War on terror

Speech by Lt. Gen (Retd.) Arjun Ray at ISB on Dec 23, 2008.
Coutesy: Gourav Ray (ISB Co2009)

The Mumbai terror killings of 26/11 have provoked anger at the helplessness of the Indian state, and disgust with governance and politicians. 26/11 has not revealed any facts we did not know earlier. The scenario remains unchanged: political corruption, with 22 percent Members of Parliament having a criminal record; the complicity of bureaucrats; no accountability at any level: little or no sharing of information by intelligence agencies, unpreparedness during the Kargil intrusion; and delayed responses of the NSG (it happened at the time of the Kandahar hijacking). So what is new?

India has been afflicted by terrorism for over six decades, but this is the first time that the psyche of the rich and middle class have been brutally assaulted. More people died at the Chatrapati Shivaji Terminus, but the incident received far less TV coverage than operations at the Taj, Trident, and ‘Nariman House.’ What happened to our anger and consciousness during all these years? Why didn’t we speak up earlier? Why this class bias towards national security?

26/11 has demonstrated a systemic failure in dealing with terrorism. Despite India’s track-record of sixty-one years in dealing with insurgency, more than any other country in the world, the results so far have been dismal. Over 40,000 civilians, terrorists and security personnel have been killed in Jammu and Kashmir; 32 percent districts of India are under Naxal influence, and insurgency in the North East continues unabated. After Iraq, the largest numbers of terrorist deaths are in India. The guilty of the Mumbai blasts of 1993 are still being prosecuted fifteen years after the tragedy. Can the judiciary, an institution of state, and the law enforcement and investigative agencies, be given a clean chit? Is it fair to single out politicians for recurring failures? Shouldn’t we be questioning our conscience and institutions harder?

Thus far, history teaches us that we do not learn from history.

In my presentation, I shall suggest what India’s responses to terrorism should be. Before I do so, I wish to underscore two strategic realities that politicians, diplomats, soldiers and intelligentsia have overlooked. These realities are conceptual and provide the scaffolding for India’s response to terrorism in the future. There are no quick solutions and we are in for a long haul.

First, war is not a solution or even an option. India and Pakistan have been to war over Kashmir and insurgency has erupted four times and there has been no resolution. Since 1989 a proxy war is raging in the Kashmir Valley and there is no end in sight. The world’s sole superpower has everything that India has on its wish list: homeland security, highly coordinated intelligence services, a national doctrine to combat terrorism, well-equipped armed forces, and domestic anti-terrorism laws that undermine individual liberty. Despite all this, the US is losing its war against terror in Iraq and Afghanistan.

There are other reasons too. War will deepen the present global economic crisis. According to the Nobel Laureate, Stiglitz, the wars in Iraq and Afghanistan are costing about 3 trillion dollars to the US exchequer, that is nearly three times the GDP of India. Pakistan is a nuclear nation and war between two nuclear powers is unthinkable. Moreover, there is near symmetry between the land forces of the two countries. So, what is the guarantee we will win? I do not think that the Americans would allow a war simply because that would undermine America’s war against Taliban in Afghanistan. Terrorists want war as that would force Pakistani forces to switch to the Indian border, thus allowing the Taliban to occupy the northern part of Pakistan which is already under pressure. Strategically, this would de-stabilize Pakistan, and a de-stabilized Pakistan will be a greater threat to India than it already is.

The second reality is that terrorists are not fanatics or sociopaths. They are as normal as everyone else. Within all of us there is a thin permeable line between good and evil. Under a certain set of circumstances, each one of us is capable of committing unspeakable crimes against our friends and neighbor. That makes our task of identifying potential terrorists impossible and our responses uncertain. If terrorists were fanatics or abnormal persons, our job of eliminating them would have been easy. Terrorists have a world view which they believe is the only view. They are convinced of the righteousness of their cause, and will go to any length to achieve it. When India TV asked one of the terrorists in the Trident, why they were killing innocent persons, he replied, “We are dying every day.”

Whilst serving as a brigadier in the Kashmir Valley from 1993 to 1995, I was in charge of military and intelligence operations. We had about 300 terrorists in custody – terrorists of all hues – young, old, mercenaries, jehadis, and the home-grown variety. I had civil and military psychiatrists to examine them to answer one question — were they fanatics? The answer at the end of the tests was a clear “No.” My findings speak for themselves. See Figure 1 below:

	Traits of a Fanatic	Present %	Absent %	Ambivalent
1.	Focused view on life	25	60	15
2.	Insensitivity	15	75	10
3.	Personalized view of the world	10	90	-
4.	Loss of critical judgment	10	90	-
5.	Inconsistency	05	80	15
6.	Certainty	20	80	-
7.	Over simplification	10	90	-
8.	Resistance to change	25	75	-

Figure 1: Traits of Fanaticism in Terrorists

It may interest you to know that, before bringing Eichmann to trial he was examined by six of Israel’s best psychologists and psychiatrists. They declared he was “more normal than the average person.”

Extensive scientific research and social experiments have been conducted notably by Stanley Milgram (Obedience to Authority) and Phillip Zimbardo (The Lucifer Effect). Zimbardo conducted the infamous Stanford Prison Experiment or SPE in 1973. Normal and healthy students from Stanford University were invited as volunteers to participate in a mock experiment. One group became prison guards whilst the other elected to be prisoners. Within the first five days the experiment had to be called off because the ‘prison guards’ started behaving sadistically and torturing the prison inmates. We may conclude that there is a “banality about evil,” namely; evil is done not by sociopaths and fanatics but rather by ordinary people. The power of the situation, blind obedience and moral disengagement seem to exert greater power over human behaviour than any other factors. The conduct of prison guards in concentration camps, and American male and female soldiers torturing Iraqi prisoners in Abu Ghraib, are well documented examples. There are many more.

There are two strategic challenges we must surmount in dealing with terrorism. If they are not adequately addressed, no amount of physical security and legislation can resolve terrorism. These challenges have generally been missed out in most national debates in TV and print media. I wish to place them before you.

