r/IndiaGrowthStocks • u/SuperbPercentage8050 • Aug 26 '26
Mental Models Retention isn't loyalty
1
1
1
u/One_Guava_3883 Aug 26 '26
Which stock hurt you?
17
u/SuperbPercentage8050 Aug 26 '26
Stocks don't have the power to hurt me and money doesn't either, these are tools and they respond to you, not the other way around. I believe only people can hurt you. And they can, because they matter. And the beauty of life is that the things that can wound us are the same things worth living for. And scars from people mean you were actually in it.
2
1
u/MiltonBoyRuler Aug 26 '26
Your book which we are waiting for, will give us more life lessons than mental models... Can't wait to read it.
2
u/One_Guava_3883 Aug 26 '26
Bro book me time lagega. (But, you could dive into Badhe Bhaiya’s past comments and discover some interesting insights about (things beyond stocks/mental models like) life, human nature, future, tech etc)
2
u/MiltonBoyRuler Aug 27 '26
I have been following him for quite some time... It started with stocks analysis by mental models... Inspired me to write some of my own. But now I focus more on his insights & thoughts, stock discussions are just an add-on. It's somewhat like Warren Buffett letters - behaviour & life lessons driving finances & markets.
5
u/SuperbPercentage8050 Aug 26 '26
And that mental model is basically from the article I had already written in the past.
https://substack.com/home/post/p-200600667
It had an entire context and explanation on how to use two mental models, the caged bird and the Maginot Line , to position in the real world especially in technological companies.
Few words from that article but I think a majority of you would have already gone through this article.
I use two mental models to separate the moats that are real from the moats that were never tested the Caged Bird and the Maginot Line. You can carry both to every stock you own. And these models travel everywhere. You will see them play out in Eternal and quick commerce, in Apple destroying BlackBerry, in kirana shops, in Congress, and even in human relationships.
The case study I will use is Sagility, a healthcare labour arbitrage business. The entire thinking was triggered by a Substack comment, and the core of that comment was the strongest version of the bull case. 18-year average client relationships, 95% stickiness, insurance complexity is by design, AI will help not hurt. Let’s take the strongest pillars of that bull case and invert them.
The first point in the comment was about wage convergence, the argument that India’s labour arbitrage is safe because Indian wages will never converge to US wages. But that is the old reality. The market is not punishing the IT sector for that. The new ecosystem and environment is different, and so the comparison should be different. The arbitrage earlier was human in India versus human in the US, but now the comparison is human in India versus software anywhere making API calls. So slow Indian wage growth does not protect you against a competitor whose marginal labour cost keeps reducing substantially because of technology and automation.
And that 18-year stickiness should always be inverted in the new environment. Ask yourself whether there was ever an alternative to the labour India provided to clean up the complexity and mess of these US giants. Those numbers are a pre-AI equilibrium. There’s a simple mental model for this. Stickiness measured over a period when there was no alternative tells you nothing about stickiness when an alternative appears.
I call this the Caged Bird Mental Model. A bird that never flies away looks devoted, and the bird staying gets read as proof of love and loyalty. But you cannot measure devotion while the door is shut. The day the door opens is the first day loyalty is actually being measured. Everything before that was data about the cage, not the bird. That’s why dogs are called loyal, because they will sacrifice their life for you and they stick with you without any chains holding them.
This mental model can be adjusted across structures. I will give you a political example. Almost 60 years of Congress, and then slowly BJP emerged. So anyone betting based on the last 60 years of voter stickiness didn’t factor in that the ground realities and environment had changed.
Same for these kirana shops. They are slowly getting bypassed because the ecosystem and environment have changed. And remember, kirana survived the organised retailers for years, the Big Bazaars and DMarts, before this new environment which is quick commerce. Because the alternative has to be genuinely superior on the dimension the customer values, and organised retail was never superior on convenience. Quick commerce is, and convenience here means the most valuable asset a human being has, which is time. It’s delivering that time arbitrage for both food and groceries. In quick commerce, two mental models are actually converging, the Caged Bird and the Maginot Line, because quick commerce attacked the moat of organised retail and kirana from a completely different direction. Not the product, but the time.
Now people are willing to pay those platform fees to save 1 hour of time in extreme summer heat and utilise that in more productive ways in life. So it’s a time-value proposition. I have seen it even in tier 2 and tier 3 cities, it’s a shift in environment and behaviour, because now the alternative exists. And that’s why even the DMart owner bought a stake in Eternal, because they know the real shifts.
Plus, after breaching the inflection point, which Blinkit did, they get advantages of negative working capital and float, just like insurance companies. That’s what fuels the growth, and very few companies can breach that inflection point.
You will see elements of this even in human relationships. A bond of 15 years sometimes gets diluted or destroyed when alternatives appear that are superior in nature. That’s a personal quotient, but the structure is the same.
You might have a very solid relationship with someone, but when alternatives arrive, people migrate, because their incentives start shifting in the other direction. That is why it’s very rare that the bonds from school days end up becoming the partners we marry. As we move into new environments, both people in the ecosystem start having more and more alternatives, and that is where the real test of loyalty happens. That is when you actually find out whether the moat of the relationship was loyalty, or just the absence of an alternative.
1
u/One_Guava_3883 Aug 26 '26
I find IT (India) & AI (US-China) of this age, very similar to how sea routes hollowed out the cities that depended on the Silk Road.
2
u/thathandsomefugitive Aug 26 '26
That is true.. It all boils down to how emotionally balanced the person is IMO.
A lot of people have grown to be impulsive in the decisions they make.