How to fight uncertain World

The world and the market changes so fast nowadays that the uncertainty is something our generation needs to live with, its is more or less unavoidable. Whether its the skill requirement for any job, the technology or even the way of looking at things, it keeps changing. There is no point fighting this change, but the sensible idea should be how to minimize the risk of uncertainty for our self and our families.
For starters, few of the ways to counter such risks can be:

1.  Awareness : The first step of negotiating any risk is to be aware about it. If we as a person are not aware of the challenges and threats we are exposed to, it will be impossible to tackle the risk.

2. Corpus: Ours is the credit card generation, we buy today and earn tomorrow assuming that the tomorrow is as bright as today. I think we should always have a  corpus of savings which is liquid in nature and should be able to sustain us for a period of 6 months to 1 year.

3. Investing in the Intellectual Capital: To walk ahead of changing times, one need to keep investing in the skills and try and improve ones intellectual capital in the process.


4. Making right choices: The choices we make should be futuristic in nature and should also be something one can enjoy.

My Introduction to stock markets …

When I first heard about stock markets way back in 90’s, it was always from the kind of money my relatives or my neighbors are making in the business, they all became my role models. They used to be surrounded by people asking for tips to invest or rather trade in the market.I used to think if I have money, I will invest in a 5 Rs stock , it will jump to 20 than again I’ll invest in another 5 Rs Stock and it will again jump to 20 in few days , the money will become 16 times .. Oh is it so easy, I said to myself, I just need to have 1000 Rs and I will become millionaire one day..this was how I was introduced to the stock market and I was barely 8 year old.

My father used to invest only in IPOs (Initial Public Offering, where one invest in the companies going for listing). I used to wonder why he is so conservative with investment, why not invest in the rapidly moving stocks in the exchange, the money is so huge there, you need to just bet on one and make merry for yourself.

I used to check out daily stock prices of father’s holdings, finding out whether we are making money or losing? In a classic bull market everything used to move so fast, wow we are making money even in IPOs. Everyone just used to talk about share and its returns those days. I used to feel that everyone is so intelligent, I should also know about it. Then there was an Uncle living close to our home and used to always talk big about the latest killing he has made in the market. I used to think, he must be so rich.

The euphoria didn’t lasted long, the whole market crashed, few of the people were badly hit, few sold of their houses, Harshad Mehta became the talk of the town. The Uncle living next door was never seen again in the neighborhood, people say he fled with his family due to the fear of creditors..

Then I thanked my father for being conservative, It’s not so easy after all.. but still that feeling was there inside me ,may be these people were not wise enough I can still make money in this market .. They should have short sold the stocks and they could all had been so rich.. I can do it one day, I used to say to myself..

To be continued..

IPL Blues…

Indian Premier League (IPL) launched just a year back was a big hit in the Indian subcontinent and the best part of it was the win-win situation, everyone was getting benefitted out of it. The players which could not make it up to the Indian team were getting great remuneration and high visibility which was at par with the international players, government was getting tax revenues and a chance to showcase India, TV channels were making loads of money through advertisements , the sports infrastructure of the country was benefiting out of the events and people were just loving it as it was their daily dose of affordable entertainment, better than the regular soaps which they have to watch. The 20-20 format was very entertaining and the time format of 2 hour game made it all exciting for even the people who don’t like to watch cricket all day.

The attack on Srilankan Team in Pakistan has caused more damage to IPL than any other event in the world. It is a classic case of a Black Swan as termed by Mr Nassim Talib in his book ‘The Black Swan’. As per Mr Talib Black Swans were debated not to be in existence and it was only before scientist found the rare breed in Australia that people realized the existence of Black Swan,  it’s a low probability event with high damage potential and nobody usually think of it in normal circumstances. A Mumbai attack through local boats or a 9/11 through passenger aircraft is a classic Black Swan which nobody thought will occur. The insurance companies never included this probability in calculation of their premiums and suffered badly from it.

Mr Lalit Modi is trying all out to make the event possible but who will take guarantees of guarding the lives of players when our own Home minister has refused to provide security to the teams during election season. Even if someone takes guarantee, the International Player might still reject the offer due to fear of attacks. Time is not far when people will start paying for their own security to outside intelligence Agencies. It does sounds like a good business proposition ‘Private Intelligence Agencies ‘?

Helpless ..