The first challenge is the “clash of civilizations” theory that has radicalized Islam and given average Muslims a feeling of being victimized and under threat. Notions of a decadent West and an assimilative India have further added to their suspicions and fears.

Consequently, counter-terrorism is more a state of mind and less a state of activity. The mind is psychological, political, cultural and historical. Activity is about killing. The underlying causes of terrorism are rooted in our society, and we cannot be seem to be at war with our own people. Killing is, therefore, not a solution as it invariably leads to deeper alienation through brutalization and violation of human rights.

The answer lies in isolating terrorists and hard liners by denying them the oxygen they need to survive. The people are the oxygen. If we want to seriously defeat Islamic militancy, we have to win over 150 million Muslims in the country. Till that happens, terrorism will thrive.

The second challenge lies in how to involve citizens in fighting terrorism. Government and security forces alone cannot defeat terrorists because terrorism is not a law and order or military problem. Citizens are part of the System. If citizens fail, the System fails. An apathetic citizenry will only exacerbate the situation. We must ask ourselves the question: what can I as a citizen of this country do to stop this mindless violence?

The larger issue before society is the widespread alienation of minorities. When a section of society perceives that they have been wronged, or the government is weak and takes sides, mass alienation and ghettoization occurs. Muslims feel insecure and deprived at all levels and are incensed by the Muslim stereotype — they are pro-Pakistani, unpatriotic and sympathetic to terrorism. Muslim human development indicators are well below the national average, and it is not surprising that many perceive that they are second-class citizens. In such circumstances, people believe in what Albert Camus said: “It is better to die on your feet than to live on your knees.” The grand design to defeat Islamic militancy can succeed, provided terrorists and their fundamental ideologies are isolated, and Muslim communities join the mainstream.

For right and wrong reasons the Muslim community today is alienated, with trust having broken down between them and the others. Unless trust is restored by improving their human development indices, empowering women, providing job opportunities, and overcoming each other’s prejudices, alienation will continue. De-alienation is overdue.

History tells us that the rise and fall of great civilizations has not been only because of military and economic over-reach, but mainly because of the quality of education existing in a culture. The challenge to education in Islam has been that many Muslims believe that what is not contained in the Received Book is not worth knowing. Thus, the backwardness of Muslims in India is largely due to lack of education. Providing easy access to quality education and technology in schools is imperative. The modernization of 10,000 Urdu schools is overdue. Against an All India pass percentage of 23 percent, the pass percentage in Andhra Pradesh, for example, is zero percent! Moreover, there are about 30,000 madrassas where children are learning Urdu and Islam. You are well aware of the imbalanced curriculum content in these schools.

Religion and culture are an intrinsic part of one’s identity. So why cannot Muslim children be permitted to study Islam and Urdu in secular schools, thereby providing Muslims their identity – Islam and Urdu? I do not see any contradiction in religion and secularism. In fact, localism is a precondition for globalism. You cannot become a world citizen at the cost of losing your cultural identity, and religion lies at the heart of a nation’s culture.

The most effective way to fight Islamic radicalism is by empowering Islamic women. Women by nature abhor violence and conflict of all kinds, from domestic to war. Ultimately, they are the victims. Women who are literate and believe in peace will rear their children to think likewise, and persuade their children to shun the path of violence. I attribute the success of Operation Sadbhavna or Goodwill, in Ladakh, significantly to the support I received from Muslim women.

Today’s statistics are worrying. Against a national women’s work participation rate of 25.6 percent, Muslim women are at 14.1 percent. Their female literacy is as low as 49.9 percent. Special emphasis has to be laid in programmes providing micro-credit facilities to women (as in Bangladesh), employment opportunities, and health care.

The vast majority of Muslims are self-employed with few facilities for vocational skills and access to credits. There is evidence that public and private banks are discriminatory against Muslims. The average amount of loans disbursed to Muslims is two-thirds of the amount given to other minorities. According to the Sachar Committee, “Some banks use the practice of identifying ‘negative geographical zones’ on the basis of certain criteria where bank credit, and other facilities are not easily provided.” While they constitute 15 percent of the population, the number of Muslims in government jobs is as low as 3 to 6 percent. While job opportunities are again closely linked to education, there is a need for liberal policies to provide credit.

I have always maintained that in life it is not what you believe is right or wrong; rather, it is how others perceive it. Muslims do have several grievances – some real, some imaginary. There are historical wrongs that should be addressed through dialogue and remedial actions; even atonement if necessary. And the initiative must come from the majority, the elder brother in the community. At the same time, we must make it clear that, in a democracy like India, grievances must be settled through dialogue and ballot-boxes.

Second, the principal flaw seems to lie in the Indian education system, that has not changed for the past 150 years – top-down assimilation, rote-memorization, the tyranny of examinations, obsession on scoring 100 out of 100, with over-emphasis on educating the head (reason), and not the heart (emotions). To me, whole-education is the golden key. Whole-education should broaden our mind and set it free, enabling us to understand the others’ point of view, and to live together peacefully despite our diverse views.

Educating the head only has other serious drawbacks: the inability to walk the middle-path; the George Bush philosophy (and many Indians think like that) that killing terrorists is the only answer; and the inability to live together with diversity. I am of the firm belief that educating the head may produce brilliant scientists, but who are likely to use their brilliance for evil purposes. I wish to remind you that all extreme ideologies in the 20th century — Marxism, National Socialism, Fascism, revolutions, and religious fundamentalism, were produced by great philosophers and thinkers.

About 50 percent of the members of the Nazi Party comprised German intellectuals. They belonged to a nation that produced some of the world’s best philosophers, best scientists, best musicians, best doctors and best engineers. They were also responsible for exterminating six and a half million of their countrymen. Pol Pot was educated in Paris and he went home and eliminated one and a half million Cambodians simply because they were educated. What happened to reason?

