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.

Same Strategy: Divide and Rule

After Jantar Mantar victory, Looking at the news which are making the headlines regarding the Anna Hazare's revolution ... people at influential position are trying to link Chief Minister Narendra Modi with Anna . Anna did praised the minister for the development work. Any linkages with Narendra Modi will only divide the masses as the minister has a image of carrying a very fundamentalist ideology.

Anna being a Gandhiwadi and true patriot has nothing to do with all these controversies. It looks to be the clear work of the people with vested interests who doesn't want the masses to support Anna's mission.

Just looking at the history, it all looks so consistent.. what a funny analogy.. Britishers tried the same divide and rule policy to dilute the Mahatma's fight for freedom now the few people are trying the same tricks to dilute Anna's mission for a corruption free country.

I hope Anna succeed like Mahatma for India and for Indians.

The Rich India : Statistical Review

 I really wanted to know the statistics regarding poverty in India after writing the post Defining Poverty. The numbers were different on various websites. Than by collecting bits and pieces I tried to make the whole picture about the rich India somewhat clear. The data is consistent with World Bank estimates about the poverty in India. I have just defined poverty level as less than 2$/day which I believe is bare minimum to lead a life.

Here the pie chart clearly shows that nearly 80% of India is still poor earning less than 2$/day, The middle class is rising and constitutes nearly 19.61% of Indians and rich are less than 0.4% of the total population. I have defined middle class as people earning more than 2$/day.

To have a better view of the enormity of the situation, have a look at the assorted data in the below picture.

We have nearly 50 billionaires which keeps hitting the media headlines. We can boast of 170,000 dollar millionaires in India but the number is less than the number of dollar millionaires in Switzerland which has less than 1% of the population of India.

The news and views on India shining and becoming developed nation keep hitting the news channels. The rich and middle class Indians feels good to hear these views but we can not deny the real situation.


The numbers are improving, there are more people every day getting out of 2$/day benchmark and becoming the part of middle class but there is still a long way to go.

Defining Poverty

Poverty runs deep in India, to the extend that we start ignoring it.. the reason is very simple, we get use to it. From our childhood days we see so many destitute, beggars that we think that is the part of our life and ets just ignore it. This blog is not on it, it is about the definition of poverty ? Who do you call a poor ?

The country is full of brilliant souls and Politicians who don't really want India to show its poor face to the world. They try and show that the poverty in the country is coming down as it portrays the good image of  the country. They try and eliminate poverty by these three ways:

1. Development: Improve the image of the country by doing developmental work which have direct or indirect effect on alleviating poverty from the country. Lot of it is being done nowadays, some by the government and more by NGO's, external aids etc.

2. Eliminate the Poor: If you cant eliminate the poverty, can reduce the number by eliminating the poor population. Very difficult and barbaric option. The good thing is that no one can do it. Its just the natural calamities and disease in India which does it. The infant and maternal mortality amongst poor in the country is very high. So no action to reduce poverty in one way is like making the poor die by disease and illness.

3. Redefine Poverty: The easiest way out to show reduction in poverty is by changing the definition of poor. If you simply change the poverty line from 1.25$/day ( World Bank PPP number ) to Indian number of1 $/day, a lot of Indians crosses the BPL line overnight.


Some economist says that people earning less than 2$/ day should be classified as poor, others argue that less than a $ per day are poor. So their is no uniform definition of poverty in India.

The planning commission of India accepts that 37% of the Indian population is living below the poverty line as per the Tendulkar ( not Sachin ) committee report.  Arjun Sengupta report says that 77% of the people in India are living with less tha 0.5 $/day.

Whatever may be the exact proportion of poor in the country but even 37% number is quite a high number.

How Google pays just 2.4% corporate Tax

It was a surprising revelation, 30 Billion $ US company, Google pays just 2.4% of the profits as taxes when corporate tax in USA is 35% .. They have saved more than 3billion dollars in last few years .. how ?
 
They adapt a popular strategy known as the Double Irish. Google has incorporated two subsidiaries in Ireland. One is a holding company in Bermuda, the other is located in Ireland.

In Ireland, intellectual property royalties has lower income tax rates of 12.5%. Google’s Irish company in Ireland pays those royalties to its Irish company in tax-haven Bermuda and again  funneling them through the tax-advantaged Netherlands on the way and end up paying just 2.4% in taxes. How this is some financial engineering.

Google should now start offering tax consulting too apart from internet services.

Two Indians in Top 10 richest College Dropouts !

