Tuesday, November 25, 2008

Movies and word-of-mouth: Slumdog Millionaire

Slumdog Millionaire's performance at the box office is worth tracking. Why? I would recommend sampling the product first. You are welcome to tell me what you think- after you see it. ;-)

My first hypothesis is that word-of-mouth would have a huge impact on the movie's box office returns.

Keeping absolute returns aside, my second hypothesis is that this movie would have a fatter tail vis-a-vis initial returns compared to a movie I have mentioned here:

Which products/ brands would have gained the most from an association with Slumdog Millionaire?

What do you think?

Saturday, November 22, 2008

Interesting Times and Investing in Large Cap Companies- Part 1

Is equity investing in large cap companies during uncertain times similar to venture capital investing if the 3 conditions below are true?
1> Your offer of capital makes you a large shareholder in the company.
E.g. Warren Buffet's investment in Goldman Sachs, with the terms he could bargain for.

2> The capital markets enter a period of volatility that begins to approach uncertainty that venture capital investors face in their investment decisions.
E.g. The VIX crossing 85 in October'08, in the context of applying the Black Scholes model to investing decisions.

3> The capital markets face a liquidity crisis/ credit crunch.

Talking points:
1> Are these three conditions enough?
2> Does the "maturity" of the company mean anything beyond the ability to effect change within the organization, and the time required to effect this change?
3> Is looking at this question purely from the financial investing term sheet perspective inherently flawed?

Now that you have been anchored to the 3 follow up questions above, here are a couple more:
1. Is there a category of distressed company investing that is similar to venture capital investing?
2. Irrespective of how you categorize your investments or investing style, would you consider ending up looking at term sheets as an indicator of the end-of-the-road for that particular investment?

What do you think?