Let us look at the CVs of the terrorist leaders today. From Osama bin Laden and his deputy Dr Al Zahawari, to the attackers of the World Trade Towers, to Taliban, to Lashkar-e-Toiba, to Jaish-e-Mohammad, to SIMI; they are all highly educated individuals. Look at Hindu right-wing fundamentalist leaders. They are post-graduates. What happened to reason – reason that was extreme and one-sided? My contention is that they received the wrong kind of education, an education that focused only on reason. The curriculum of our schools and colleges, therefore, needs immediate revision, to focus on whole-education (though not at the expense of academic performance). You may well say that I am completing my college education so what relevance does whole-education have for me?

I wish to remind you that the single greatest competency in the Knowledge Age is lifelong learning. This competency is enabled by the increasing obsolescence of knowledge, neuroplasticity of the human brain, and the scientific fact that we are products of our synaptic connections. Whole-education through lifelong learning can start at any age. We, the older lot, possibly need it more than our children. The time has already come for us to become our own teachers. Our personal learning plan should include:

Leadership studies

Meta-cognition

Sciences with contemporary liberal arts

Participation in outreach community programmes

Whole-education ensures:

a. We grow up as world citizens with a broad view of life.

b. There is balanced development of one’s cognitive, emotional and spiritual personality, with greater possibilities of growing up to be just and humane.

c. That good persons are not bystanders and stand accused of remaining silent and doing nothing about wrongs in society.

d. Citizens who respect authority but have the courage to oppose unjust systems, who hold themselves accountable for their actions, who will not allow the system to de-individuate their personal identity, and who will be equipped with the skills and sensitivities to live with diversity.

This brings me to the role and psyche of India’s middle class, intellectuals and intelligentsia. 700 years of Muslim and British role as well as a stratified society has affected the psyche of intellectuals and the Indian middle class. Despite having a superior culture and life-philosophy we got beaten. The psychological effects in the middle class till today are there to see:

Political apathy

Confused identity: Who am I — Brahmin? Tamilian? Indian? Citizen?

Absence of the social value of wanting to make a difference

Fence-sitters

Lack of accountability

Sense of inferiority. Everything Western is better

Loss of confidence

Voicelessness

There is a difference between intellectual and intelligentsia. Intellectuals are strong at academics, but they are not committed to social change. Like terrorists, they too have a fixed world view, are dogmatic and doctrinaire. They espouse a viewpoint and are prepared to defend it all costs in classrooms, in front of TV cameras, in newspaper columns, and at cocktail parties. They could be successful civil servants, professors, CEOs, think-tanks and ideologues.

A Russian derivative, intelligentsias are different — intellectuals in their own right, who are global citizens. They are change-agents and active citizens who are committed to social and political reform. They have the unique ability of not taking sides but bringing opposite sides together.

Intelligentsia comprises people who shape public opinion. I expect you to join the intelligentsia, because the fight against terrorism and all forms of political and religious violence starts with you. You are critical stakeholders in the security of the India and the well-being of its people. If you give up we will lose out to the forces of evil. The tragedy of life is not the evil deeds by the evil people, but the appalling silence of the good people.

What are my expectations from you, the intelligentsia?

Be informed about your own religion. Most people are unaware of the fundamental tenets of their religion; they are carried away by the power of rituals and interpretations given by clerics and the priests. In my experience, most religious fundamentalists know little about the richness of their religion. I would like you to promote the central doctrine of all religions, which is rightful living and reverence for all forms of life – from atoms to molecules to insects, to trees, to animals, to human beings.

As members of the intelligentsia, I expect you to secure the middle ground between the two extreme positions of hate and sanity. Let me give you give an example of the prevailing opposites:

1. First Radical View: Haflz Saeed, Founder of Lashkar-e-Toiba.

“There cannot be any peace while India remains intact. Cut them, cut them so much that they kneel before you and ask for mercy.”

2. Opposite Radical View: Babu Bajrangi on camera during Gujarat riots.

“We didn’t spare a single Muslim shop; we set everything on fire... I don’t care if am hanged… just give me two days before my hanging and I will go and have a field day in Juhapura where seven or eight lakhs of these people stay… I will finish them off… at least 25,000 to 50,000 should die.”

As citizens, committed to nation-building you must pledge to make a difference in the local community, especially the poor and marginalized. As long as people remain poor they will be exploited by terrorists. The middle class has distanced itself from the poor; and unless this social gap is closed quickly, alienation in society will continue.

In conclusion, I wish to re-iterate that war and armed responses are no solution for problems that are political, cultural and religious. The ultimate answer lies in winning over people and isolating the terrorists. Towards this strategic goal, citizens and the intelligentsia of the nation play a pivotal role. They have to become agents of change and secure the middle ground.

Success will depend on how tolerant you are. Tolerance is lacking, and if you do not give space to dissent, we will go into reverse gear, into a dangerous situation where there are only two options – coexistence or no-existence. Unless the middle ground is expanded there will never be peace. The only impediment before us is fear. The terrorist intends to strike fear in our minds and create a climate of collapse and deter us in capturing the middle ground. I say; do not be afraid. Because if you are; then terrorists will win.

Finding your true North star - Prof. Kaipa

Got an opportunity to attend a session on 'Finding your true North Star' by Prof. Prasad Kaipa.

The 4 point, 8 question analysis:
Point 1: Happiness

1. Am I happy doing the the job that I am doing now?
2. What kind of happiness/joy do I bring to people around me?

Point 2: Skills and competencies

1. Am I using my skills and competencies in the current job?
2. Can I learn the skills and competencies required for the current job from the people around?

Point 3: Serve as a motto

1. Do I feel that I am serving others by doing this job?
2. Do I feel that other people serve me in my job?

Point 4: Needs

1. Am I meeting my needs - financial, emotional, intellectual, relational, etc?
2. Does your job meets someone else's need?

How to use this questionnaire:
Score the above 8 question on a scale of 1 to 10, with 10 being high and 1 being low and try to improve the scores on each questions. The objective should be two fold:

• Improve the scores of each question. This would increase your performance.
  
