Showing posts with label Perspectives. Show all posts
Showing posts with label Perspectives. Show all posts

Monday, 9 January 2017

How contributing to another comes around unexpectedly

In Crown Heights, there was a Jewish man named Yankel, who owned a bakery. He survived the concentration camps, and always said, "You know why it is that I’m alive today?"

"I was a kid, just a teenager at the time. We were on the train being taken to Auschwitz. Night came and it was deathly cold in that boxcar. The Germans would leave the cars on the side of the tracks overnight, sometimes for days on end without any food, and no blankets to keep us warm," he said.

"Sitting next to me was this beloved elderly Jewish man from my hometown. He was shivering from head to toe, and looked terrible. So I wrapped my arms around him to warm him up. I rubbed his arms, his legs, his face, his neck. I begged him to hang on. All night long, I kept the man warm this way.

I was tired, and freezing cold myself. My fingers were numb, but I didn’t stop rubbing heat into that old man’s body. Hours and hours went by until finally, morning came and the sun began to shine. When there was some light in the boxcar, I looked around to see the other people.

To my horror, all I could see were frozen bodies. All I could hear was deathly silence. "Nobody else in that cabin made it through the night. They died from the cold.

Only two people survived: the old man and me. The old man survived because somebody kept him warm...and I survived because I was warming someone else.”

When you warm other people’s hearts, you remain warm yourself. When you seek to support, encourage and inspire others, then you discover support, encouragement and inspiration in your own life as well.

May this story inspire you to experience the magic of priceless contribution to others.

Source: Rohan Singal

Saturday, 19 January 2013

The missing watch...


The Missing Watch…

There once was a farmer who discovered that he had lost his watch in the barn. It was no ordinary watch because it had sentimental value for him. After searching high and low among the hay for a long while; he gave up and enlisted the help of a group of children playing outside the barn. He promised them that the person who found it would be rewarded.

Hearing this, the children hurried inside the barn, went through and around the entire stack of hay but still could not find the watch. Just when the farmer was about to give up looking for his watch, a little boy went up to him and asked to be given another chance.

The farmer looked at him and thought, "Why not? After all, this kid looks sincere enough."

So the farmer sent the little boy back in the barn. After a while the little boy came out with the watch in his hand! The farmer was both happy and surprised and so he asked the boy how he succeeded where the rest had failed.

The boy replied, "I did nothing but sit on the ground and listen. In the silence, I heard the ticking of the watch and just looked for it in that direction."

Source: Rohan Singal

Tuesday, 18 December 2012

Heaven OR Hell in Life - a matter of choice

Guided tour of heaven & hell… I once got a guided tour to Heaven & Hell !!! I was first taken to Hell. I had expected it to be full of fire, flames, blood etc. To my utter surprise it was all green, well manicured gardens, 8 lane roads etc. I was shocked. However, the inhabitants were very frail and thin. As if they have not eaten for days – skin stretched on skeleton! I then went to Heaven. The scene here was exactly same. Same infrastructure, greenery, roads etc. The only difference was that the inhabitants looked very fit, healthy and happy!! What was the mystery? I rushed to God and asked. “Please tell me why people at these two places look different?” God smiled. “Did you see their canteen?” “No. What is there to see in the canteen?” I asked. “There you will find your answer!” God said. I went again. Outside the Hell canteen, there was a notice. “You can eat ONLY with the spoon provided”. There was a big spoon put on the notice board – 2 feet long. Also the spoon was tied to the one arm of each inhabitant as they entered (with elbow locked), the other arm was tied behind his back. Inside the canteen, the scene was interesting. Each person was dipping his spoon in the food and throwing it towards his mouth & attempting to catch the food. Everyone was doing that. All were busy. 95% of the food fell on the floor. I then went to Heaven’s canteen. Same rule, same spoon! Yet the scene was different. You guessed it right!! People were sitting in pairs, facing each other. Each person picked food in the spoon and fed the person in front. Important point to note is that no one was shirking. Every person did his/her job. No one was fed out of pity, none were pleading helplessness. How does this apply to our life? We have a choice to create Heaven or Hell, right here on this earth. If we only think of “Self, Me, Mine”, we may most likely create Hell around us. If we choose to be in pure contribution mode, where we contribute to others, “Help them to help themselves”, we may create Heaven around us right here on this earth. Remember ‘Helping out of pity” is totally opposite of pure contribution. Most of the time, that act has a big selfish element. One may feel that at least there is someone who exists because of him. One may also feel that he/she is better off than someone. It may even be seeking appreciation, approval from the person being helped, or from society or even self satisfaction. It is all the same thing. It fuels the ego subtly. Someone taught me: “Keep your hand always outstretched in an active contribution mode – as a GIVER. Contribute and add value to the situation. You will never need to spread your hand out as a borrower or for favour. What you need will come to you!” I realized that much later in my life. I remember in my first few years of working as an employee. I always thought of what I was getting; how my CV value was getting enriched for a better job, higher salary; how to maximize available benefits and allowances from the company; how I deserved better from life; how people should pay me for my past individual accomplishments!! – ME, ME & I all the way. Much later I realized that when I first focus on the company, its bottomline growth, contributing to its clients, growing people around me, helping them to be winners in their lives, life turned simple & heavenly. The joy of being a star pilot in my own life was miniscule in comparison to the joy of assisting others to fly in their lives in reaching their dream destination. Here is a test. Whenever you find something a drag and struggle, do a check. Have you shifting to ME-ME mode from the contribution mode. Shift the choice back to pure contribution and see the drag disappear magically!

Wednesday, 31 August 2011

Risk of delaying a Financial Decision

Is lack of time making you go crazy in your attempt to plan your finance?
Does your busy professional schedule offer you time to monitor your personal finance?

Balaji is working for an MNC. Today he has got a deadline for a particular assignment. His day is fully packed. First thing in the morning, he receives a mail from his HR Dept stating that today is the last date for producing proofs for tax saving investments; otherwise a huge amount will be deducted from his salary as tax. He wanted to do some tax saving investments urgently and submit the proof on or before end of the day.

