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Commodities were hot in 2007. and they will stay hot in 2008. But when most people think commodities they think Oil, Steel, Copper etc.

But the biggest stories will be in food commodities… A couple of stories

1. CNN has a video about the “Queen of Oranges” - an uneducated illiterate Yemeni woman who is one of the biggest wholesalers of oranges in Yemen and the Middle east. Apparently she sells 270,000 dollars of produce per day!
2. Mango producers in the Ratnagiri district and the rest of the Konkan area of India have never had it so good. Apparently the global demand for Mangoes “all the year around” has given rise to giant orchards on the Sahyadri hills in the Konkan. Using special strains of mango trees, they manage to produce mangoes in just 2 years after planting as compared to 7 years previously. The mango plants and mangoes are germ resistant and a single plant produces 40 kilos of mangoes per year.

Agri-products and “manufacturers” of Agricultural products will really prosper as two trends take hold -

• As supermarkets push on to create their own private label products, newer customers for the producers are created. Old intermediaries will be pushed out.
• As the middle class consumers in China and India get more comfortable with the concept of “I eat the food I want to eat, when I want to eat it”, the year around production in warm climate countries like India, Kenya and Brazil to fulfil this want will increase the business of agriproducts in its entirety, and exotic produce in particular

So
a) If you’re a producer - get serious about positioning - market your product as an attractive addition to the menus of consumers and target retail customers to support them in their private label efforts
b) If you’re an investor - start researching agricultural companies and their position in the “value chain” from farm to shop
c) If you’re a consumer - enjoy your meal!

Warren Buffett recently talked to a bunch of students at the University of Florida’s MBA school. The talk goes about how to pick companies, understand them, and views on different trends in the economy. Have fun watching and learning from one of the best of them…

Whoever wrote this text needs to stand up and be counted… He must be an awesome copywriter… It’s inspirational and gets me (in any case) to work harder.

On a more sober note, McKinsey and Company has a new series of articles on the McKinsey Quarterly titled “Building a better India”. Take the time to read it.

I got these from fool.com, where they interviewed Mohnish Pabrai

Maybe there's something to it..

1. 52-Week Lows on the NYSE (published daily in The Wall Street Journal and weekly in Barron's)
2. Value Line (look at their various "bottoms lists" weekly)
3. Outstanding Investor Digest (www.oid.com)
4. Value Investor Insight (www.valueinvestorinsight.com)
5. Portfolio Reports (from the folks who put out OID)
6. The Wall Street Journal
7. Financial Times
8. Barron's
9. Forbes
10. Fortune
11. BusinessWeek
12. The Sunday New York Times
13. The Value Investors' Club (www.valueinvestorsclub.com)
14. Magic Formula (www.magicformulainvesting.com)
15. Guru Focus (www.gurufocus.com)

I just love that line in this article in CNN Money. hahaha India's capital markets are still shallow, but there's money flowing in, so while there is a chance of manipulation, that chance goes down each day. Admittedly, the author is a lover of democracy and feels that it will make up for deficiencies in execution on the part of India vis-a-vis China, but being an Indian, I just love the fact that companies look to India now as the place to invest. 4 great reasons:

1. It's still cheap to buy out companies or grow organically.
2. You have property rights, and can own your own business (in most sectors now)
3. It's got a massive market of "brand-loyal" customers - most of them in the middle class.
4. There's price parity in what the consumer will pay between India and the West.

Think about that.. again.

This is a great article by Ralph Block on fool.com - the Motley Fool website. It introduces guidelines along which the different asset classes - bonds, commercial real estate and equities are "priced", and offers that REITs are of modest risk and have the same return on capital as equities. Although the earnings season of REITs in the US have ended, the first game has just begun in Europe. Hello Germany :-) It's a simple article, requires a small bit of arithmetic to understand, so I recommend you to go and read it.

I attended an information session at my old alma mater - the Rotterdam School of Management, and found that my favourite professor was teaching an elective at that time on investment management. So I ducked into the class to relive the experience again.. One of the topics covered was how to pick mutual funds based on factor and style analysis. Well, to cut a long story short, she told us that a very distinguished Nobel laureate called William Sharpe who's studied funds in depth suggested that the best ways to pick a mutual fund were in this order of descending importance

Expense ratio

Churn of stocks held

... The message was - find the funds that have the lowest operational and transaction costs. Amazing isn't it? The market and the fund's mandate makes sure that no one fund can beat the market at all times. So effectively, funds will yeild the same return on investment - in the long term. The only way an investor can get above average returns is if the fund's costs were lower... :-) I wonder if I can use this principle in pricing other physical products and services. (Any ideas would be appreciated here) When I worked in India for an outsourcing firm, there was tremendous cost control.. The message being - the lower your costs, the more value you can provide to a customer, and the better the chance you will survive in the long term. Lessons that are tough to forget. But it was nice to hear them again in a totally different context.