• Reduce the difference in sum of all Q1 and Q2. This would ensure balance in your role and others role for you.

When you have scored total of 80 points, you are operating from your true north star.

4 important things while working towards your true north star:

1. Awareness: Be aware of the happenings around you. Else you will always operate in auto pilot mode.
2. Attention: Pay attention to the feedback you receive from others. While giving feedback, talk about positive also. What you appreciates get appreciated and what you depreciates gets depreciated. This will also enhance your EQ
   
3. Take action: Act on things that you have been procrastinating. We normally act on routine activities, but that is not sufficient. Activities with give you busy-ness but action would give business.
4. Reflect: Do self introspection of your success and failures. Also force people around you to to introspect, you can do that through GPS - guilt, pride and shame.

Some more profound thoughts by Prof. Kaipa

• IQ will make you efficient; EQ will make you effective.

• Life is not about efficiency; it is about redundancy.

• IQ will help you get a job; EQ will help u get a promotion.

• We often have thoughts; but we do not think often. Converting thoughts to action will force you to think.

• Journey of life is never straight, it is spiral.

Some more examples on points stated above:

• Hoarding of information would attract people to me. Does this mean that I will score high in case of this ? No. People should come to you even otherwise, such as discuss problems, ask advice, etc.
• Post a picture of what you want on a mirror.
• Break the goals in small goals.
  

To conclude: True north is a state of mind. Try operating from your true north.

Berkshire Hathway shareholder's meet, 2008

Prof. Sanjiv R. Das, the almighty in financial engineering shared this with the students. I found it really simple and useful. 3 things I liked is the funda on retirement, donation and outsourcing. The best line which I think many of us need today is, "Tough times do not last. Tough people do"

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A summary by some gentleman who attended the BH shareholders' meet. Even if you are least bothered about investments, I insist, Pl read on.



I had the good fortune to attend the 2008- Berkshire Hathaway Shareholders meeting at Omaha, Nebraska a few weeks back. It was a wonderful experience listening to and learning from the Master Investor- Warren Buffett himself and all I can say is that he stands alone as the reigning deity of financial world's Mt Olympus!

The degree of humility and composure he exhibited, although he is the richest and most well respected human is stunning! I tried to take some notes and would like to share with you some of the best questions and answers which came across during the conversation between we mortals and God.

Having read about him, observed him and worshipped him for a few years now, I think it is reasonable to believe that this guy is exactly what he seems: a plain-speaking, tee totaling man of uncrackable integrity who works really, really hard and sticks to his investing and management principles through boom and bust which makes him a freak of nature since he is above normal human tendencies. He is like a comet streaking through the heavens every 75 years or so. The questions the shareholders threw at him for 7 continuous hours ranged from finances, life, religion, career, politics, sports and several other streams.
And he answered everything with a Zen like calm and confidence.
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What does it take to become a successful investor? Brilliance or Smartness?

Neither, Success in investing doesn't correlate with I.Q. Once you have ordinary intelligence, what you need is the temperament to control the urges that gets other people into trouble in investing.

When do you deicide to invest in a firm?

The best thing that happens to us is when a great company gets into temporary trouble. We want to buy them when they're on the operating table. (Mr. Buffett bought Coke when it had its biggest fiasco after launching New Coke; he bought American Express when it went through a loss making phase in the early 60's)

What do you look for in people when they come to sell their firms to you?

I don't look for the usual credentials such as an MBA, a pedigree (Harvard, Wharton), or cash reserves or market cap of their firm. What I look for is just a passion in their eyes; I think that's the key. A person who is hungry will always do well. I prefer it when people evenafter selling stay on and work for the firm; they are people who can't wait to get off their bed to get to work. Passion is everything; there is no replacement for innate interest.

Mr. Buffett, you told us that Berkshire Hathaway has $ 45 Billion in cash. Why aren't you investing?

Up until a few years back I had more ideas than money. Now I have more money than ideas.

When do you plan to retire?

I love my job; I love it so much that I tap dance to work. Mrs. B, the founder of Nebraska Furniture Mark worked until she was 104, she died within 6 months of her retirement, that's a lesson to all my managers, don't retire! I personally am going to work 6-7 years after I die, probably that's what they mean when they say- "Thinking out of the Box"!!

Why do stock market crashes happen?

Because of human nature for greed and insecurity. The 1970s were unbelievable. The world wasn't going to end, but businesses were beinggiven away. Human nature has not changed. People will always behave in a manic-depressive way over time. They will offer great values to you."

What are the things that are taught wrong in Business school and the corporate world?

I like such open ended questions, I think Business schools should refrain from teaching their wards about profit making and profit making alone, it gives a sense of 1 dimensional outlook to the young students that loss is a curse. In reality, in the corporate world, failure and loss making are inevitable. The capital market without loss is like Christianity without hell. I think they should teach the student on how to buy a business, how to value a business? Not just on how to determine the price of a business. Because price is what you pay, value is what you get.

Do you still hate Technology stocks?

With Coke I can come up with a very rational figure for the cash it will generate in the future. But with the top 10 Internet companies,how much cash will they produce over the next 25 years? If you say you don't know, then you don't know what it is worth and you arespeculating, not investing. All I know is that I don't know, and if I don't know, I don't invest."

How to think about Investing?

The first investment primer was written by Aesop in 600 B.C. He said, 'A bird in the hand is worth two in the bush.' Aesop forgot to saywhen you get the two in the bush and what interest rates are; investing is simply figuring out your cash outlay (the bird in the hand) and comparing it to how many birds are in the bush and when you get them."

How do you feel after donating $ 40 Billion to the Bill and Melinda Gates foundation? You are a hero to us!

I feel nothing. I haven't sacrificed anything in life. I have had a good life. I donated after I turned 75. I think I admire those people who sacrifice their time, share their food and home, as the people to be emulated not me. Besides, what is money before a man's life?