Mahesh is an NRI, working for a software company in US. He has got a couple of crores in his overseas fixed deposits giving a return of 1.50% p.a. Returns are taxable. At times, he thinks that the return what he getting is very low. He wanted to check up with a professional financial planner in India. He thinks he will contact as soon as his present project gets completed. Like this he has not contacted any financial consultant for the last 3years because of some reason or the other.

Most of the investment decisions are either taken because of some compulsion or urgency or postponed because of compulsion or urgency in some other area of life. This is because we want to complete the urgent thing first not the most important thing. Many important things that contribute to our overall financial objectives and give richness don’t tend to give any pressure on us. Though they may not be urgent, they are the things that we must give importance and carry out immediately.

We act upon things like pressing problems, deadline-driven projects, and official meetings. We don’t give importance to
• prepare for a meeting with a financial planner; appraising a financial planner before making investments
• planning activities like budgeting, children’s future planning, retirement planning;
• protective activities like taking a term insurance, house holder policy, health insurance;
• empowering ourselves by upgrading our knowledge with reference to investments
Why we are not able spend time on important things and spend most of our time on urgent things? Because, we are following a way that focuses on how fast or efficiently we are getting things done. We are not following a way that focuses on why we are doing things.

Take the case of Mr.Balaji. Why didn’t he do his tax planning during the beginning of the financial year itself? Why is he chasing at the last minute? Balaji is much worried about his deadline for assignment than tax planning. As he is making investment urgently, it is difficult for him to choose the right financial advisor and also difficult to judge which one would be the best tax saving option for him. He will be investing with an advisor who can get the investment proof on the same day.

Is this the basis on which we select an investment advisor? Will the relationship of Mahesh and this advisor be a long term one? Will this investment is going to be of any help to Balaji in meeting the higher education expenses of his son after 15 years?

Coming to the case of Mr. Mahesh, he had couple of crores at 1.5% pre-tax return. He could have tripled his returns by investing in an Indian liquid fund which is very safe. There are far better investment options available for him to choose. But he has settled for 1.5%.

If he could have spent a day or two in carefully choosing the right financial advisor and investment product he could have earned more. The earning opportunity which he missed with his investments might equal to his 6 months or 1 year salary.

He could have generated that passive income equivalent to 6 month or 1 year salary without any pressure from the top management; without meeting any deadlines by just spending a day or two.
We are all working hard for money. Is our hard earned money is working for us or lying in our SB a/c or really growing?

We find a ladder and see there are so many people trying to reach the top of the ladder faster. Then we also follow the group, deadlines to be met in each and every step; focusing more on reaching the top and finally reached the top. Only after reaching the top, we realize that we have come to a very wrong place or a place which is not worth missing so many things and opportunities in life. This is how the today’s world is.

Nothing wrong in working harder or focusing more on completing the assignment or spending more time on finishing the project on deadline. These are all good thing to do. But always remember, there are better and best things to do. We keep too many good things ahead of a few best things.

Setting up financial goals; working out a plan for achieving those goals; and implementing those plans are all best things to do in life. You know in advance where you want to reach exactly, by doing this exercise. As we progress, we enjoy the journey. As we reach the place, we really feel happy and we have not missed any important thing on the way.

Procrastination and not giving priority to financial goals and investment plans are costliest mistake one can take. So let us stop procrastinating and give priority to our financial goal setting and investment planning. Then life will be really so beautiful.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Flying creature in crystal river: Story of a messiah

Once there lived a village of creatures along the bottom of a great crystal river.

The current of the river swept silently over them all – young and old, rich and poor, good and evil, the current going its own way knowing only its own crystal self.

Each creature in its own manner clung tightly to the twigs and rocks of the river bottom, for clinging was their way of life, and resisting the current what each had learned from birth.

But one creature said at last. “I am tired of clinging. Though I cannot see it with my eyes, I trust that the current knows where it is going. I shall let go, and let it take me where it will. Clinging, I shall die of boredom.

The other creatures laughed and said: “Fool! Let go, and that current you worship will throw you tumbled and smashed across the rocks, and you will die quicker than boredom!”

But the one heeded them not, and taking a breath let go, and at once was tumbled and smashed by the current across the rocks.

Yet in time, as the creature refused to cling again, the current lifted him free from the bottom and he was bruised no more.

And the creatures downstream, to whom he was a stranger, cried, “See a miracle! A creature like ourselves, yet he flies! See the Messiah, come to save us all!”

And the one carried in the current said. “I am no more Messiah than you. The river delights to lift us free, if only we dare let go. Our true work is this voyage, this adventure.”

But they cried the more, “Saviour!” all the while clinging to the rocks, and when they looked again, he was gone, and they were left alone making legends of a Saviour.”

“What you hold on to most dear will always hold you back!!”

Source: “Illusions” – by Richard Bach

The Folded Napkin - A Trucker Stop Story

"I try not to be biased, but I had my doubts about hiring Stevie. His placement counselor assured me that he would be a good, reliable busboy. But I had never had a mentally handicapped employee and wasn't sure I wanted one. I wasn't sure how my customers would react to Stevie.

He was short, a little dumpy with the smooth facial features and thick-tongued speech of Downs Syndrome. I wasn't worried about most of my trucker customers because truckers don't generally care who buses tables as long as the meatloaf platter is good and the pies are homemade.

The ones who concerned me were the mouthy college kids traveling to school; the yuppie snobs who secretly polish their silverware with their napkins for fear of catching some dreaded 'truck stop germ'; the pairs of white-shirted business men on expense accounts who think every truck stop waitress wants to be flirted with. I knew those people would be uncomfortable around Stevie so I closely watched him for the first few weeks...

I shouldn't have worried. After the first week, Stevie had my staff wrapped around his stubby little finger, and within a month my truck regulars had adopted him as their official truck stop mascot.

After that, I really didn't care what the rest of the customers thought of him. He was like a 21-year-old in blue jeans and Nikes, eager to laugh and eager to please, but fierce in his attention to his duties. Every salt and peppershaker was exactly in its place, not a breadcrumb or coffee spill was visible when Stevie got done with the table.

