Early Exits, Lost Billions
We all admire legends like Mark Zuckerberg, Warren Buffett, Steve Jobs, and Elon Musk for building billion-dollar empires. Yet, behind their success lies a lesser-known truth: they didn’t do it alone.
Each of them had co-founders or partners or investors who were part of the journey but exited the stage too soon, missing out on the chance to share in the incredible wealth that followed. These four instances offer valuable lessons about vision, timing, and staying the course.
Ronald Wayne (Apple)
Wayne co-founded Apple with Steve Jobs and Steve Wozniak but sold his 10% stake for $800 in 1976. Today, that stake would be worth over $200 billion (making him the fifth richest person)
Marc Randolph (Netflix)
Randolph left Netflix early, before it grew into the streaming giant it is today. While he benefited financially, a full stake in Netflix, now worth over $200 billion, would have translated into several billions more.
Rick Guerin (Berkshire )
In the 1973-74 downturn, Rick was levered with margin loans. And the stock market went down almost 70%. Rick got margin calls, and he sold his Berkshire stock to Warren Buffet at under $40 apiece (today $700,000). His Net worth would have been $4 Billion.
Andy Bechtolsheim (Google)
Bechtolsheim, an early investor in Google, provided the company with a $100,000 check before it was even incorporated. While he did profit handsomely when Google went public, had he retained his entire stake, it could have been worth over $10 billion, far exceeding his eventual earnings.
India in Focus: A Growth Story Unfolding
“India can become AI chip capital of the world”: SoftBank’s Masayoshi Son
“India ‘kind of laboratory to try things”: Bill Gates, Microsoft
“India is becoming ‘startup nation’ of the world” WEF President Borge Brende
“The world is bullish on India” IMF’s Krishnamurthy Subramanian
Economic Indicators Overview – October 2024
Manufacturing PMI: India’s Manufacturing Purchasing Managers’ Index (PMI) moderated to 56.5 in November 2024, compared to 57.5 in October. Despite the slowdown, the index remained firmly in the expansion zone (>50) for the 40th consecutive month. Growth was bolstered by accelerated exports and sales, although the rate of output expansion softened. Rising input costs posed challenges but were offset by resilient external demand.
Services PMI: The HSBC India Services PMI, compiled by S&P Global, held steady at 58.4 in November 2024, marginally down from 58.5 in October. Robust growth in the services sector continued, supported by strong demand and record hiring. Domestic and international orders contributed to sustained momentum. However, input cost inflation surged to a decade-high, leading companies to pass on price increases to clients, reflecting in higher output prices.
GST Collections: Gross GST collections stood at ₹1.82 trillion in November 2024, marking an 8.5% year-on-year growth. This sustained the streak of monthly collections exceeding ₹1.4 trillion for the 33rd consecutive month. The April 2024 record of ₹2.1 trillion remains unmatched but sets a high benchmark for fiscal performance.
Core Sector Production: The index of eight core industries grew by 3.1% year-on-year in October 2024, up from 2.4% in September. Seven out of eight constituent sectors recorded growth, with coal production leading at 7.8% year-on-year. The improvement was influenced by a favorable base effect and steady industrial demand.
Industrial Production: Factory output, as measured by the Index of Industrial Production (IIP), increased by 3.1% in September 2024, a rebound from a 0.1% contraction in August. Growth was observed across all three major sectors—manufacturing, mining, and electricity—highlighting a broad-based recovery.
Credit Growth: Scheduled Commercial Bank credit grew by 11.15% year-on-year as of November 15, 2024, compared to 20.64% in the corresponding period of the previous year. The decline reflects a high base effect following the merger of HDFC Ltd. and HDFC Bank. Despite this, credit growth remains healthy, supported by robust lending activity across sectors.
Equity Market Performance – November 2024
Market Indices
The BSE SENSEX rose by 0.5% in November 2024, outperforming the NSE NIFTY index.
Both the BSE Mid-Cap and BSE Small-Cap indices underperformed the SENSEX, gaining only 0.1% and 0.4%, respectively, during the month.
Top-performing sectors for November 2024 included:
Information Technology (IT): +5.8%.
Teck: +4.9%.
Consumer Durables: +3.0%.
Institutional Flows
Foreign Institutional Investors (FIIs): Net FII outflows from Indian equities stood at – $2.5 billion in November, following significant outflows of – $11.2 billion in October 2024.
Domestic Institutional Investors (DIIs): DIIs continued to be net buyers, with inflows of + $4.5 billion in November 2024, though lower than the + $12.8 billion recorded in October.
Year-to-Date (CY2024) Trends
Net FII Flows: Negative at – $2.0 billion.
Net DII Flows: Robust at + $58.2 billion, significantly outpacing FII activity in the Indian equity cash markets.
This divergence highlights the sustained strength of domestic inflows, even amid global market uncertainties and persistent foreign outflows.