What do you think are the pitfalls in donation?

I have never donated a dime to churches or other such organizations; I need to believe in something before I end up doing that. I have beenobserving the Bill & Melinda Gates foundation for years now and I am confident they will do a fantastic job of making use of the money.I am a big believer in Outsourcing, others believed in me as an Investor and gave their hard earned money to invest. I believe in Bill Gates, he is a better donor than me.

Why do you work from Omaha and not Wall Street, New York?

Wall Street is the only place where people alight from Rolls Royce to get advised by people who use the Public transportation system.

You seem to be so well read, tell us how it all started.

My father was a stock broker, so we had all these financial books in our library. He introduced me to those classics and I got into them. Iam lucky that my father was not a fan of Playboy! Reading is the best habit you can get. Well, you can learn from teachers too, and have mentors but there are so many constraints attached- they will talk fast, talk slow, they might talk like a pro or they might be terrible communicators. Books are a different animal altogether, I love reading! The beauty about reading and learning is that the more you learn the more you want to learn.

People who join Berkshire Hathaway seldom leave. How do you get along well with all your executives?

I try to get quality people. I always say - Hire someone in your organization who is better than you are. If you do that, you build a company of giants. If you get people worse than yourself, you build a company of dwarfs. And do not try to do everything yourself Delegate the jobs and look out of the window. The results will come. That's how you build institutions. It happens only when you empower others, believe in others. Iam an investor, Iam very secured at that, I have no clue how to make Coca-Cola or how to dole out credit cards (Mr. Buffett owns 8% of Coca-Cola and 13 % of American Express). I understand the wisdom of the aphorism that you cannot please all thepeople all the time. Of Course, you will always find qualities that you don't like in people around you, but if you observe carefully the love of the work unites you both. There is no point in being obsessive about a bad quality in a person, whom you otherwise respect.

I am a small time businessman from Dallas, Texas, what do I need to do to hit big time?

Be patient, Achieving your financial goals and dreams will not happen overnight. As much as we would all really love to accomplish our goals in a few years, this is an ongoing process. Defining your financial goals is not a one-time task; you need to keep adding new plans atdifferent stages in your life. We all admire the skills of Olympic ice skaters, pro golfers, and concert pianists. But do we remember that they didn't acquire their skills overnight? They had to practice hours on end for years to achieve their dreams. The key to success is to continue learning throughout your life with a voracious appetite.

I think it is marvelous that you have had a golden run with investing, how did you do that?

My rule is to be fearful when others are greedy, and be greedy when others are fearful. Besides, I call investing the greatest job in the world because you never have to swing. You stand at the plate; the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it. Stay dispassionate and be patient.

You're dealing with a lot of silly people in the marketplace; it's like a great big casino and everyone else is boozing. If you can stick with drinking Coke, you should be OK. First the crowd is boozy on optimism and buying every new issue in sight. The next moment it is boozy on pessimism, buying gold bars and predicting another Great Depression, most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.

Mr. Buffett you have seen so many crashes and recessions, your take on facing recessions and stock market crashes?

If past history was all there was to the game, the richest people would be librarians. Every scenario is different. But always remember, Tough times do not last. Tough people do.

What is the 1 biggest advice you would impart to a young investor like me?

Think for a moment that you are given a car and told this is the only car you would get for the rest of your life. Then you would make sure that you car is taken care of well, it is oiled and detailed every now and then. You would make sure that it never gets rusted, and you would garage it. Think of yourself as that car. You just get 1 body, 1 mind and 1 soul. Take care of it well. Invest in yourself that would be my advice.

You personally know many of the Financial executives who are engineers of the current turmoil in the financial world, surprisingly even after record losses, those executives receive astronomical salaries and bonuses and arrogantly declare that they deserve it, why dint you advice them from making such decisions and what's your view on their justification for their pay?

I like sharing my ideas but don't like imposing my ideas on anybody It doesn't make sense and is a waste of time. If somebody has decidedthat they know everything that is there to know, nobody can help them. The best way to learn and succeed is to know that we know nothing. There is an entire universe out there and still some of us think we can know everything In the world of investing a few people after making some money tend to imagine they are invincible and great.

This is the worst thing that could happen to any investor, because it surely means that the investor will end up taking unnecessary risks and end up losing everything – arrogance, ego and overconfidence are very lethal. Personally I don't feel too comfortable with too much extravagance, because I always think like an investor. My thought process doesn't see a lot of value in a fancy car or a designer suit.

Thinking like an investor always is very important to bring in a sense of disciplineand focus. Before reading balance sheets and investing you need to make sure your outlook and mindset is that of an investor.
Never let ego, arrogance and over-confidence control you - not just as an investor but also as a human being. You will never have internal peace if you are unable to look at everybody around you with love, compassion and understanding. Irrespective of who the person is, he or she can teach you something you don't know. I have learnt so much from people all around me and I wouldn't have been able to learn all thesewonderful things if I had not spoken to them with a smile. To quote Sir Isaac Newton- If I have seen farther than others, it is because I have stood on the shoulders of giants.

Terrorist Attack on Mumbai

Many people will be speaking on new channel giving their views and many would be writing about this on their blog. Unfortuanately not many of these would be doing anything about this.

I personally would not like to write or give my views on the same as it is neither important and I think at this point of time instead of giving views let us try to do something that we can.

A few sites that I found all of us should register as to create this a mass movement:

• http://www.avaaz.org/en/india_undivided/98.php/?cl_tf_sign=1
• http://jaagore.com/main.php
• http://www.PetitionOnline.com/26novAct/petition.html

Please do not say, this is mumbaikar's spirit. It looks too cliched and is just an execuse to show that we are helpless. So instead of saying, let us all act.

Term 5

Fixed Income Securities - Prof. Kuldeep Shahstri, Pittsburgh

Managing Teams - Prof. Henry Moon, LBS

Negotiation Analysis - Prof. Dishan Kamdar, ISB

Options and Futures - Prof. Ramabhadaran S. Thirumaalai, ISB

The first of the 4 elective terms and was a real chaos for bidding. Finally I got what I wanted. I decided to select courses that I liked based on the content and faculty ratings and not go by what I want to major in.