Our only problem was persuading him to wait to clean a table until after the customers were finished. He would hover in the background, shifting his weight from one foot to the other, scanning the dining room until a table was empty. Then he would scurry to the empty table and carefully bus dishes and glasses onto his cart and meticulously wipe the table up with a practiced flourish of his rag.

If he thought a customer was watching, his brow would pucker with added concentration. He took pride in doing his job exactly right, and you had to love how hard he tried to please each and every person he met.

Over time, we learned that he lived with his mother, a widow who was disabled after repeated surgeries for cancer. They lived on their Social Security benefits in public housing two miles from the truck stop. Their social worker, who stopped to check on him every so often, admitted they had fallen between the cracks. Money was tight, and what I paid him was probably the difference between them being able to live together and Stevie being sent to a group home. That's why the restaurant was a gloomy place that morning last August, the first morning in three years that Stevie missed work.

He was at the Mayo Clinic in Rochester getting a new valve or something put in his heart. His social worker said that people with Downs Syndrome often have heart problems at an early age so this wasn't unexpected, and there was a good chance he would come through the surgery in good shape and be back at work in a few months.

A ripple of excitement ran through the staff later that morning when word came that he was out of surgery, in recovery, and doing fine.

Frannie, the head waitress, let out a war hoop and did a little dance in the aisle when she heard the good news.

Bell Ringer, one of our regular trucker customers, stared at the sight of this 50-year-old grandmother of four doing a victory shimmy beside his table.

Frannie blushed, smoothed her apron and shot Bell Ringer a withering look.

He grinned. 'OK, Frannie , what was that all about?' he asked..

'We just got word that Stevie is out of surgery and going to be okay.'

'I was wondering where he was. I had a new joke to tell him. What was the surgery about?'

Frannie quickly told Bell Ringer and the other two drivers sitting at his booth about Stevie's surgery then sighed: 'Yeah, I'm glad he is going to be OK,' she said. 'But I don't know how he and his Mom are going to handle all the bills. From what I hear, they're barely getting by as it is.' Bell Ringer nodded thoughtfully, and Frannie hurried off to wait on the rest of her tables. Since I hadn't had time to round up a busboy to replace Stevie and really didn't want to replace him, the girls were busing their own tables that day until we decided what to do.

After the morning rush, Frannie walked into my office. She had a couple of paper napkins in her hand and a funny look on her face.

'What's up?' I asked.

'I didn't get that table where Bell Ringer and his friends were sitting cleared off after they left, and Pony Pete and Tony Tipper were sitting there when I got back to clean it off,' she said. 'This was folded and tucked under a coffee cup.'

She handed the napkin to me, and three $20 bills fell onto my desk when I opened it. On the outside, in big, bold letters, was printed 'Something For Stevie'.

'Pony Pete asked me what that was all about,' she said, 'so I told him about Stevie and his Mom and everything, and Pete looked at Tony and Tony looked at Pete, and they ended up giving me this.'

She handed me another paper napkin that had 'Something For Stevie' scrawled on its outside. Two $50 bills were tucked within its folds. Frannie looked at me with wet, shiny eyes, shook her head and said simply: 'Truckers!!'

That was three months ago. Today is Thanksgiving, the first day Stevie is supposed to be back to work.

His placement worker said he's been counting the days until the doctor said he could work, and it didn't matter at all that it was a holiday. He called ten times in the past week, making sure we knew he was coming, fearful that we had forgotten him or that his job was in jeopardy.

I arranged to have his mother bring him to work. I then met them in the parking lot and invited them both to celebrate his day back.

Stevie was thinner and paler, but couldn't stop grinning as he pushed through the doors and headed for the back room where his apron and busing cart were waiting

'Hold up there, Stevie, not so fast,' I said. I took him and his mother by their arms. 'Work can wait for a minute. To celebrate you coming back, breakfast for you and your mother is on me!'
I led them toward a large corner booth at the rear of the room.

I could feel and hear the rest of the staff following behind as we marched through the dining room. Glancing over my shoulder, I saw booth after booth of grinning truckers empty and join the procession. We stopped in front of the big table. Its surface was covered with coffee cups, saucers and dinner plates, all sitting slightly crooked on dozens of folded paper napkins 'First thing you have to do, Stevie, is clean up this mess,' I said. I tried to sound stern.

Stevie looked at me, and then at his mother, then pulled out one of the napkins. It had 'Something for Stevie' printed on the outside. As he picked it up, two $10 bills fell onto the table.

Stevie stared at the money, then at all the napkins peeking from beneath the tableware, each with his name printed or scrawled on it. I turned to his mother. 'There's more than $10,000 in cash and checks on that table, all from truckers and trucking companies that heard about your problems. 'Happy Thanksgiving.'

Well, it got real noisy about that time, with everybody hollering and shouting, and there were a few tears, as well.

But you know what's funny? While everybody else was busy shaking hands and hugging each other, Stevie, with a big, big smile on his face, was busy clearing all the cups and dishes from the table....
Best worker I ever hired."

Plant a seed and watch it grow.....

Source: Rohan Singal

A tale of two seas - lessons from nature

Sitting in the Geography class in school, I remember how fascinated I was when we were being taught all about the Dead Sea. As you probably recall, the Dead Sea is really a Lake, not a sea (and as my Geography teacher pointed out, if you understood that, it would guarantee 4 marks in the term paper!) It’s so high in salt content that the human body can float easily. You can almost lie down and read a book! The salt in the Dead Sea is as high as 35% - almost 10 times the normal ocean water. And all that saltiness has meant that there is no life at all in the Dead Sea. No fish. No vegetation. No sea animals. Nothing lives in the Dead Sea.

And hence the name: Dead Sea.

While the Dead Sea has remained etched in my memory, I don't seem to recall learning about the Sea of Galilee in my school Geography lesson. So when I heard about the Sea of Galilee and the Dead Sea and the tale of the two seas - I was intrigued.