Indian Fixed Income Market Outlook – December 2024
Monetary Policy
On December 6, 2024, the Reserve Bank of India (RBI):
Maintained the policy rate, aligning with market expectations.
Reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4%.
These measures reflect a balancing act between inflation and growth. The recent inflation print exceeded 6%, breaching the RBI’s upper target range, and prompted the central bank to revise its Q3 FY25 inflation projection to 5.7%. Despite limited room for immediate rate cuts, weaker-than-expected Q2 GDP growth and downwardly revised GDP forecasts for H2 FY25 provide scope for easing. The RBI is anticipated to cut policy rates in February 2025, with inflation expected to moderate to ~4% by Q2 FY26.
Liquidity
Banking System Liquidity: Average system liquidity remained robust at ₹1.42 trillion in November 2024 (vs. ₹1.53 trillion in October).
Core Liquidity: Core liquidity (system liquidity + government balances) declined sharply to ~₹1.4 trillion by November 22, from ₹3.2 trillion at October-end and ₹4.3 trillion at September-end.
Key drivers included:
RBI forex interventions to address currency pressures.
Higher cash demand during the festive season.
Fixed Income Market
Yields in the fixed income market remained largely range-bound in November 2024.
The 10-year G-sec yield traded between 6.75% and 6.85%, influenced by:
A higher-than-expected monthly inflation print, which temporarily pushed yields upward.
Softer-than-expected GDP data, which moderated yields towards month-end.
Fiscal Policy
Gross tax receipts for April-October 2024 grew by ~11% year-on-year, supported by:
Buoyant direct tax collections.
Resilient indirect tax performance.
The record-high RBI dividend further boosted non-tax revenues, strengthening fiscal buffers.
Key Events to Watch in December 2024
1. U.S. Policy Developments: The potential for increased tariffs on foreign goods entering the U.S. remains a critical area of focus as the new administration shapes its trade policies. Such measures could significantly impact inflation, global trade dynamics, and price-sensitive industries and markets worldwide.
2. Federal Open Market Committee (FOMC) Meeting The FOMC is scheduled to meet on December 18, 2024, to deliberate on monetary policy. Following rate cuts in September and November 2024, the policy rate currently stands at 4.5%-4.75%. Markets have largely priced in a 25-basis-point rate cut, though key economic indicators like labor market performance and inflation could influence the final decision.
3. Additional Market Monitors
Festive Season Demand: Consumer spending trends during the festive season will provide insights into domestic economic resilience.
Oil Market Volatility: Fluctuations in crude oil prices may influence inflation and trade balances, impacting energy-intensive industries.
Central Government Capex: Updates on capital expenditure plans by the central government will shed light on infrastructure growth and economic recovery prospects.
GST Council Meeting: Key policy announcements from the Goods and Services Tax (GST) Council could affect taxation and compliance trends, particularly for businesses operating in India.
These developments will play a significant role in shaping market movements and economic sentiment through December 2024.
Looking Ahead – Market Outlook
November 2024 witnessed a series of significant global and domestic developments, resulting in heightened market volatility. Key factors to watch in the coming months include:
Global and Domestic Factors
U.S. Policy Shifts: With new U.S. leadership set to assume office early next year, potential material policy changes, particularly in trade and fiscal strategy, warrant close monitoring.
State Election Impact in India: On the domestic front, recent state election results could reinforce policy continuity, boosting investor confidence and market stability.
Q2 FY25 GDP Performance: India’s GDP growth for Q2 FY25 moderated to a seven-quarter low of 5.4% year-on-year, impacted by:
Adverse weather conditions.
Sluggish urban consumption.
Reduced government spending.
Looking ahead, these challenges are expected to ease, supported by higher government expenditure, festive season demand, and a robust Kharif and Rabi harvest.
Corporate Earnings Trends
Earnings Downgrade Stabilization: The worst of earnings downgrades appears to be behind us, with minimal further reductions anticipated in the second half of FY25.
Sectoral Highlights
Weak overall consumption is offset by a strong premiumization trend.
Global demand-driven sectors like Information Technology and metals exhibit resilience, with minimal risk of earnings downgrades.
Valuation Trends
Large Caps: Valuations have corrected closer to long-term averages.
Mid and Small Caps: Despite recent corrections, these segments trade at a premium, supported by robust domestic flows.
Market Strategy
Navigating Volatility: Given the uncertain geopolitical landscape, currency market fluctuations, and relative Indian market valuations, heightened volatility is likely in the near term.
Investment Approaches
Large-Cap Focus: Well-diversified strategies, such as Large Cap, Flexi Cap, and Multi Cap funds, offer compelling opportunities for medium-term investors.
Downside Protection: Asset allocation strategies, including Multi Asset Allocation and Dynamic Equity, provide better risk-adjusted returns.
Mid and Small Caps: Long-term investors with higher risk tolerance can consider staggered allocations to mid and small caps through systematic investment plans (SIPs).
By maintaining a balanced and diversified approach, investors can navigate the current environment while positioning for long-term growth.