Nega and Managing team were strategy courses and highly recommended to all. Both Profs were good and they teach in tandem.

Prof Ram, F&O was interesting and helped me understand much more than I knew.

Corporate Social Responsibility Index

Our paper on Corporate Social Responsibility Index written by Deepak and me @ ISB, selected in the finals at IIM B.

Corporate Social Responsibility (CSR)

While we go through the annual reports of many listed companies we always come across a section describing how the company has contributed back to society. Often the items contained in this section are donation paid to NGOs, medical camps conducted, provided education to rural people, etc. However this is a myopic view of CSR. Like a country that has high GDP per capita does not mean that it has a high human development index, a company doing a few such so called CSR activities does not become a high CSR company. CSR is a more holistic concept encompassing customer, suppliers, employees, shareholders, communities, as well as environment. Corporate social responsibility (CSR, also called corporate responsibility, corporate citizenship, responsible business and corporate social opportunity) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.[1]

Also the biggest CSR activity that a company does for society is recruitment of people. It would be an additional burden on companies if they were forced to contribute for any additional CSR activities. Non existent of these large corporate houses will generate large scale unemployment and also hamper economic growth. Hence we consider that all the organisation do CSR in form of employing people. However this is not sufficient. Employing people at the cost of other stakeholders and environment will be detrimental to society.

In that case the question still remains how one measures CSR? The feasible approach in this case would be to develop parameters on which the companies can be rated to get a common and comparable CSR Index. Few features for any index would be measurable, comprehensive, composite and comparable. Keeping these features in mind we have decided upon a few criteria for CSR Index. We have divided these in ‘must do’, ‘should do’ and ‘ought to do’ signifying the importance of criteria within these heads.

· Must Do, scores ranging from + 3 to -3

o Corporate Strategy: It is very important for the corporate strategy statement to include some concerns related to all stakeholders and environment. A corporate strategy statement, which says only about profit and hence serves on one class of stakeholder will be scored low whereas that of a company which includes CSR activities in its Value statement. A strong motto towards CSR activities generates a lot of goodwill for the company.

o Environment Policy: It is very important for a company to have environment policy. Climate change is an opportunity that astute businesses will turn to their advantage. By taking positive action on climate change a company can differentiate itself from its competitors. Climate change program must be profitable to be successful. This can be achieved quite simply by turning carbon costs into opportunities for the organization. Carbon credits are a key component of corporate emission trading schemes that have been implemented to mitigate global warming. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price.

· Should Do, score ranging from +2 to -2

o Employee Satisfaction: The biggest stakeholders in any corporate are its employees. Hence by scoring high on employee satisfaction a company does contribute to CSR. It’s a old say that every good deed should begin at home. Thus by having empathy towards its employees and taking care of their necessities a company can add tremendous value to the society. Infact the best way in which a company can add maximum value to the society is through creating more jobs and thus reducing social unemployment and poverty. Moreover goodwill brought by CSR activities adds value to and motivates existing employees as well. Greater employee satisfaction in turn will result in higher productivity and thus improve companies’ efficiency.

o Profitability: This is a CSR activity towards investors in the company. A company by contributing towards social good also guarantees its long-term sustainability, as in the long term only those companies would survive which are pro-society. By contributing to CSR activities, company generates a lot of goodwill, which can be reaped by current and future investors.

o Suppliers: A big and successful company can further contribute to society by encouraging young enterprising organizations. By providing competitive terms and by being fair to its suppliers a company can generate revenues for many other organizations with out compromising its own profits. Moreover a company’s goodwill will add credibility to many of its suppliers also. An example would be the Tata Nano where Tata’s have ensure to take care of vendors also to the extent possible

o Customer: Company also adds value by providing a range of products to the customers. By satisfying customer needs company not only generates profits for itself but also satisfy consumer requirements. Without such companies such needs may remain unfulfilled leaving a void in that space.

o Society: Company adds tremendous values to the society by many activities mentioned above. Apart from that a corporate can contribute directly to society by organizing various activities like blood donation camps, cultural events etc. Private sector has huge resources and it has to play a very important role in alleviating humanity from problems like unemployment and poverty. Corporates also pitch in during natural and man-made calamities by donating huge amount of money.

· Ought to do, scores ranging from +1 to -1

o Fraud Detection: In case a company has strict internal controls and policies it avoids frauds and hence improves the quality of service. It also deters the staff from wrong doing and hence increase the honesty level in the society.

o Ethics/Integrity: Leaders and big corporate houses can set examples by displaying a highly ehical behaviour. Example may be quoted of Infosys, which sacked one of its senior staff on grounds of unethical behaviour. Such behaviours can set great precedence for the society and bring similar behaviours from others. Such behaviours will spread good activities in the society and thus create more dignity for human values.

---

[1] http://en.wikipedia.org/wiki/Corporate_social_responsibility

Big Bang CERN LHC test

Got this video explaining the big bang test... courtesy: Ankur Goel @ ISB



If some of few would have seen hindi news channel they talked about end of world... This was no where near that... LOL

CAT Practice on Mobile Phone

Dear All

I am pleased to announce the launch of our new venture in alliance with Tata Mcgraw Hills. We have launched a portal to bring CAT practice exams on your mobile.

The portal can be downloaded from:
http://madmobilesoftware.com/freedownload.php
http://www.tatamcgrawhill.com/announcement/TOPCATBooks.jsp

I am sure you would be knowing people who would be preparing for CAT to be held this Nov 16th. Request you to please share this info with them and also download 1 of the 4 module on your mobile phone to get a feel.

I would be glad to have your feedback on the same.