Turns out that the Sea of Galilee is just north of the Dead Sea. Both the Sea of Galilee and the Dead Sea receive their water from river Jordan. And yet, they are very, very different.

Unlike the Dead Sea, the Sea of Galilee is pretty, resplendent with rich, colorful marine life. There are lots of plants. And lots of fish too. In fact, the Sea of Galilee is home to over twenty different types of fishes.
Same region, same source of water, and yet while one sea is full of life, the other is dead. How come?

Here’s apparently why. The River Jordan flows into the Sea of Galilee and then flows out. The water simply passes through the Sea of Galilee in and then out - and that keeps the sea healthy and vibrant, teeming with marine life.

But the Dead Sea is so far below the mean sea level, that it has no outlet. The water flows in from the river Jordan, but does not flow out. There are no outlet streams. It is estimated that over 7 million tons of water evaporate from the Dead Sea every day. Leaving it salty. Too full of minerals. And unfit for any marine life.

The Dead Sea takes water from the River Jordan, and holds it. It does not give.

Result? No life at all.

Think about it.

Life is not just about getting. Its about giving. We all need to be a bit like the Sea of Galilee.

We are fortunate to get wealth, knowledge, love and respect. But if we don't learn to give, we could all end up like the Dead Sea. The love and the respect, the wealth and the knowledge could all evaporate. Like the water in the Dead Sea.

If we get the Dead Sea mentality of merely taking in more water, more money, more everything the results can be disastrous.

Good idea to make sure that in the sea of your own life, you have outlets. Many outlets. For love and wealth - and everything else that you get in your life. Make sure you don't just get, you give too.

Open the taps. And you'll open the floodgates to happiness. Make that a habit. To share. To give.

And experience life. Experience the magic!

Source: Rohan Singal

Fable of the porcupine

It was the coldest winter ever. Many animals died because of the cold. The porcupines, realizing the situation, decided to group together to keep warm. This way they covered and protected themselves; but the quills of each one wounded their closest companions. After awhile, they decided to distance themselves one from the other and they began to die, alone and frozen. So they had to make a choice: either accept the quills of their companions or disappear from the Earth. Wisely, they decided to go back to being together. They learned to live with the little wounds caused by the close relationship with their companions in order to receive the warmth that came from the others. This way they were able to survive. Moral of the story: The best relationship is not the one that brings together perfect people, but when each individual learns to live with the imperfections of others and can admire the other person's good qualities.

Source: E-mail Fwd

Sunday, 24 April 2011

A step by step guide to first financial plan

Prabu was a college student till yesterday. Today he has got a job. He has changed his costume from T-shirt and jeans to a formal wear with a tie. When he got his first pay cheque, his father advised him to save, his girl friend asked him to take her out on a date, and his friends wanted a party. Prabu was totally confused what to do with his first salary. What are all his actual priorities? Let us help him by laying out a step by step initial financial plan for him.
Get a PAN Card:
PAN Card is an ID card issued by income tax department. This card is useful in filing your Income Tax returns. Apart from this, the PAN card is very much useful in opening a bank a\c, demat a\c, investing in mutual funds and the like. The required documents for getting a PAN card is a passport size photo, address proof and an identification proof. You need to apply with either UTI or NSDL. They are the two approved agencies by income tax department for issuing PAN card.
Personal Accident and Disability Insurance:
Almost every day you can find a news column about road accident. It may be your colleague, your distant relative, your neighbor, your friend, your classmate. The stories of such incidents give us a reminder that the accidents can happen to anyone. The impact of these accidents on ones working life could be huge. Some accidents could reduce our employability temporarily or permanently. Personal accident and disability insurance policies will cover the financial losses arising out of accident and disability.
You need to decide the coverage amount of this policy based on the estimated loss you may suffer because of accident. That is how much loss you may incur from employment temporarily or permanently because of the accident. This will cost you approximately Rs.1500 p.a for a coverage of Rs.10 lakhs.
Health Insurance:
Most people don’t think about health insurance very often. But it comes to mind first when a loved one is sick. Under health insurance, the insurance company pays the medical bills if the insured person becomes sick and hospitalized. Health insurance can protect a family from financial damage in case of severe and serious illness.
If you have a health insurance from your employer, that may not be sufficient. Employer may cover the employee and not his family members. And moreover these policies are not portable and cannot be individualized if you leave the job. Employer provided policies cannot be transferred to another employer in case you switch your job. Also employer provided policies will give you coverage as long as you are employed. Once you retire you may not be having coverage. It is really unfortunate that only after your retirement you need health insurance at the most. If you plan to take a fresh policy after retirement, insurance company will not cover the pre-existing diseases at that point in time. Though your employer provides a health insurance policy it is better for you to take a separate health insurance policy at least with a small amount of coverage.
The coverage amount of the health insurance policy need to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.
Term Insurance:
Generally as a beginner, there will not be any requirement for any life insurance. But if your parents are financially depending on you, then you need to cover yourself with life insurance. As a breadwinner, today you are there for your family to provide a lifestyle. In case of any mishappening to you, your family members should not compromise on their lifestyle. That is why it is advisable to cover yourself with life insurance if you have dependents.
But don’t fall prey for ulips. Go for a pure term insurance policy. These policies give you a high coverage with low premium. The premium for a sum assured of Rs.10 lakhs will cost a 25 year old only Rs.2500 p.a. approximately.
Emergency Reserve:
Once you have completed the above obligations, you need to build an emergency reserve or contingency fund. One aspect of financial planning involves planning for situations where there could be a temporary break in one’s professional income. This could happen, amongst other reasons, due to ill health or could even be self opted. Such planning requires creation of contingency fund. The size of a contingency fund is linked to one’s estimate of what could be the maximum duration of such a break. For instance some people plan for the possibility of a 3 months break, others for 6 months.
This emergency fund gives a psychological security to you. In case you need to quit you r present job and need to search a new one, you can do that comfortably and confidently as you have an emergency fund for the intermediate period. You need not panic. If you have created a contingency fund, in the event of any emergency you need not pre-close your other investments and hence you avoid paying penalty or booking losses.
Tax Planning:
You can save under section 80 C up to Rs.120000. Out of this Rs.20000 need to be invested in the infrastructure bonds and the balance Rs.100000 can be invested in NSC, PPF, insurance premium, and ELSS mutual funds., You can give maximum allocation to ELSS mutual funds, as you are so young and in the beginning of your career.
Other goals:
You may have other goals like buying a laptop, higher studies, and vacation. You need to plan for all these goals. You need to keep in mind two things before deciding an investment. They are your risk tolerance and time horizon. How much risk you are afford to take and psychologically comfortable in taking? When do you need this money back? Based on the answers to these questions you need to choose the right kind of investment plan.
Plan out your work and work out your plan. Normally we don’t plan to fail, but we fail to plan.If you work on your financial plan, when your friends are partying and taking their girlfriends out, you will be definitely going to be retired richer than your friends.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

