Saturday, April 6, 2013

When Moat is not enough

True, when moat, float or neighbour's goat is not enough.

Investing in stock implies wresting money from others in a capitalistic society. Or as Charlie Munger calls, "being rats in another persons' granary".

Nepotism and Monopolies which stifle the life of a thriving and creative society are actually great friends of investors. I am not really proud of it but then I am not the prime minister right ! I am an average Joe who has to make ends meet and earn the hard way for retirement.

Bajaj Scooters did not build its foundation without a stranglehold of monopoly during licence raj for over 30 years; those were the days when waiting period ran into years for an obsolete phone or two wheeler in India.

Monopoly sounds like a great idea, however, there are instances when it does not work in an investor's favour despite investments' monopolistic traits. That is when society at large rests on the laurels of ancients who invented something thousands of years back, gives into moral and economic debasement, and when trust is breached. Greece situation is not very different from Indian one, Greece adore the inventions of the past and Indians may hold notion-of-feeling-of-being-spiritual and old literature as their treasure. I know in between these blanket generalizations there is a tiny spectrum of people who are otherwise.

OPAP ( is a Greek monopoly with an exclusive license for soccer betting until 2020 and lottery license until 2030. Greece Govt. has blocked all rulings of EU to open up the market. In fact Govt. routinely blocks websites to prevent citizens from participating in any gambling activity that is not run by OPAP in geography of Greece.

When purchasing power has been hit by people earning 60,000 Euro per annum and not producing output worth 10,000 Euro, then monopolies and conjointly buy-and-hold fails.

My search is on for investment in another morally corrupt monopolistic venture.