else, and this is something practically no one talks about, every article/clip/research paper is about themes/narratives/stocks etc etc.


Now lets have some fun on random predications, but first a review of 2021

~Random Predictions for 2021~

Source: https://www.thaicapitalist.com/random-thoughts-animal-farm-rant-predictions-a-book-a-youtube-clip/

  • Protests will kick off once again when this round of lockdown is over – and watch it become stronger. I’ll give myself a yes as we had gun/bomb fights over at Vibhavadee – though this wasn’t well covered in the news, social media had it all.
  • Napoleon and Squealer will be gone by mid-year – Or they’ll finish their 20 year target. Ah…damn….instead they got rid of Thamanat whom was considered to be the link man
  • CP Group will have to sell off an entity to cover their debt – They’re cash broke. Wrong again, instead they’re recapping, capital markets are willing to finance everything at the moment.
  • Inflation (supply-side) is going to kick off off strongly – Look at soft commodity prices… WINNER WINNER CHICKEN DINNER
  • R#10 will do an act that brings positive public support – Protest related. Is the fact that he did nothing something positive?  Nope wrong again
  • The SET will reach 2,000 – Commodities, low rates, consolidation, fund flows  Started the year @ 1450, peaked at 1,650…so far far away…-17%.
  • Roll-up across industries continue – Your 2nd/3rd favourite hotel, coffee shop, restaurant, supplier/service provider are dead. Unfortunately, correct.
  • USD/THB hits 26 – Thailand is still a net exporter, hasn’t relied upon foreign debt issuance since Thaksin part I (for now), capital flows. Argh! completely wrong on this. Delta happened and boom.
  • For my friends that listened re BTC – it’ll hit USD 100k this year or go to zero.  started the year @ 28k now 49k peaked at 67k….wrong!

So that was a great hit rate of 3/9 Let’s see how I do for 2022

~Random Predictions for 2022 ~

  • Commodities will surprise to the upside – far more than what the market expects  i.e. oil @ 100 in 1H22
  • Politics in Thailand will be noisy, presenting great trading opps – bkk gov election – potential PM election as well. It’s going to be a fun year for the trading portion of anyone’s port…
  • Chadchart wins Bkk, PPRP form the government, Laurel & Hardy get replaced by Tom & Jerry.
  • Tanks on the street as a result of the f**kery that will emerge from the PM elections.
  • Roll ups become more obvious. Caterlisation of industries continue. All hail our oligopoly overlords.
  • BTS Group delists and relists as a Berkshire Hathaway clone. Think I’m joking? Look at how great their investments have performed over the past few years.
  • Omicron is the end of c-19, the SET will reach 2,000, commodities, low rates, strengthening thb, fund flows, higher margins for listed co’s, consolidation, banks will be a key driver.
  • USD/THB hits 29!
  • The next PM I vote for will be kicked out of the country/politics (I have a perfect hit rate over the past 15 years)
  • Thailand will cement its position as the crypto & cannabis destination for the region, we find out that r10 holds a tonne of bitcoin hence the push for SCB to acquire Bitkub (h/t to KP)

And I’m done! Happy Holidays everyone.

  1. Hey Pon,

    Thanks for all your thoughts and musing throughout the year, they are a lot of fun to read and ponder.

    The position sizing question is always interesting and thought you may enjoy this paper and specifically how NZS capital approach position sizing.

    Summary: https://static1.squarespace.com/static/5ca38f3216b6405d11e3d4b4/t/602c15ae7a57d9350da0d9b7/1613501882823/NZS+Capital+-+Complexity+Investing+overview.pdf

    Details:
    https://static1.squarespace.com/static/5ca38f3216b6405d11e3d4b4/t/60131df6a8d27d63432ea5ff/1611865607574/Complexity_2021update-v9pt2.pdf

    Enjoy the rest of 2021 and have a good break!

  2. Thanks 🙏 so much for keep us always informed . Without you I will sometimes lost in this dodgy Market 😉
    Your Ideas and “ Brain Farts” are interesting stuff .
    Have an good 2022 .
    Chris

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