ALL you wanted to know about Company Deposits

Company Deposits are simply nothing but fixed deposits in companies that earn a fixed rate of return over a period of time. Company deposits are really down-to-earth products. The influential advantage of the company deposits is its plain simplicity. Company deposit is understood even by the most novices among the investors community.

Have you ever wondered the logic behind why pure vanilla flavored ice cream sells more than any other flavor? Similar logic is just as true when it comes to the company deposits vis-a-vis many other modern investment options.

With the meltdown of NBFCs almost a decade ago, company deposit market had a major slow down, but volumes still remain significant and there are loyal investors who prefer company deposits to other investment products.

Advantages of Company deposits:

 Assured return.
 Higher interest when compared to bank deposits.
 Low risk when compared to stock market investments.
 Service at your doorstep.
 Lock in period in most of the cases is 6 months only.
 If the interest income is less than Rs.5000 in one financial year, then NO TDS.

Risk in Company Deposits:

Company deposits are basically unsecured. That is if the company defaults in repaying the interest or principal, the investor will not be able to recover his capital. As a company deposit holder, you don’t have any lien on any asset of the company, in case it goes into financial difficulties. This makes the company deposits a risky investment option.

Identifying Risky Company Deposits:

One of the important tasks in investment planning in company deposits is to identify the risky company deposits and avoiding them. If you find any of the below symptoms in any of the company deposit scheme, then it is better to avoid such company deposit schemes.

 Poor credit ratings like A or lesser ratings.
 Companies making losses.
 Companies that skip dividends.
 Companies that offer higher than 3% to 4% of bank deposit rates.

Checklist for choosing right company deposits:

There are some good investment options in company deposits. Also there are some bad investment options. If you know how to select the right company deposit then company deposits can be really an interesting investment option in your portfolio.

 You need to ignore all the unrated companies and need to choose companies with the rating of AA or higher.
 Choose the company with better reputation within a given rating grade. If you read business papers and magazines periodically, it is not difficult for you to check the credentials of the company.
 Take the help of the qualified financial advisor in choosing the right company deposit. But mind you, there are very few reputed and qualified financial advisors.
 Company deposits need to be spread over a large number of companies in different industries. By this, you can diversify your risk. Irrespective of the rating and reputation of the company, don’t invest all your investments in a single company deposit scheme.
 You need to check on the servicing level and standard of the company. You need to ignore companies that don’t care or care little about issues like sending interest warrants and principal cheques.
 After investing in a company deposit, you need to constantly track the company’s credit rating. The times are uncertain and downgrades are rampant.
 Check the company’s balance sheet for its asset back up, profitability, reserves, existing borrowings and loans.

Every investment has its distinct features and benefits. Likewise each investor has specific risk taking ability and personal needs. Professional investment planning needs matching of the product benefits and features with the financial objectives of the investors. So one need to weigh the various alternative investment options like bank deposits, debt funds vis-a-vis company deposits before making a choice.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Wednesday, 7 April 2010

Microfinance – An overview

{Given below is my understanding / interpretation of various discussions held during the course on ‘Microfinance’ by Prof. Shamika Ravi at the Indian School of Business (ISB), Hyderabad}.

IntroductionThe question that sowed the seeds of microfinance; Can you do business with ‘un-bankable’ clients? By un-bankable clients we mean people who are very poor and do not have any assets that can be used as collaterals. Banking with such people is risky and hence we do not find commercial banks lending or dealing with them.
But is it so easy to eliminate such huge masses from financial system just because they are risky? The recent financial turmoil due to subprime crisis has shown that the so called ‘non-poor’ (people like many of us) are equally risky if not more. Microfinance was invented through innovation in the process of market creation that reduces the risk. It is interesting to note the mechanics of how microfinance institutions operate to understand the innovation, but before that let us dwell in the types of risk that a bank will carry if it extends loan to un-bankable population.

Types of risk
The word ‘risk’ as used in common parlance means a source of danger or possibility of incurring loss or misfortune. Hence when a bank denies a rural labourer (un-bankable person in our case) for a loan, the rationale provided is lending in this case is risky. (The reason that person is taking a loan could vary from setting up his own small shop to renovating his home to getting his children married). What risk are we talking about? A risk that the bank may not be able to recover the loan and it has no collateral; hence it is risk of the loan going bad. The causes for the loan going bad are lack of information about the borrower, and hence inability of bank to distinguish between a good and a bad person based on loan application form and lack of collateral to enforce repayment. Hence we see two major risks that the banks face:
1. Adverse Selection: Neither banks nor other institutions have adequate information of credit-worthiness of the un-bankable population. Hence if banks were to extend loans to them they would need to charge high interest rates to compensate for bad loans from the pool of loan made to un-bankable people. However as the interest rate goes up, a good un-bankable person would avoid taking loan and hence the pool of un-bankable that comes to take loan will become worse. This is similar to ‘market of lemons’ as coined by George Akerlof. Hence the first risk is that to cover for bad loans / defaults the bank would need to charge high interest rates for un-bankable population and if it does that the pool of un-bankable that comes to take loan becomes worse and default increases, the basic cause being lack of information.
2. Moral Hazard: Even if the bank can get some information on credit- worthiness of un-bankable population and it starts extending loans assuming that a few of them would default there is always a risk of moral hazard. When a few people default, other people who ideally would not like to default will always be tempted to delay their payments or default on their loans as they have nothing to lose. Since there is no collateral in all these cases if from a pool of hundred un-bankable people taking loan, one of them defaults, the other ninety nine have nothing to lose, if they default and hence they are certain to default. The bank in this case carries a risk of 100% default due to moral hazard
The next time we see an old Hindi movie, where a village money lender charges exorbitant interest rates from poor people think about the above two risks; namely ‘adverse selection’ and ‘moral hazard’. It is very easy for us to sympathise with the poor person and consider the money lender as villain; but he is only trying to cover the above two risks, he may not be as bad as we think him to be.

