Health, Wealth & Leadership [17 March 2024]

Eat 100 grams of protein, invest 30% in global equities and believe in yourself to get what you want.

Every Sunday I share three lessons. This week we look at research on why we should be targeting the consumption of 100 grams of protein a day, 13 reasons why you should invest 30% of your portfolio in the global stock market, and some beautiful words of wisdom on belief and energy from Alicia Keys.

You can access previous editions of my weekly emails here.

1. HEALTH: How much protein you eat each day is critical.

36 men between the age of 18 and 40 you were recreationally active and had no health conditions were studied in this randomized controlled trial.

Ingesting 100 grams of protein caused a greater muscle and whole-body protein synthesis compared to ingesting only 25 grams of protein.

How much protein you eat is very important. And how much you eat in a day is what matters more than how much you eat in a single time.

Eat more protein! And if you cannot eat a lot through food then buy a protein powder you like and have two scoops of it to make it a 50 grams serving. That's how I start my mornings.

These findings come from: https://pubmed.ncbi.nlm.nih.gov/38118410/

2. WEALTH: 13 reasons why you should invest 30% of your portfolio in the global stock market.

1. India, China, US, Europe - this is where the largest stock markets lie.

2. The US is the world largest stock market. It's 5x larger than India's. 

3. Over the last decade US is the highest performing stock market. 13% dollar compounding over the last decade or so. 

4. There are roughly 800 stocks in the US with a market cap of above $20 billion. India has 50 stocks above $20 billion. Europe will have 400 stocks above $20 billion market cap.

5. Financial reporting language globally is English so we can sit in India and read the financial reports of any global company, understand the fundamentals and make rational investment decisions.

6. Indian market is doing so well. Why should an Indian investor, invest in global stocks? 3 reasons:

   1. US has achieved its dominance through hard work. No other market has a history of creating wealth over such an extended period. This is over hundreds of years. It's backed by data. It's the home of free market and capitalism.

   2. Diversification - Demonetization, Russia Ukraine war, Indian elections, none of these impact the US market. So you are diversifying risk. You are making the wealth creation curve much smoother. You don't have to time your market. More good days (stock pricing rising) vs bad days. 30% of your portfolio should be global.

   3. A big number of middle class kids end up studying in the US. It costs close to a crore a year. You have that liability coming up. So investing in dollar assets is one way of doing this. Even if you don't study abroad, a bit part of our lives - airline travel, Spotify, Netflix, they are actually dollar expenses that you pay in rupees. So you need to build dollar assets.

7. India is the fastest growing large economy. Doesn't that mean it will perform the best in the next ten years? Yes and No. 

   • Often the thinking that high GDP growth = high stock market growth is not the case. For example China grew at an astonishing 13% in terms of dollar GDP growth from 1992 to 2022. In terms of economic growth China has been unmatched. Now if you look at their equity returns, they are less than half compared to the US. And in these 30 years the US economic growth has been around just 5%. So US economic growth has been 1/3rd of China's but their equity returns have been 2x that of China.

   • Another example is Japan, 1970 - 2022, more than 50 years, the GDP CAGR growth isn't very different between them and the US. But the equity market returns have had a huge difference.

8. In the US between 2011 - 2022 the Nasdaq index did 19% CAGR. Marcellus usually target 8-9% higher than the index. How? By keeping the process simple: 

   • Look at the mid and large cap of North America and western Europe. Then filter quantitatively and qualitatively. Quantitatively look at stocks that have given consistent returns (cash flow/invested capital) and growth (revenue and operating cash flow growth). Revenue filter is only 4-5% because quality can reside in many forms. We can identify many cyclical companies that have moats. So in the down cycles investors ignore them which allows them to buy back a lot is stocks. Just these buybacks can add 7-8% to total returns.

   • Qualitative part is not only the annual reports but also channel checks, actually talking to people on the ground who know about the company because they have worked for them or their suppliers. Pre-covid getting these kind of executives on the phone would be difficult but COVID changed mindsets and now getting them on a zoom call has become much easier. Behavior has changed significantly. For example we, Marcellus, did this for Intuit Surgical and spoke to medical students in the US, Europe or Australia to understand why this company is so special. They have almost 90% market share in surgical machinery. We (Marcellus) reached out to these students via LinkedIn or through expert services that connected us. Then we (Marcellus) reached out to hospital management teams. We ask them how happy they are to pay $2 million for a Davinchi robot and why do you want to pay? 

   • Another example is Costco. Their opportunity for growth in China over the next ten years is immense. To understand this we (Marcellus) flew to China and spoke to people. 

   • Interesting Fact: For 40% of S&P500 companies more than half the growth comes from outside the US.

9. Are US companies valued the same way as Indian companies? Most US companies are technology companies. They can be disrupted. So people don't look beyond 5 years. Therefore, they are valued more conservatively. Valuing them is a different exercise vs valuing a Titan from India who has more longevity. If you see a consumption company in the US vs India, the multiple tells you a story. A Sherwin Williams would do a 25x PE. An Asian Paints would be 55x PE. India gets more of a premium.

10. What else does a Global Compounder (non-India companies that Marcellus invests in) have which an Indian stock market cannot give them? 

    • US: There are a lot of pockets in the US where you can make really good money, like Aerospace and Defense. Many suppliers are monopolies. Another example is pet ownership; Idex machines are used every time your pets get tested.

    • Europe: Luxury brands are typically European. They have a heritage, like Hermes, and other brands that are Italian and French. Every time someone is getting rich in India, they are making those companies richer because they buy the luxury products that they have created over centuries. 

11. S&P is at an all time high. Is this a good time? Market is trading at 20x PE. But if you look beyond the FAANG stocks that skew the PE, there are opportunities. So be stock specific.

12. Risk associated with investment in US? Currency. In last 30 years $ has usually appreciated 3-5% compared to rupees. Only between 2004-2008 did rupees rise. This risk is minimal. If there is global turmoil dollar is a hedge because it is the safe haven. This is a hedge. For the Indian market to stay competitive, the currency has to stay competitive. For the currency to stay competitive, given that foreigners want to invest in India, Indians also have to be able to invest outside India.

13. Recommended books - This time is different, Eight centuries of financial folly, and Capital Returns by Ed Chancellor.

Lessons from Marcellus: Global Equity Investments with Saurabh Mukherjea and Arindam Mandal.

3. LEADERSHIP: We don't get what we ask for. We get what we believe.

We don't get what we ask for.

We get what we believe.

And what we believe about ourselves shows up in our energy.

It's how we walk into a room.

It's how we communicate through body language.
 
"I don't deserve to be here."

It's whether we sit up straight or hide out at the back of a meeting.

At times my own energy has been saying, "Im cool with the bare minimum, don't give me more."

Without knowing it, I stunted my growth because I was scared to be magnificent and doubtful that I was.

I have embraced experiences I never dreamed I would have.

And I have risen to some enormous moments.

But there is still more I can do.

Other ways for me to grow.

And as I keep relearning, it's ok to own a desire for more.

Alicia Keys: It's worth listening to her say it.

Other posts on LinkedIn and WhatsApp:

• The best diet is the one that you can stick to.

• Don't call yourself an investor if you aren't willing to hold.

• Struggling in toxic relationships? It may be a reflection of how you treat yourself.

I build businesses by growing revenue through systems and processes. Posts about how I stay healthy, make money and lead. Region Head @ EthosData VDRs. Founder @ Happy Ratio Diet. Long-Term Investing Evangelist @ Marcellus.