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Pinanity
An infinite warp of cause and effect. Haphazard Linkages is a repository of writings on investing, machine intelligence, history and psychology. By: @pinanity

Is Inflation Really A Risk?

This edition illustrates how we test market biases, through our self-learning framework (example covered here). To highlight and contrast cross asset-class behaviour, we illustrate with examples from Equity and Credit markets. The edition concludes with some thoughts on algorithmic models and their utility in thinking about real-world phenomena.

As economies emerge from COVID lockdowns, market attention has landed on Inflation Lift-off. A section of market participants, and mainstream media, hold the view that this is the sell-off/top trigger for markets.

Is Inflation really a Risk?

Source for the data used in this edition.

The Inflation Effect?

Unlike natural sciences, where independent and dependent…


Will growth create value?

Zomato Limited has filed papers to go public in India, and is looking to raise $1 Bn. IPO Pricing is yet to be finalized.

This edition delves into Zomato’s business, and offers some thoughts on the India opportunity and valuation.

This edition is laid out in 5 sections

1. Business

2. Unit Economics

3. Zomato Mental Model

4. Valuation

5. Interesting footnotes

Usual disclaimers apply. This piece is for informational purposes only, and reader attention is urged at exercising their independent judgment. Nothing mentioned here should be construed as investment advice. …


The Wizard of Odds was a master of probability.

In a break from our usual long-form pieces covering businesses and valuation, this edition focuses on how we use self-learning algorithms in our internal framework.

Our basic philosophy leans away from predicting future outcomes.

We are better served by triangulating embedded market expectations, then corroborating/diverging with embedded expectations. Our self-learning algorithmic framework is built on a similar game theory philosophy.

Specifically, our self-learning algorithmic framework is built on the following foundations.

  1. Instead of imposing a user-supplied, hard-coded version of reality (e.g. ‘Over 40x P/E is expensive’, or ‘we will only use the 50/200-day moving average’), the framework needs to learn…


The art of guesstimation in the face of uncertainty

Coinbase Global, Inc IPO is around the listing corner. At a time when IPOs and Cryptocurrency of all hues are attracting attention, Coinbase’s Direct Listing IPO has been in a league of its own.

As an important cryptoeconomy infrastructure player approaches IPO, how should one think about the business, IPO pricing, and valuation?

Guesstimation is a difficult art form. When this art form is called forth to take up arms against a previously unknown adversary (cryptoeconomy infrastructure players), it often beats a hasty retreat.

When market participants are confronted with opportunities with lack of precedent, markets fall back to heuristics…


Sifting through 7 million titles for the Top 500…

Yet another hyper local lock-down looms large around the world. From the slew of what to watch? questions coming our way, it appears that our binge watching buddies are at the end of their line. Patience — in discovering the next thing to watch — is wearing thin. The task of googling each title and peering at multiple ratings before making a time commitment decision is a rather laborious exercise.

Help with Discovery on What To Watch? would be a welcome antidote.

We ran down the rabbit hole of the comprehensive IMDb datasets, for some fun aggregation and organization. …


Reflections on an evolving country over the years.

One of the things I enjoy is to observe how humankind organizes itself, and to chronicle some of the long-wave changes that are shaping a country.

Over the past few years I have traversed 16 states across India, with over 17,000 km of rubber on roads.

This year’s road trip was particularly interesting, as India is emerging from a widespread lock-down in a bizarre year.

The following are some impressions of the long-wave changes that are shaping India.

India Mental Model: Three Buckets

A useful mental model is to think of India as 3 buckets.

India 1 (75–100 million population): Premiumization

India 1 thinks, acts and consumes like a Westernized, high-income…


How will Apple Inc look like in a decade?

Apple released its latest 10-K recently.

Yours truly is a fan of long-term history.

The 10-K is a good excuse to take a bite of Apple’s historical evolution, and consider how Apple would like in the coming decade. As with all things pertaining to the future, the following should be considered as one observer’s musings. Reality has no obligation to adhere to assumptions; and it may look dramatically different from the version posited here.

A SHORT HISTORY

Source: Company filings. “Others” Prior to 2012, includes iPod, Peripherals & Hardware. “Services” Prior to 2012, includes Music & Software Services.

In the 90s, Apple struggled through a period of uncertainty. The company looked very different back then compared to today. It was primarily a Products firm…


When the unstoppable force of a Story meets the immovable object of Plausibility.

We yearn for the warm cloak of certainty, in a windswept world of imperfect information and unknowable futures.

Scratch the optically alluring surface of most stories, and one enters a labyrinthine world of Plausibility Hoops. Where the observer is forced to pause and test the plausibility of the key assumptions underpinning each story line.

This piece looks at India’s most valuable start-up: PayTM.

…and the various Plausibility Hoops that the story needs to conquer in order to emerge victorious on the other side (read: 1) survival, 2) long-term value creation).

Disclaimer: We had no access to either the company managements…


A perception problem

Vedanta Ltd (VEDL) delisting offer has been receiving a lot of attention.

Most of the junta’s demands for a higher price is based on:

  1. Some variant of the general argument of VEDL having enough cash to pay more (needn’t mean an automatic obligation to pay more),
  2. (I̶ ̶p̶a̶i̶d̶ ̶o̶v̶e̶r̶ ̶R̶s̶.̶3̶0̶0̶/̶s̶h̶a̶r̶e̶)The stock has seen north of Rs.300/share, so how can ‘management shaft shareholders’ by paying less?

Casting aside emotional arguments for a moment, here’s a look at the valuation that the business can support intrinsically. …


Pavlovian Conditioning & the Psychology of Herding

Pavlov presented dogs with a ringing bell followed by food. The food elicited salivation, and after repeated bell-food pairings the bell also caused the dogs to salivate. Over time, the dogs began salivating upon seeing the white coat of lab assistants. Pavlov found that after repeated association, the dogs would respond to stimuli other than food.

Ivan Pavlov would’ve probably found more interesting subjects had he peered into the largest laboratory of human psychology in the world: financial markets. Where frigid numbers and emotive participants spar enthusiastically in a perennial drama-in-motion. Where participants interact with the crowd, internalizing the herd’s…

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