Mechanics of operation- Group Lending‘Group lending’ has become synonymous to microfinance operations. A microfinance institution goes to a village and asks the potential borrowers to form groups of 3 – 10 among themselves (depending on the policy of micro finance institution). The lending is first done to only one of the members of a group and repayment is often weekly. Only after the repayment of first loan is completed to certain extent, a second person gets an opportunity to take loan and based on his repayment the third gets his opportunity and the cycle continues. However if the person who takes loan defaults; there is a clause of ‘joint liability’ which makes the other people in the group jointly liable to make the loan good. In case other people do not make good, they would not be extended any credit in future. If one finds it difficult to understand this concept; think of ‘VISI or VISHI’ that is run by many people in our community. The concept of group lending and joint liability is somewhat similar to it.
It is astonishing to see how this simple mode of operation reduces the above two risks of adverse selection and moral hazard to a great extent:
1. Adverse Selection: This risk as described above was due to lack of availability of information with the bank (lender) about the un-bankable borrowers. This was because banks were dealing directly with each borrower. By creating this simple concept of group lending, the lender is now dealing with a group of borrowers and not individual borrowers. Further the group is formed by the villagers who have information about the credit-worthiness of each other better than the bank. Hence while the groups are formed with an understanding of joint liability, each person will ensure that only good people i.e. people with intention of making regular payments form group together. Hence the problem of lack of information is solved automatically for the bank, though the bank remains as ignorant about credit-worthiness of each borrower as before. As this reduces defaults, the interest automatically comes down and hence the pool of un-bankable borrowers becomes better; exactly reverse of what happened earlier.
2. Moral Hazard: This risk as described above was due to lack of any collateral which would mean that the lender may not be able to recover anything in case of default, which is further aggravated by the fact that even if one person in the pool defaults, there is a very high likelihood that all the borrowers will default as they are dealing with bank individually. However with clause of joint liability in group lending, in case anyone of the group of 3 – 10 members defaults than other people need to make that good, else they would not be extended any credit. Hence the onus of recovery now shifts from the bank to the group that borrower belongs to. In this case the other members of the group would help the person who has taken the loan in his work so as to ensure that he does not default. There is also peer pressure and loss of face in case of default; which ensure that the borrower repays the loan instalments as per schedule. It once again surprises us the way in which a simple group lending with joint liability solves the problem of moral hazard; and the bank still does not have any collateral to protect him against default, yet the defaults reduces dramatically.
It is easy for us to believe that group lending is always good; but let us pen down some specific advantages as well as disadvantages of this mechanism.
Advantages:
• Convenient to borrower as the lender comes to his village
• Convenient to lender as the transaction cost is reduced as he is dealing with group
• Reduction of two most important risks; viz. Adverse Selection and Moral Hazard
• Creates a market without any extra information or collateral
Disadvantages
• Collusion by all the group members might result in high defaults
• In case of dispersed, mobile, urban population it may not be as easy
• The correlation of defaults within the groups of same village is very high; this may happen when the entire village is facing natural calamity and is not in a position to repay the loans
Reality check
It is important to do some reality check with practical examples across world to put in context the theory described above.
An example of victory: Grameen bank in Bangladesh started by Prof. Muhammad Yunus in 1976 is a leading success story in the world of microfinance. The bank has 7.86 million borrowers, 97 percent of whom are women; it serves in 84,388 villages, covering more than 100 percent of the total villages in Bangladesh . It was awarded noble peace prize in 2006. The bank has been profitable in most of the years since inception, except 3 years.
An example of debacle: A microfinance institution named Corposol in Columbia started in 1988 and had loan portfolio of $ 38 million in 1995, but it collapsed and went bankrupt in 1996 . Few explanation for this were; aggressive growth on mangers to extend credit to new clients, quality of loan was not monitored, internal controls were poor which resulted in higher delinquencies and defaults.
Beyond Loans: As seen worldwide it is important for microfinance institution to think beyond extending loans. It is important to think microfinance as ‘financial inclusion’ which would mean providing micro-insurance, micro-savings, micro-credit, etc. to the un-bankable population.
Indian Context: The Indian microfinance sector is expected to grow ten times by 2011 to a size of Rs. 250 billion . A few known names in the industry are SKS, Spandana and Basix. The industry currently is concentrated in Southern states and is restricted to lending only. This is because the law does not permit acceptance of deposits by micro finance institutions in India. There are some major developments that are in the pipeline. The Union Cabinet is likely to soon approve the Micro Financial Sector (Development and Regulation) Bill, 2009 which seeks to make NABARD the sector regulator. The new Bill entrust the function of development and regulation of the micro financial sector to the National Bank for Agriculture and Rural Development (NABARD), a subsidiary of the Reserve Bank of India. The passage of the Bill would result in the regulation of the micro-finance organisations not being regulated by any law for the time being. It also has a provision where it would permit the microfinance institution to accept deposits from its clients and hence inculcate a culture of thrift among un-bankables.
Objective: It is important to understand the objective of microfinance institutions. Though it seems that it is more social and that these institutions are not for profit, it is not the case. The objective can be either social (can be referred as ‘outreach’ objective) or profitable (can be referred as ‘sustainable’ objective). Institutions with social objective are formed to help the masses at large. Institutions like Grameen are living examples of the same. The founders of such institutions have a passion to help the society at large and they are formed with not for profit motive. However this is just one side of story. There are many organisations that look microfinance as business opportunity and hence start with profit objective. The profit made is the difference between the cost of borrowing and cost of operations (lending + operations). Approximately the lending rate is 30%, the borrowing rate is 12% and the cost of operations is 15%. Hence there is a 3% spread that is available to microfinance institutions . Please note, we are not passing any value judgements as to whether any objective is good or bad; both the objectives are totally valid and there have been success stories as well as failures in both the cases.
Conclusion
It would be naive for any finance professional to ignore this industry in today’s context when ‘bottom of the pyramid’ is talk of the day. It has the potential to throw various opportunities for all of us in terms of job prospects, consulting assignments as well as entrepreneurial opportunities. Hence it would be useful to have some basic knowledge about this industry; and its mechanics. I hope this article is able to provide a glimpse of the same.

