Portfolio Paranoia

Intel’s Andy Grove penned a great book back in 1996 about Intel, business and being paranoid about the competition. People have been asking me what’s happening worldwide, what’s up with India, etc…I see two stories being told depending on the audience.

The positive spin is “in the long term everything will be okay and you might actually want to invest now” and the other is “dude, watch the expenses, be liquid and don’t trust anyone.”   When it comes to my money, I’m absolutely paranoid and the competition is anyone out there trying to reduce my capital. In the last 6 weeks I have seen legitimate deals vanish, what was a viable business plan back in September is now apparently crap. The VC studs at Sequoia Capital had a meeting this week with a slide deck titled “RIP: The Good Time” and in short – get your house in order, things might get real crazy real fast. (Here is summary from Om Malik of the meeting).  

Someone asked me what is the silver lining to all this. I would take this time to vet out money managers, if they can survive this period they can rock in any market. If big companies can be paranoid about the future, I’m not sure why you shouldn’t be. It’s not me being a permabear, it’s just me protecting my capital at all costs.

Here are some great quotes from today’s newspaper:

The property rates in Mumbai will not see a correction above 10-15%, given the land rates are very high in Mumbai…

Gopal Sharma of Gundecha Builders 

Gopal has to be positive or his cashflow won’t be positive

Indians buy a home for long term use, unlike people in western countries

Pravin Doshi, Pres of Maharashtra Chamber of Housing

Seriously, Pravin have you even visited the West or just talking smack?  I know several of my cousins in India that have bought property for a quick flip. And several of my cousins in the US, that only have one house – the one they live in.

Be absolutely paranoid about your portfolio and don’t let anyone sway you.  People talk about risk metrics, the best risk metric is if you can sleep peacefully at night.

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