Friday, October 6, 2017

What a Swiss Pianist taught me about Contrarian Thinking

It was a pleasure and privilege to attend a solo piano concert by Swiss pianist Nik Baertsch at the Calcutta School of Music on the Saturday preceding Durga Puja (the biggest religious and cultural festival in the state of West Bengal - and now celebrated all over the world by NRIs).

A sparse and motley group - ranging from young music students to very senior citizens - were in attendance. The pianist set the tone for the evening by stating that his performance will explore the rhythmic rather than the melodic aspects of a piano.

What followed was an hour-long exploration in rhythmic sounds that can't be called music in the traditional sense of the word - because it had little harmony, almost no emotion and was not pretty to listen to.

Having heard other (mostly European) pianists, who plucked the piano strings as well as played on the keys during their mostly melodic performances, I was interested to find out what Nik Baertsch would do differently. 

He turned the grand piano into a percussion instrument - drumming up a steady beat on the keyboard with both hands; occasionally running his fingers across the strings; getting up from his seat to thump on the piano strings with both hands; using implements like sticks and mallets to strike various metal and wooden parts inside the piano; playing an almost melodic part on the keyboard. It was a dynamic and spellbinding performance, completely different from anything I have ever heard before.

Nik is obviously a very accomplished and well-trained pianist. Yet he chose a unique way to explore and expand the sonic possibilities of a piano. That got me thinking about the way people invest.

Most small investors prefer to take the easy way forward by following the herd. They buy the stocks that well-known investors or funds are buying, or the ones that are recommended by business papers or TV channels.

Developing a contrarian attitude doesn't mean doing the opposite of what others are doing. It means thinking differently and looking beyond the here and now to get an edge in the market.

For example? The recent pronouncement by Nitin Gadkari that automakers will be 'bulldozed' to replace petrol and diesel vehicles with electric vehicles by 2030 sent analysts scurrying to identify the likely winners in the electric vehicles and ancilliary space.

Not surprisingly, names like M&M, Exide and Amara Raja were being recommended. As if it was a no-brainer.

A little Google search will tell you that the largest EV maker in terms of sales is Renault-Nissan (not Tesla). Renault-Nissan is already present in India. Tesla is waiting to get in. If either or both start producing EVs in India, M&M's EV dreams will lay in tatters.

Who supplies batteries to Renault-Nissan and Tesla EVs? LG-Chem and Panasonic/Sanyo respectively. Both LG and Panasonic are present in India already. If EV sales start picking up, will batteries be supplied by Exide and Amara Raja or by LG and Panasonic?

It is this kind of thinking that will help you to catch the winners rather than the losers in the EV space. 

(If you do catch any of the EV winners, you needn't thank me. Thank Swiss pianist Nik Baertsch instead.)


kumar shah said...

Don't think about Panasonic will not make lithium battery...panasonics private entity makes it
And for lg dont know which listed player are you talking about sir

Subhankar said...

Thanks for your comments, Kumar.

The point was that Exide or Amara Raja are unlikely to be the likely battery suppliers if Renault-Nissan and/or Tesla start manufacturing EVs in India because international manufacturers prefer to procure from their existing vendors.

Unknown said...

from last few weeks, i was planning to buy samkrg piston, company is good and with good valuations but ev don't need pistons, so this company is not for long term? or the sector is not good for investments? (particularly i.c. engin), sure... company will not face problem from next quarter but may be big investors will start dumping this stock, so can a small investor invest in such sector or companies?

i think ev are still 4 to 5 year away

Subhankar said...

Hi Dhanshri

Whatever Gadkari might have said or meant, EVs are unlikely to replace Petrol/Diesel cars in the foreseeable future.

So, go ahead and buy Samkrg or any other auto ancilliaries that are performing well. But you may want to check Q2 (Sep '17) results before doing so.

The EV example in the post was used to make a point about contrarian thinking. Let Maruti come out with an EV and see how it sells before worrying about the future prospects of auto ancilliaries.