Thursday, 6 August 2009

Bandra Worli Sea Link – eyewash for Mumbaikars

A project conceptualised in 1987 with a estimated cost of Rs. 50 crore, finalised sometime in late 90s for Rs. 400 crore and planned to be opened for public in 2004, finally got completed in 2009 for cost of Rs. 1600 crore. This is a brief story of bridge commonly known as Bandra Worli Sea Link in Mumbai, Maharashtra, India.

I started my professional career in Oct 2003 with a company called Marico in its office at Bandra. I used to drive on my two-wheeler 13 kms one way (from my home) to office which took 30-45 minutes. While I joined the company I had people telling me “few more days and you would take 15 minutes as this bridge gets completed in 2004”. I was waiting for that day and the day finally arrived in Jul 2009. A bit late, I had already left Marico by then, did my MBA from ISB and then joined Aditya Birla Group. What a co-incidence, I waited for 5 years to use that sea-link and the bridge got delayed exactly for that period. On a lighter note, even if it were open before I left Marico, I would not have been able to use it, because I use a two wheeler and it is not allowed on the sea-link.

The bridge was inaugurated recently with much hype. Many big names were invited for the inauguration and it included the president of ruling party, the prime minister of country, former chief minister if state and others. This despite knowing that we have made a structure costing 4 times more than its projected cost and taking twice the budgeted time.

So what does this mean? Have we provided an in principle approval for all such infrastructure projects to over run its budgeted cost by few times and get delayed in implementation by few years. The media coverage and the praise that the inaugural ceremony received were really surprising. If we build all our infrastructure projects at this speed, we would certainly be a different place to live in a few decades down the line. As per the website of this bridge; it is 5.6 km long and the expected benefit is Rs. 100 crore per annum savings in vehicle operating cost due to reduction in congestion in the existing roads and lower vehicle operating cost on the bridge.

With these statistics I am afraid of few questions that my son would ask me once he knows some basic mathematics which would be 3 years from now. I expect the following questions and do not have any answers:

• This is a brilliant piece of engineering dad. Your generation build a bridge of 5.6 kms on sea and spent Rs. 1600 crore for building the same. This would mean Rs. 285 crore per kms; isn’t that awesome. Can we check the cost per km of a bridge in some other countries to see how it matches with international standards? Ah, maybe I need to do some more searches on the internet.

• The cost you spent is Rs. 1600 crore and the benefit expected is Rs. 100 crore per annum. Hence assuming that these numbers are accurate you will take 16 years to recover the cost, is that correct? Yes dear but I am not sure if it was planned that way. My son is too young to understand the concepts of discounting and compounding and hence if we were to calculate a discounted payback it would be much more than 16 years.

The site also cites reduction in accidents as one of the benefits of this sea-link. Though I am not an engineer by qualification and hence may not be the right person to comment on this, but I fail to understand how a bridge can reduce accidents.

All in all there is only one conclusion that I can come at. This sea-link and its inaugural ceremony is a testimony to Indian politics on how to depict a shoddy performance as the most superlative one. If there is an award ceremony on eyewash of the decade, I am sure the sea-link would be on the top of that list. I would also sincerely request some of the most respectable politicians to stay away from such inaugural ceremonies as it suggests a stamp of approval from them which may not be their intention.

It’s time we need an execution commission instead of planning commission.

Sunday, 26 July 2009

Air India – God save our Maharaja

Started in 1932 as Tata Airlines by J.R.D Tata, Air India was formed in 1953 when air transport industry was nationalised. Since then the Maharaja has been a household logo and a strong brand in itself. However since last decade a complete mismanagement of the organisation by its owner; government of India has led it begging for a ‘bailout’.

Some really foolish decision in the national carrier; Air India and Indian Airlines that would make even a layman raise eyebrow:

• There were 2 national carrier; Air India for international and Indian Airlines for domestic for more than 50 years, but we learnt about word called ‘synergies’ in 70s or 80s. Was there a need for distinction between domestic and international operators? Better late than never; finally there were some talks of merging both the national carriers which began sometime in 2000 which finally happened in 2007.

• In late 2005 a plan to re-brand Indian Airlines as India was rolled out. That is a big joke when one knows that we are going to merge both the national carriers and the identity of Indian Airlines is anyways going to be lost, why was there a need to re-brand. Further I travelled once in a rebranded Indian and the experience was no different from Indian Airlines. It was just a cosmetic change; something similar to what many public sector banks did a year ago (refer my post on re-branding public sector banks). I am sure that there was huge amount of money that was wasted in this process.

• The worth of new fleets ordered was more than the revenue of the entity. Now this is something that can never go well with any person. Though there has been big acquisition by large conglomerates in recent past; but they were exception than a rule. I am not sure if there was even a rough plan on how would the payment for these fleets by arranged?

These are just few examples that make us raise eyebrows on the governance structure of operations of national carriers which is now National Aviation Company of India Limited (NACIL); the parent company of Air India and Indian. There could be many more but these are enough to raise questions on the people managing the show. The minister who has been responsible has been continued for more than last half decade and now he is being asked to prepare a restructuring plan. Can someone tell me; what is the incentive that he gets by turning around this company? In fact the incentive is reverse; the poorer it performs the higher the bailout.

