Mistakes investors make but armies don’t🧵
The Soviet leadership was panicking.
America had developed bombers planes that could fly to any part of the world (and drop bombs).
Mid-1950s, the Soviet spies learned about a new American bomber plane – XB 70.
America had developed bombers planes that could fly to any part of the world (and drop bombs).
Mid-1950s, the Soviet spies learned about a new American bomber plane – XB 70.
It would be able to fly at speeds over 3000 km/h; heights above 75,000 feet.
Passenger planes even today: speed, ~800 km/h; height, ~40,000 feet.
The Soviet area was the largest in the world – a lot of airspace to guard.
Passenger planes even today: speed, ~800 km/h; height, ~40,000 feet.
The Soviet area was the largest in the world – a lot of airspace to guard.
America only needed to build a few XB 70s. But the Soviets needed many interceptors to block the XB 70 from entering – maybe even thousands.
No time to make new engines. They used engines from a missile – the largest ever used in planes till then.
No time to make new engines. They used engines from a missile – the largest ever used in planes till then.
They wanted to use lightweight alloys. Again, no time or capacity for those. Heavier steel alloys were used for the body.
They fitted only four but humongous missiles to shoot bomber planes.
At panicking speed, the Soviets put together an interceptor plane.
They fitted only four but humongous missiles to shoot bomber planes.
At panicking speed, the Soviets put together an interceptor plane.
In 1967, the MiG-25 (also known as the Foxbat) was shown to the world.
The MiG-25 made America take notice. The details were absolutely scary.
They were so easy to manufacture, every month, about 100 planes were rolled out from the factory in 1969.
The MiG-25 made America take notice. The details were absolutely scary.
They were so easy to manufacture, every month, about 100 planes were rolled out from the factory in 1969.
The Foxbat was heavy. So it wasn’t able to turn left/right/up/down quickly – critical to fighter jets. Horrible characteristics for a fighter jet.
Then why were the Soviets making it?
It wasn’t about what it could not do. It was about what it could do.
Then why were the Soviets making it?
It wasn’t about what it could not do. It was about what it could do.
The Foxbat was the fastest fighter jet in the world when it came out (1967).
It is – believe it or not – still the fastest fighter jet in the world today – in 2022.
It was capable of speeds over 3100 km/h – 3 times faster than the speed of sound.
It is – believe it or not – still the fastest fighter jet in the world today – in 2022.
It was capable of speeds over 3100 km/h – 3 times faster than the speed of sound.
When it cuts through the sky, it sends out loud claps of thunder as it breaks the sound barrier. Search for videos on Youtube. There are many.
And that’s plenty good.
But the Foxbat wasn’t done. There’s more.
And that’s plenty good.
But the Foxbat wasn’t done. There’s more.
In addition to speed, it could fly at heights greater than any other plane.
In one record, it climbed to 1,23,000 feet – towards the edge of Earth’s atmosphere.
At the time, fighter jets barely crossed half that height.
In one record, it climbed to 1,23,000 feet – towards the edge of Earth’s atmosphere.
At the time, fighter jets barely crossed half that height.
There are quite a few stories about the Foxbat’s habit of giving sleepless nights to its rivals.
There’s one more interesting fact about the Foxbat that might interest you.
The Foxbat was a Soviet plane. But the Soviets did give the Foxbat to a select few countries.
There’s one more interesting fact about the Foxbat that might interest you.
The Foxbat was a Soviet plane. But the Soviets did give the Foxbat to a select few countries.
Tendency of People
Most people aren’t able to look at situations the way the Soviets and the Americans did.
Almost too often, we observe investors concentrating on specific details too much and missing out on the larger objective.
Most people aren’t able to look at situations the way the Soviets and the Americans did.
Almost too often, we observe investors concentrating on specific details too much and missing out on the larger objective.
It is called focus illusion.
There’s nothing new about it – we all do it in some way or another.
Still, we should try to minimize it.
There’s nothing new about it – we all do it in some way or another.
Still, we should try to minimize it.
Returns & Taxes
Ever heard about someone investing in a particular investment because it is tax-free?
Many times, that money invested elsewhere would be taxed – but would give higher returns.
Why earn less money? Just so you have to pay less tax?
Ever heard about someone investing in a particular investment because it is tax-free?
Many times, that money invested elsewhere would be taxed – but would give higher returns.
Why earn less money? Just so you have to pay less tax?
Nearly all tax-free investments have given single-digit returns.
Example:
Investing Rs 5 lakh for 5 years
Option 1: Good equity mutual funds or index funds (returns are taxable).
Option 2: Low returns but tax-free.
Example:
Investing Rs 5 lakh for 5 years
Option 1: Good equity mutual funds or index funds (returns are taxable).
Option 2: Low returns but tax-free.
Option 1 has so far given double-digit returns. Say you got 12% per annum. After paying 10% tax on profits, your effective returns are around 11% per annum.
Option 2 has mostly given around 8-9% – but no taxes to be paid.
Which is better?
Don’t get this the wrong way.
Option 2 has mostly given around 8-9% – but no taxes to be paid.
Which is better?
Don’t get this the wrong way.
There are advantages to investing in low-return investment options – low volatility, better for the low duration, lower risk, etc.
If anyone invests in them for those advantages – great.
But avoiding good returns only to pay no taxes isn’t the smartest thing to do.
If anyone invests in them for those advantages – great.
But avoiding good returns only to pay no taxes isn’t the smartest thing to do.
Expense Ratio vs Returns
We see similar behavior in the mutual fund world too.
The expense ratio is the fee we pay to mutual funds. It is automatically deducted from the returns.
So the returns we see in mutual funds are after the fees have been paid.
We see similar behavior in the mutual fund world too.
The expense ratio is the fee we pay to mutual funds. It is automatically deducted from the returns.
So the returns we see in mutual funds are after the fees have been paid.
Many investors chase mutual funds that have low expense ratios.
Why?
People think lower fees equate to higher returns for the investor.
With mutual funds, there are many factors to look at. The expense ratio alone won't indicate much.
Why?
People think lower fees equate to higher returns for the investor.
With mutual funds, there are many factors to look at. The expense ratio alone won't indicate much.
Yes, there are funds with very high expense ratios that have given insane returns.
At the same time, there are excellent mutual funds that have pretty low expense ratios too!
At the same time, there are excellent mutual funds that have pretty low expense ratios too!
Foxbat in India
Coming back to the Foxbat in India.
India used the Foxbat to snoop on its neighbors. The plane would go dangerously deep across the borders to click pictures.
The plane retired after India got access to satellite imagery.
Coming back to the Foxbat in India.
India used the Foxbat to snoop on its neighbors. The plane would go dangerously deep across the borders to click pictures.
The plane retired after India got access to satellite imagery.
Despite the immense danger, the pilots were supposedly not that stressed.
The Foxbat was so blindingly fast, there was no jet or missile that could chase the Foxbat and shoot it down.
The Foxbat was so blindingly fast, there was no jet or missile that could chase the Foxbat and shoot it down.
There are tales of the Foxbat flying only a few thousand feet above hostile territory – not because it needed to – but simply because it could get away with it.
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