Yes, two Indians has made it to the top 10 richest dropouts of the world .. I was surprised when I read the list, more so as I never knew that both Mukesh Ambani and Ajim Premji are college dropouts.

One can say that they had the legacy of their fathers behind them but I will still say that they actually made it big. Particularly Mr Premji venturing into software from commodity business was amazing.

Incidentally both  of them were studying in Stanford University before they left it for the good. Other college dropout that made up to the list from Stanford University is Steve Ballmer, the CEO of Microsoft.

Harvard Grads, Bill Gates and Mark Zukerberg of facebook fame also adored the list of richest dropouts.

Now we know where to go if we want to be rich and also don't want to study for too long :-)

Speak like a Captain

 Being a captain of any team, one has be responsible and intelligent in all the external communications. The curious case of Shahid Afridi bashing Indian people and media is still alive in our memories and has left a bad taste in mouth. Since the wordings were so strong the media actually made him take his words back.

Now the hard hitting batsman Mr. Sehwag has also done something which I will not associate well for a captain of the team Delhi Daredevils. He said in a press briefing, " I have played under Dhoni's captaincy and I know what all tactics he can deploy as a captain and will make it ineffective against Delhi Daredevils Team" . Now there are somethings which you might be thinking of but speaking it out as a captain does not look really good for a captain of the team. Yes, it might not be as bad as what Afridi did but non the less he could have been more discrete. The media might not have caught the comment made by him but it does looks immature for some one like Sehwag.

The only thing which is interesting in these recent episodes is the similarity between Sehwag and Afridi's way of playing cricket.

Anna shows the Power of Democracy

Mr. Anna Hazare is actually showcasing the power of democracy in this modern world. Old Gadhian tools of Ahimsa and Satyagraha are working wonders again in this world of tears and blood sheds. I am really fascinated to see the kind of support his movement has got from the people of the country.

The youth of country has also sent a very strong message to the government that the days of corruption are limited now and they should better improve the governance otherwise this country come to the streets and fight it out. Ihe important part of this message is that the youth of the country is intelligent and responsive and will adopt the route of peaceful agitation. Few years back it was difficult to foresee this new face of Indian Youth, I believe the Sanjay Dutt movies on Gandhi giri should be admired for making this internet and i-pod generation believe in Gandhian philosophy.

Other exciting thing happening is the rapid adoption of technology in the country. I am very hopeful that the changes brought about by use of Information technology and social movements will work in parallel and will make the administrators of the country more transparent and responsive.

The initiative of UID could prove to be a another milestone which will change the way system works and will drastically reduce the leakages.

Looking at the evolution of the western world, they all suffered from corruption during high growth phase but the systems became much cleaner and government agencies became far more responsive as they got the dose of development.  India is also witnessing the same changes and hopefully in our life times we might see a new India with with far less corruption and red tap-ism. 

What exactly is CBI doing ?

If we look at the past, we all know how honest had all our politicians and bureaucrats been. The Central Bureo of Investigation was primarily created with following divisions:

• Anti Corruption Division: Cases of corruption and fraud committed by public servants of all Central Govt. Departments, Central Public Sector Undertakings and Central Financial Institutions.

• Economic Crimes Division: Deals with cases including bank frauds, financial frauds, Import Export & Foreign Exchange violations, large-scale smuggling of narcotics, antiques, cultural property and smuggling of other contraband items etc.

• Special Crimes Division: Deals with cases such as cases of terrorism, bomb blasts, sensational homicides, kidnapping for ransom and crimes committed by the mafia/the underworld.                      (Source:  Wikipedia)

Now if we analyze their work particularly in anti corruption,  I cant remember any of the politician or a top notch bureaucrat being nabbed by CBI. The Raja's 2G scam was discovered by central Vigilence Unit so was the case of Hasan Ali where Supreme Court has to intervene when it found CBI doing nothing. This is the story with almost all the prominent cases.

Even now that the CBI is investigating  the 2 G scam, the charge sheet filed by CBI is kind of soft towards Raja. I really dont understand what exactly are they doing ? Is there some genuine conflict of interest where all the posting and promotions of CBI are being done by the influential politicians and bureaucrats and they just cant do anything about them ?

Team India: Making History

It was amazing to see India lift the Cricket World Cup yet again after 28 years. The team never looked perturbed by the initial blows in the finals, not even when Sachin got out. This team under Dhoni has graduated to a level where they can think about winning without Sachin.