I am sure that we will see more losses than posted by any company historically in India unless we make it run like a private company and bring in some professional managers to turn it around.

The company has already posted Rs. 8,000 crores losses and there is some hue and cry in the parliament. However people in the parliament seem to be busier in protesting against some reality shows instead of focusing on thousands of crores of tax payer money going in drain.

Dear GOI, please bring in some person from industry like you did for Unique Identity Project; else only god can save our Maharaja.

Friday, 24 July 2009

Should you do MBA? too after having corporate exposure for half a decade?

Frankly speaking it is catch twenty two situation. There are many good things that we here from people who have done MBA and also broadcasted by various media channels. Few of them are it broadens perspective (gas), bigger network (most abused term), better job (correlation vs. causation), etc. As I have been crisp in mentioning the meaning of each of these term in bracket let me explain some of them and put down my views:

• Broadens perspective: This is what I said when I wanted to get in, after coming out did it proved right? Yes, it did, but it is individualistic and cannot be true for all. You have to really work to do this and any B school will only provide environment to you but it is finally you who have to take advantage of that and broaden perspective. I would like to quote my favourite Prof. Sanjeev Das here who really helped me do this well. While having a chat with him I asked him what should one look for while deciding the electives. He was apt and clear, “select only those subjects that help you think differently. The problems in this world are same but the solutions could be different. Take subjects that help you think through different solutions”. Bullseye, this is what I think will help broaden perspective.

• Networking: This is the most abused term and a reason for B school. Though I was also one of those who gave this as one of the reason to do MBA, it is now that I realise it was so baseless. In the craziness of networking you will see people doing crazy things to get noticed and hence increase their network. Also with the current plethora of social networking site, I feel this reason has lost its importance whatever little it had. You do connect with few good people but saying that I would do MBA to increase my network seems too immature for me.

• Better Job: Well this was certainly not the reason for getting into MBA for me. But there is a confusion of correlation vs. causation as I have mentioned. There is a high correlation between doing MBA and getting good job, (by the way what is a good job) but good job is not a cause of MBA. People do get good jobs even without MBA. The reason for getting better jobs in the last decade was not MBA but the economic scenario that supported it. However as the tables turned and the scenario was not as good as it had been, things looked sad at all the B Schools. Hence B Schools would help you get a better job is a flawed argument.

Hey, wait there... though I have listed some reasons which I think are incorrect for doing an MBA, there are some reasons why I think MBA makes sense.
I will first put a quantitative reasoning for doing MBA, this would certainly make my economics professors happy.

• Reason 1: There would be more than 2 Lac CAs and more than 1 Lac MBAs (from premier B Schools) in India. However there would be less than 1000 people who are both. Now the choice is yours, whether you are happy being a part of 2 Lac CAs or a part of 1000 CA+MBA.

• Reason 2: Doing an MBA after getting good under-grad degree and a decent work experience sends signal to the outside world that you are serious about your career and better of the lot. It’s like a guarantee / warranty that manufacturers give on their product to signal that their product is better.

Now some gas, which I am really not good at. I have never experienced a campus life and hence doing MBA gave me a taste of campus life where you interact with people from difference background. I enjoyed my stay and learnt a lot from peers and professors whom I would have never met otherwise. I feel this is very important, but difficult to describe why at this stage, maybe once I work for few more years I would be in a position to mention the reason.

Coming to another question of ISB vs IIM, well my view would be its up to you. It is important to select a good B school whichever it may be will not have material impact on the objective.

Few professors from whom I learnt a lot and would certainly remember for life were Prof. Sanjeev Das, Prof. Prashant Kale, Prof. Dishan Kamdar, Prof. Henry Moon, Prof. Shamika Ravi and Prof. Subra.

Few colleagues that were great peers to have at ISB; Amit Uncle and Dilpreet Singh my study group mates and our dear neighbours and block mates Suketu Shah, Sandeep Gupta and Vikram Garg.

This post would be incomplete without mentioning the name of one important person who was my pillar, she is none other than Jinal; my friend and also my wife who put her career at stake and supported me all the time. I owe a lot to her.

Tuesday, 3 February 2009

Warren Buffet's advice for 2009

This was shared by Chandan (ISB Co2009), found it very useful... Happy reading...

We begin this New Year with dampened enthusiasm and dented optimism. Our happiness is diluted and our peace is threatened by the financial illness that has infected our families, organizations and nations. Everyone is desperate to find a remedy that will cure their financial illness and help them recover their financial health. They expect the financial experts to provide them with remedies, forgetting the fact that it is these experts who created this financial mess.

Every new year, I adopt a couple of old maxims as my beacons to guide my future. This self-prescribed therapy has ensured that with each passing year, I grow wiser and not older. This year, I invite you to tap into the financial wisdom of our elders along with me, and become financially wiser.

* Hard work: All hard work bring a profit, but mere talk leads only to poverty.

* Laziness: A sleeping lobster is carried away by the water current.

* Earnings: Never depend on a single source of income. [At least make your Investments get you second earning]

* Spending: If you buy things you don't need, you'll soon sell things you need.

* Savings: Don't save what is left after spending; Spend what is left after saving.

* Borrowings: The borrower becomes the lender's slave.

* Accounting: It's no use carrying an umbrella, if your shoes are leaking.

* Auditing: Beware of little expenses; A small leak can sink a large ship.

* Risk-taking: Never test the depth of the river with both feet. [ Have an alternate plan ready ]

* Investment: Don't put all your eggs in one basket.

I'm certain that those who have already been practicing these principles remain financially healthy. I'm equally confident that those who resolve to start practicing these principles will quickly regain their financial health.

Friday, 28 November 2008

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:
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.

Friday, 14 November 2008

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

Wednesday, 5 November 2008

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.

Monday, 27 October 2008

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...

Friday, 3 October 2008

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.