26^th – 28^th Nov , Sitting at home, watching the live videos of destruction and misery of people who fell victim to the planned attacks , that strong feeling of disgust and utter helplessness which few of us had ever felt .

This is not a fact to ignore that some people actually came, killed for fun and we were just the mock spectators. It differs from the cowardly planned bomb attacks, this time they took the whole city for ransom for 60 hours, looked liked as if the freedom of 60 years evaporated in 60 hours.

After everything got over, the anger of the people came out; they showed their solidarity for the cause and wanted a swift action from the government machinery. They pledged to put all their energies together to fight against the evil.

The question remains -Are we civilians really helping out our authorities in putting an end to the terrorism. What can we people do other than candle light marches and shouting for justice? How can we make our effort count? Is it really possible? I think this case is much tougher and complex than any of the case studies we have discussed in class. Do anyone have any concrete answers to the problem. 

I believe that even the government is helpless to a certain extent. Diplomacy is not working out for us the way it works for other countries as most of the countries are looking safeguard their interests rather than seek justice for India. Starting a war in this crisis will not only weaken the country financially but it will also affect the foreign relations and image of our country. So what can the government do? 

Market Timing ..

All technical and short term investors usually try to achieve something called market timing. Most of the traders believes that they can buy at low levels and sell at higher level in short duration of time. Although the term might look very simple but it is one of the toughest task according to industry experts. 

Technical analysis is the study of demand supply which is analyzed by reading different chart pattern which can daily, 3 day, 7 day or 30 days moving averages. The logic behind this exercise is said to be decoding the fundamental nature of human behavior that react to market scenario in either Fear or Greed. Most of the time people behave like a herd and as per the technical analyst the chart pattern actually help them in predicting the future direction of the market.

I am never able to appreciate the art of charting. Infact I seriously doubt the technique of reading charts for predicting future market scenario is something which can be proved or done on a regular basis. 

If we check the history of stock markets, the research suggests that the past information cannot be used to predict the future trends in market as that information is already discounted in the share price. This theory is called Weak form of ‘Efficient Market Hypothesis ‘ and has been proved by several quantitative research experiments.

Few weeks back I was reading a book on market timing by a prominent author who was trying to explain in a very unconvincing manner that the market timing does exist and people can actually do it. It is actually this belief which is making the markets liquid, nearly 60% of the volumes on BSE and NSE is from day traders who want to make the most in a day. They have literally zero holding time in comparison to the Warren Buffet philosophy of holding the stocks forever.

All said and done but I am yet to meet a person who says that he makes money 3 times a week by day trading specially in such volatile markets.

Govind ki Chai ..

Getting good food is a big issue around NMIMS. Our canteen does not serve very good menu most of the days and most of the people have to go to likes of Cooper Hospital , Rasraaj or Dena Bank Canteen for lunch . I mostly go to dena Bank canteen where Madhav’s canteen food taste seems more palatable and the place is easily accessible as it is just opposite to our Campus in JVPD. 

When I today stopped for tea after lunch near Dena Bank, I met Govind , he has been selling tea there from past 18 years , he is a very silent middle aged person who generally don’t talk much with the customers . I just talked with him about how the business is going and what kind of issues he faces regularly in the business and I found that his replies were quite interesting.

He told me that getting a place to setup a tea stall is very tough in Mumbai as most of them are illegal and the other hawkers want to grab the space where they can do good business. He regularly has to fight with other people ‘ Bhai’s ‘ who want to get that place but since he is there for around 18 years now, the tussles have reduced. Surprisingly the tension due to internal fights for space among hawkers is much more than that of the threat from Bombay Municipal Corporation (BMC) for illegal encroachment of space.

The business risk of these kind of setups are completely different from regular legal business .It cannot be easily evaluated by doing sensitivity analysis in the excel sheets. For example as NM has closed the main entrance for students from last few months, his business has reduced by nearly 50% as students don’t want to travel too far for tea. Again if less people start preferring Dena Bank canteen food, his business will again be impacted. These are some of the risks which are completely beyond his control. Although his tea tastes best in that area but there are very few students seen around his shop nowadays.

Govind misses the previous batches of NM, as per him those students were much more closer to him. They used to sit around his shop for long hours. Even now when they come to that area for some work they don’t forget to land at his place for a tea. He has lost the taste in business now as student nowadays does not interact much with him.