I still remember the matches of world cup from 1992 to 2011, the truth is the team never looked so formidable before. Yes, the team had a good chance in 1996 but Srilankans with the assistance from unprepared pitch of  Eden Gardens gave us a disappointing loss. The uncompleted match played at Eden  made a lot of Indians to cry and we still get emotional about that game. The itch lasted really long  but finally Dhoni's XI gave  Lankans  reply after 15 years. What a fabulous way of winning.

The God of Cricket got the due respect from the team and it was very nice to hear the team dedicating the cup to him. Sachin actually got what was long due to him. I strongly believe Sachin should play another world cup as he is still the best batsman in India and the world and his fitness levels are beyond doubt.

The whole thing is still to seep in, Winning the world cup Feels great !

Stock Market Puzzle

Nobody Knows when the markets moves up or down !

The market was going smoothly in 2010 and than it declined nearly 20% all of a sudden. What were the reasons for it ? People can only find out the reasons after the market actually falls. People gave lot of reasons

• Egypt Crisis
• Inflationary Conditions
• High Interest Rate to reduce the Profitability of India Inc
• Corporate Governance issues emerging in Indian Companies
• Libya Crisis
•  Manmohan Singh Government and scams
• Crude Oil to hit the growth of India 

Few of the economist had even written off India. Likes of Goldman Sachs said that developed countries will outperform the emerging economies .. hmm too many views all of a sudden..

Now the market has recovered almost 1000 points in a short run. The conditions are actually quite similar to earlier conditions or much worst that what they were. The crisis in Japan can also affect the growth of the world, than you have RBI increasing the policy rates yet again and none of the earlier conditions have actually changed.

The truth is that no one can predict the direction of market in short run and whenever market takes sharp turn than most of the market players are caught unaware of it and it is not logical.

The funny side of the story is that whenever there is a strong rumor that the market it is going to decline, usually there is no actual decline in stocks and when the market declines, nobody knows it.

10 reasons why people love regular Bollywood movies ..

Its hard to imagine people loving bollywood movies.. a big statement right .. I am talking about the regular bollywood movie where you can predict the movie right from the beginning, there are cheezy and crapy songs after every 15 minutes, characters which might look 50 year old but can still be shown as teenagers, larger than life lead characters and same old  f***** story. Wow, this is the real bollywood movie .. Hard to imagine why people just fall for it over and over again.. 

I still remember that once upon a time I went to watch this movie " KISNA" and had taken a vow that will think twice before getting into a theater. Yes some of the movies are real awesome but  Goodness me watching KISNA was a real pain sitting in that theater, you can't even sleep, it was so irritating !

So I was trying to think why people might like bollywod movies ..and at times watch the same movie over and over again ..  The reasons can be plenty but the one I can think of are: -

1.  Hero Worship : hmm , rather a costly way .. cant resist the mass appeal hmm ..

2. Songs : Wanna hear to good songs  , Get yourself a I-Pod ..

3. Heroines : Hmm actresses ,  cant find a solution , go buddy watch it again as if she is gonna jump out of the screen..

4. Time Pass : Have you tried the new PS 3 with motion sensors..

5. Accompanying your GF/BF/WIFE/Relatives : Hmm , I can very well understand what you are going through ..

6. Insomniac :  If typical bollywood movie is better than a sleeping pill , wow .. its a new market for theaters.

7. Language Troubles : Can't understand the accent, try the subtitles. You gonna love it !

8. Place for Romance: There are very few corner seats , try the box seats, they are kinds cool !

9. Bird Watching : Never knew you can watch birds in dark !

10. Bollywood movies are real awesome : No comments .

Investing in Mid Caps .

Small and mid caps companies looks very attractive at times on stock indices. You might find them rightly priced, far cheaper than the regular blue chips but investing in them is a tough question.

The biggest problem in these companies is lack of transparency. Inspite of strict discloser norms enforced by SEBI, there are companies which frequently cook up their numbers.


The corporate governance issues are creating lot of volatility in the mid caps stocks off late.The mid caps actually corrected by nearly 25% in last one month as some of the companies were found to be either involved in unethical business practices or their owners were involved in some types of scams which puts a question mark on the whole company.  

Mid caps also have problem of cash and seldom a recession can eat of all their cash reserves and a company might never be able to become profitable even after the return of good times . In case of blue chips the resilience to survive a few quarter of negative growth is much more.

I believe the best way to pick a good mid cap stock is :

1.      
      How to pick the real Infosys of the future amongst hundreds of scripts? The real multi-baggers will be found in mid or small caps only . 