Back to Square one - 4 years of exhilarating journey

"During mahurat trading you should always buy your favourite scrip, and that too in multiples of nine" these are the famous words from Bhanabhai, the seniormost member in our equity trading group at Marico. I am in a midst of fun and learning but one thing that I miss is the equity market discussions we used to have at Marico.
It was 6 months since I joined Marico as management trainee, the NDA govt fell, May 17, 2004 and the sensex fell from 5069 to 4505, a fall of 564 points. I was novice to equity markets and had never previously traded on my own. Harish was in the same boat and both of us were curious to take the plunge. The next step was quiet obvious, we opened a online trading account with ICICI. The first stock i purchased was Arvind Mills, bought 100 shares at 56 and sold at 64 in a month. What a sense of satisfaction, Rs.800 a month. The stock has touched a high of 115 since then and is now trading at 14!!! I started investing in blue chip companies and started making notional profits, on the contrary Harish had a different approach. He liked to make losses in stocks like Nocil. His mantra was buy high and sell low. My first error in stock market was spicejet, i bought at 4 and sold at 6, what next it went on to touch 100.
A year later we had new member in our team, Vinod Gurnani. He was a third type of trader, interested in cyclical stocks. He had huge appetite and his favourite was arvind remedies. The matra was buy at 2.5 and sell at 3.5, it was a penny stock. The share currently trades at 1.3 (not bad as compared to market). It was fun playing the equity markets. The fourth member to join was Sateesh Penetela. He took some time, to get accustom to the market but once in he was at his best. His favourite was Ranbaxy, the day he invested in Ranbaxy it has never touched his cost price till date. We used to have fun looking at the prices of all our favourite stocks. While we were having this fun investing there were people like Vivek Karve who used to do a detail financial analysis and take decisions to buy the stocks. He was a true investor. I should also include the name of Nikhil as he was also a silent investor and maybe a long term investor, who was in and out of markets but never played it like a casino the way we did. As time passed by, we graduated ourselves to technical analysis. After attending a session by Vivek Patil, i though i knew all about stochastics and oscillator. Well the technical analysis syndrome caught us, and we all started doing stochastic and taking daily buy / sell decisions. The sensex was around 12,000
I moved on to corporate accounts and we had a big tolly of interested people. It was inevitable for the corporate accounts team comprising Satish Kadam, Swapnil, and Vishal working with me to get themselves into this casino. There were many others like Naresh, who came up with interesting scrips never heard of. I still recollect his recommendation freshtrop fruits @ 150, now trading at 15!!! Then there was Ankit Jain who believed in only buy, Amit Kedia and Aashu were also drowned in the casino by now. The best was my boss Subhash Bhat, he was as restless as anyone can be and we had real fun as well as great learning from him. The last one to be mentioned is Shri Saurabh Bhansali who is now being grilled at IIM B just like i am here. For sometime now we all had 'teledata' in our life. We started buying at 10 and it went upto 100, currently trading at 6. Many of us made and many lost, but that was a scrip that was the most talked about. Bhanabhai was our important advisor and a source of information. He has seen many bull and bear markets so it was fun listening his views. All of us were at one end and there was Srikrishna at the other, determined that he would not be getting in equity markets. He was the only one who was not convinced at this casino. Pawan joined in after Subhash's exit, he was again a person who started his journey with derivatives, not many people would dare this stint. But then he made some losses and reduced his exposure. We were also able to convince Mahesh Murkute to open an online trading account (not sure if he remembers the password now!!!)
Well by that time, i graduated myself to derivative. The fever passed on within the group, and many people started trying out F&O. The markets were hot at 20,000. More people were willing to take the plunge, until Jan 23rd, when all of us were in deep shit. People with open positions were struggling with margin calls and people with delivery saw their portfolio turn red in books. The activity subsided in sometime and it was time for me to say good bye. I am not sure about the position of the group members but it was a exhilarating ride for me. When i saw market kissing 8K today, well its approx 12% p.a. return since we started investing, i was surprised. We could have invested our money in bank FD and earned equivalent return, but am i justified when i say this? No, what about the learning that i had in last four years. It made me much more sensible and mature towards money and i m sure this learning would certainly help me in future.
Also in the journey of last 4 years the group had diversed set of people with different approach to equity markets. Was any of them the best? I don't think so, its just that a particular strategy is good for a particular market and hence one size fits all does not work. That's my guess... Hope u felt as nostalgic reading this as i felt while writing... feel free to put in your comments...

Term 4

Government, Society and Business
- Mudit Kapoor, ISB
- A K Shiva Kumar, UNICEF Bhavini Damaraju

Investment Analysis
- A Subrahmanyam, UCLA

Management of Organisations
- Stefan Thau, LBS
- Luis L. Martins, Georgia Tech Debapriyo Nag


Strategic Analysis of IT
- Rajiv D Banker, Temple
- Vallabh Sambamurthy, Michigan Aruna Deepthi

This was the last of the core terms at ISB. As in the previous 3 terms there was one person who was the highlight of the term and this time it was Subra. Invst Analysis lectures were real fun and all credit to Subra and his style of teaching. One needs to attend a lecture to believe it and also listen him in "Shudh Hindi"

GSBC was also interesting, though Mudit was a bit controversial I liked his thought provoking habit of teaching. Got a glimpse of political economics behind many decisions that we see in day to day life. Prof Shiva Kumar's lecture of population was very serious and heavy. I understood the importance of meaning "population control" and why one should never use such a term. It was also insightful to know the impact of one child policy in China.

Potential consultants started some warm up for placement preparation. I was not among them and hence had a relaxed life. I started my resume preparation and was able to complete it by end of term 4.

Excellent Ads by public sector bank - but for what?

