Archive for April 12th, 2018

How the Quakers became unlikely economic innovators by inventing the price tag

April 12, 2018

We tend to associate economic developments with big theories and big bang reforms. But dig into economic history and you realise how small things matter much more. Infact, we take several things for granted today but when they were introduced sometime in history they created a revolution of sorts. For instance bar codes, shipping containers and so on.

Add price tags to the list as well. This video tells us how Quakers ended up inventing the price tag. The circumstances were unusual driven by morality and opposition to frequent price changes:

Belying its simplicity and ubiquity, the price tag is a surprisingly recent economic development. For centuries, haggling was the norm, ultimately developing into a system that required clerks and shopkeepers to train as negotiators. In the mid-19th century, however, Quakers in the US began to believe that charging people different amounts for the same item was immoral, so they started using price tags at their stores to counter the ills of haggling. And, as this short video from NPR’s Planet Money explains, by taking a moral stand, the Quakers inadvertently revealed an inefficiency in the old economic system and became improbable pricing pioneers, changing commerce and history with one simple innovation.

Superb stuff…

 

Advertisements

Key lesson from Buffet and Munger duo: Simple makes you money…

April 12, 2018

Another nice post from Dhirendra Kumar of Value Research.

For close to two decades, as technology companies took over the world and started eating up practically every industry, the world’s greatest investors ignored it. For all practical purposes, Warren Buffett and Charlie Munger missed the technology bus. They started to invest in Apple and IBM only recently, after the former has transformed into a consumer durables company and the latter into a business services company. Why did they avoid technology? And more importantly, is there anything that us mere mortals can learn from thi

Even during their early years, Buffett and Munger often said that they did not invest in the stocks of companies whose businesses they did not understand. A simplistic response would be that they missed out on a lot of great investments because of that. Despite always having billions of dollars of investible surplus, they never made a dime out of stocks like Google and Amazon, which delivered more than 20X for investors over these years.

And yet, the duo is pretty sanguine about the opportunity lost. The reason for this is that they are still the most successful investors in the world at this scale. They were successful because they invested in businesses they understand. In hindsight it’s easy to say that they missed out on Amazon and Google. However, they also missed out on Pets.com, Webvan, Myspace and other expensive failures. Since they did not understand the business, they were just as likely to invest in these duds as they were to invest in Amazon and Google. After all, the great media moghul, Rupert Murdoch, did buy Myspace for US$ 580 million and then sold it four years later for US$ 35 million. To avoid this 94 per cent loss, all Murdoch had to do was learn from Buffett and Munger and not touch businesses he did not understand.

And that’s exactly what we should do too.

 

No matter what product or service we are buying or using, nothing impresses us more than features, jargon, and complexity. Perhaps the modern technological world has trained our mind to champion most of the new wonders of the world that are too complex to understand. The underlying assumption is that anything that is complex is the best of the lot.

Unfortunately, in personal finance, this idea is fatally wrong. In case of personal finance products, simplicity is not just useful or helpful, it is an absolute necessity. The reason is simple–if an investor does not fully understand a financial product or service, then he or she has no way of telling if it is suitable at all, regardless of how good its seller may claim it is.

Railways to make the Marethan train popular amidst tourists…

April 12, 2018

The stories on old trains and attempts to restore old history are always great to read.

This one on restoring and making Matheran train more popular:

The Central Railway (CR) is planning a series of measures to make the Matheran toy train service popular. Key among them is to reintroduce the heritage steam engine. The CR is conducting trials and will be holding a ceremonial run on April 14 between Aman Lodge and Matheran.

Divisional Regional Manager S.K. Jain said, “We want to attract as many tourists as possible. We shall be conducting a ceremonial run of the steam engine with two coaches on April 14.”

The reintroduction of steam engines is part of the Indian Railways’ plan to promote its heritage and attract tourists. Apart from Matheran, steam engines will be introduced in other hill station routes such as Darjeeling-Siliguri, Kalka-Shimla, and Kangra Valley. The steam locomotive will not be coal-fired, but will be powered by diesel.

The CR has increased services on the three-km Aman Lodge-Matheran section since March 30. It is currently running 21 services on Fridays and 22 on the weekend. On Mondays, it operates 17 trains and during the remainder of the week, it runs 14 services daily. Railway officials said their weekend earnings have nearly tripled after introducing the shuttle service. Soon, one will be able to book tickets of the toy train on the IRCTC.

Among the other proposals is a revolving restaurant, where a coach will be placed on a turntable. The other plan is to renovate British-era bungalows. The CR also plans to have a heritage gallery, food plaza, and rest rooms.

The CR will be teaming up with the IRCTC to prepare packages aimed at foreign tourists. The packages will include booking of resorts at the hill station. “We have noticed that most foreign tourists either start their India tour in Mumbai or end it here. We are looking to target these tourists and give them an experience,” Mr. Jain said.

The train services were shut in May 2016, after two derailments. The CR restarted the toy train in October 2017 between Aman Lodge and Matheran. The line was opened in 1907, and railway officials are hoping to have it included in the UNESCO heritage list.

 Hope to do this trip sometime…

Waqf – an economic perspective

April 12, 2018

A nice speech from  Mr Marzunisham Omar, Assistant Governor of the Central Bank of Malaysia. It is always interesting when central bankers give a much broader perspective than just interest rates and inflation.

In this piece Mr Omar discusses Waqf which is basically endowment in Islam and how to make most of this religious norm.

First some history of Waqf:

(more…)


%d bloggers like this: