26/06/2022
There’s a village in Aurangabad, Maharashtra by the name of Kagzipura.
For around 800 years, they’ve been hand-making paper.
Paper from Kagzipura was used all over India for all these years.
Such was the demand, practically every house in the village was involved in making paper.
Hence the name, Kagzipura (Kagaz means paper).
Rags are chopped to a decided length, beaten, pressed, and dried. What comes out of this is cut. Hand-made paper.
It takes many man-hours and skill to get done. These skills would be passed on generation to generation within the same family.
Earlier, this was the only way paper was made.
Come the Industrial Age, factories started making paper. Large rolls of paper started getting made at a fraction of the cost, time, and effort.
As the years passed, demand for hand-made paper fell, the prices fell. Eventually, paper makers left the hand-made paper industry.
This story is the same across the globe. There are paper makers in Japan, China, parts of Europe, middle-east Asia, and further.
Most of the families involved in the manufacturing have left the industry.
But there is a revival - a small ray of hope.
Despite the higher price of hand-made items, the demand for hand-made paper is rising for its artisanal value.
Gift card makers, diary makers, and a few others love the idea of using hand-made paper.
They appreciate the effort and skill gone into making the paper.
A similar revival can be seen in other similar industries.
Knife makers in Japan are seeing renewed interest. Soap makers in Syria are exporting their handmade soap. Cloth weavers in India are experiencing demand.
While this is indeed good news, a fact that remains is, that these industries will most likely never return to full-scale supply.
Most people buy paper to write on it. How the paper is made doesn’t affect their decision. They do care about the price though.
The same goes with clothes, knives, soaps, brushes, earthenware, etc.
People care about the end result.
The quality should meet a minimum standard and the price should be the cheapest possible.
The technique, procedure, tools, method, time, effort - most buyers don’t care.
Harsh, but true.
There’s this phrase popular in the markets called ‘beating the market’.
What does this mean?
Sensex is an index made up of 30 of the biggest stocks in India. And Nifty is the same but for 50 of the biggest stocks.
If you did nothing else but simply invest in an index, that is, you invest in the 30 or 50 stocks based on the weightage, you would get what is called the market returns.
In India, over the last 20 years, the markets have returned around 14% per annum.
What is ‘beating the markets’?
You, as an investor, should be able to make more than the index returns are. That is beating the markets.
The reality is that a large number of investors are unable to beat the markets.
Most investors involved in day trading lose money - let alone beat the markets.
Many investors involved in long-term investing also make returns less than the market returns.
As surprising as it may sound, some mutual funds also struggle to beat the market.
This is why it is important to compare your investments’ returns against the index.
This isn’t to say beating the markets isn’t possible.
Many investors make returns much higher than market returns through various means.
Many mutual funds too give returns much higher than market returns.
Time and effort are required to become a good investor.
Start small, educate yourself, and increase your investments as you gain confidence through the years.
And there’s nothing wrong with not picking stocks. You can always invest in a good mutual fund. Or invest in an index.
The story of the hand-made paper makers indicates that the markets don't care about how long you've been doing something.
It does not care about 'experience' or how skilled you are at paper making.
You should always listen to the markets. And respect the markets.
Learning and increasing knowledge is the only way an investor can get good at understanding the markets and therefore understanding what is truly good for them.
Praindu Consultancy
9916480741