I have been watch television off late, to keep a check on financial market. In last few weeks I observed some astonising trend. Many public sector banks in India have come up with amazing advt. To be fair, I have never seen such emotional and appealing advt. even by any private sector banks.
But for what? Why are these banks advertising? I am not able to answer these questions. Do they think they will get any new customer by these advt? If they think so, they are foolish. Well I have not experienced the services of any of these banks for last few months, but I cannot accept that they have improved their service to such a level that they are willing to offer a customer a tea and accept deposit if he is a bit late. Its time to do some reality check. Just by putting such advt. does not automatically changes the operations, and I am sure they also know this.
The only conclusion I can make is, something is cooking as we say 'daal mein kuch kala hai OR puri daal hi kaali hai'. Someone is raking moolahs in this deal, not a bad idea.
For those who wish to have a look at the advt., they are available on youtube.

An hour drive with Mr. Subhanu Saxen, CEO, Novartis

I received a call at midnight from Dilpreet. "Will you go to receive Mr. Saxena" at the gate at 4.00?" After meeting many first generation entrepreneurs this was a time to meet a CEO of truly global MNC.

What will I do till 4 in the night. A better idea would be to go to pick him up at airport i thought and also since Jinal (wife) and Moulik (kid) were in Mumbai i had nothing better to do. So i came back home, had a clean shave, put on formals and left for the airport.

We reached airport at 2.30 in night and the driver wanted to have some food as Ramzan is in process and he can only have food till 4.00. I was in a dilemma whether to ask him to go for food or no as the flight was scheduled to land at 2.55 and i was sure that the driver would not be back on time. However i allowed him to go ahead and have food.

The flight was on time (it generally will be when u do not want it to be). Mr. Saxena shook the hands and i told him that the car would take sometime due to Ramzan. He was absoutely cool about it, this was at 3.00 in night. I was really impressed. He started his discussion with ISB and how he has been associated with the institution, then the discussion shifted to INSEAD and life of an MBA student there. It was almost half an hour we were standing outside the airport and discussing about MBA and he was least bothered about the delay in car. Have never seen such a down to earth CEO. Finally the car came at 3.30 and we started for ISB. While in the car the discussion went on to the hottest topic, the financial mess. I liked his views; it happens every decade. It will come and go and come again. The only difference is the % fall in every crash has been higher than the previous one. Few rules of investing that he followed; never invest in a single asset class, never take a loan or always try to repay the loan as soon as possible and never trade in derivative, the weapons of mass destruction. He recommended a book 'richest man in barbelon'.

It took us an hour to reach ISB and I should pat my back was able to keep the CEO involved in a discussion for more than an hour. It was a great drive, i never thought i would be able to keep on chatting with him and also make him chat for the entire drive...

Bail Out - Moral Hazzard

I was curious to know why is US govt. bailing out these companies who deserve to be wiped of for their wrong doing. I asked this to Prof. Krishna Kumar and his reply was "there is a school of thought who feels that the great depression of 1929 could have been avoided. It was a similar situation and the govt. did not provide funds to generate liquidity. This was despite of the fact that US govt. had ample funds. Hence fed does not want to take a chance this time".

This is arguably the only reason why fed is justified in bailing out. But it gives rise to one more evil of 'moral hazzard'. All these firms did what they were not supposed to do, now they are paying for their wrong doing and US govt. is providing funds for that. What is the guarantee that this will not be repeated few years from now. I had few important points that I wanted to pen down.

What happened after the great depression, there was a lull of economic activity, large scale unemployment, etc. for a period till 1933. Post that there was world war II, after which US emerged as a super power. We do not know if there was no great depression what would have happened and it is difficult to argue for any scenario.

This time it is difficult to imagine what would have happened without this bail outs. It is just a hypothesis that the financial markets would have crashed, but even if this happens, I would like to argue so what? Is bailing out a permanent solution? Where is the money for these bail outs coming from? As far as my knowledge goes there can be three options:

1. Increase taxes - you will make the condition of an average person worse as he is already under the threat of unemployment and by increasing tax collection his income further reduces
2. Print more money - this would certainly increase inflation and hence hurt the pockets of common man
3. Borrow from other countries - Borrowing comes with a servicing cost, US economy has already borrowed huge money to fund the wars, additional borrowing for these bail outs would further increase the servicing cost and hence the budget deficit.

Hence the question, is bailout a permanent solution to this? I strongly feel that by doing this US govt. is just postponing the problem. It is a myopic view being taken by Fed. Only time will tell who is right?

Financial Mess

Lot has been written about regarding the current financial mess in the economy. Prof. Subra shared a very useful link with all of us which gave a detailed analysis on the hows and whys of the condition, you can access it on

http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/

I am not going to repeat any of these things as there would be nothing new. However looking at this financial mess a bigger question that arose in my mind is how can this happen? All these companies who are either no more or have faced the turmoil had the so claimed best brains in the world. Inspite of having the most envied talent pool they were neither able to foresee such an event nor they were able to prevent any of such things...

Isn't this surprising!!! Is it time to question the definition of best brains and do a check on the source from where these best brains come from.

Is the education system so hollow or can we say that the education institutions are creating literate heads but illiterate hearts.

Just a thought to ponder upon...

Tata Singur

It has now been concluded that Tata will move out of Singur and Nano will not be rolled out from the state of West Bengal.

If we just look back and think about the events we find that the entire process is quite disturbing. I do not have anything against Tata or for that matter against industrialisation. If we want to bring the masses out of the vicious cirle of poverty, economic growth is a must and for economic growth, industrialisation is a must.

But suppose someone comes tomorrow and tells me that he wants to buy my home and he will pay twice its current market value. Will I be Ok giving it away. I do not think so and hence how can I expect a farmer who has an emotional attachment with the piece of land part away with it for the sake of industrialisation and economic growth. This is irrespective of the price being paid. One can argue that it is against the right to property.

However our govt. has been doing this under the law of 'eminent domain' and i do not think this is good for long term. This would further increase the income gap and create unrest in future. I certainly think that buying land after the concent of owner and that too not only for a price but for a share in profit from industrialisation will be the best way to economic growth. Suppose if every farmer of Singur was offered shares in Tata motors so that the upside of industrialisation is also shared among poor farmers, it would have been a better solution.

Lets ensure that we do not go against the 'right to development' in our bid for economic development.