            1. Analyze the leverage of the company: A highly leverage medium sized company is more likely to fall in bad times.

2.      
      2.Disclosures and Transparency

3.      3.Quality of management

4.      4.Business Model

5.      5.Barriers to Entry in the business

6.      6.Profit margins 

             

        All said and done , its a tricky exercise . If one is not very sure of investing in equities than investing in mid caps is definitely not a option . 

Centre Point of India

Nagpur isn't really a exciting place, sun beating down on you even in the month of November. The only thing I was excited about was to see the Centre Point of India, yes the point from where the East, West, North South parts of India are equidistant. ! Wow centre of this huge country ! Must be awesome ..

So me along with Sid asked our Cabbie to show us the Centre Point , he told us " Do you mean Centre Point Hotel Sir " . No we told him . Finally he left us somewhere in between and we kept searching for the place, no body there seems to know about the Centre point.

Finally some learned man told us that the place is called the "Zero Mile". Hmm, the name is in interesting. Finally we reached the place, and was aghast after seeing the condition of the place. Thay have simply killed it !

The place was uncleaned, surrounded by political and business hoardings. The centre point of India and no maintenance what so ever. Tried to click a few photographs, Planning to write to the authorities. Where are our taxes going ?

When will we start marketing our country ?

Once upon a time in India..

Recently happen to visit Sevagram, the place where Mahatma lived with his team and planned and implemented the project " Freedom of India " . All the great freedom movements were actually thought through and discussions on the future directions for the pan India movement was done at a place which is almost the centre point of India.  The simplicity of the place and lifestyle of Mahatma really makes you think   "What Am I running for ?"

Clicked few of the pics during the trip ..

Barkha Dutt Episode : Not a surprise

Although very few newspapers are reporting the controversies of alleged lobbying by the celebrated journalists like Burkha Dutt and Vir Sanghvi, people are slowly getting the feel of the reality. Media does not want to publicize or comment on the episode as it might lead to problems for them . "People who live in glass houses shouldn't throw stones on other."

It was not at all surprising to find Burkha and Sanghvi involved in such practices. The whole media is like that Only the stories which are well paid are told by the media. Needless to say all controversies relating to page 3 people, linkages of actors and actresses just before a movie release, editorial with a biased stance are the profitable products of our media. We all know now why one of the leading newspaper of India was so critical about CWG scams just after loosing its bid to be the media partner of the event. Its all about conflict of interest and media have power to portray anything in the way they want.

Burkha dutt has always been a loud mouthed women, making big statements which catches public attention. I still remember her article , " Like Father , Like Son" she published after the son of Late Promod Mahajan was found involved in a drug overdose case. In her article she critiques Promod and tries to suggest that the son of Promod is so much like Promod Mahajan himself. It was a profound insult to a dead man. The lady leaves no one when it comes to publicity . Now if we just use the same analogy in case of Burkha, the character of whole Dutt family can be easily sketched , but will any sane person do it .

Its so easy to be the one, holding the mike and asking difficult question, making witty remark and commenting on the integrity of the person but its so difficult to be a real genuine person using your power responsibly.

Black Money : Making India Uncompetitive

 Indian economy is over a trillion dollar economy but lot of economist says that the parallel economy (in the form of black money or undisclosed transactions ) is as big as the real economy. Billions of rupees are never shown to the tax man to avoid tax . This black money is really bad for India. It is making India uncompetitive in business at a very fast pace . How ?

Black money usually goes into the investments where it is hard to detect. Usually people keep the black money in cash but it is hard to carry it every where and there is no return on it. Real Estate is the prime investment destination for it as the prices paid in white are abysmal and a very high amount to black money is involved to evade tax. Very high proportion of black money is chasing very few investment destination of real estate. The  real estate prices are shooting over the roof. Now when the land prices are abnormally high due to vested interest of people some of the speculators bring in even more money in the real estate market which increases the costs even further. In a nut shell the black money is creating a bubble in the real estate market.

Now land and real estate are essential part of the infrastructure required for industries. Due to soaring cost of infrastructure the industry is finding it tough to be profitable. The entry barriers for small size co-operations are even higher. If you want to have even a small office in rime locations the money which is charged to you is as high as one in developed economies like USA or Europe with the pricing of products and services nowhere close to it. How will the industry in India survive in long term if the real estate price goes on increasing.

A Passing thought: It is good that lot of Indian black money is parked in the Swiss Banks as it will only worsen the condition of property markets in India.

Indian Judiciary : Can't Get Worst !

Indian Judiciary might be seen as a important part of the Indian democratic system, but its very difficult to cope with it. Yes, as a citizen of the country I have my rights protected but the slowness of the judiciary makes life difficult .

Anyone can do anything here as one knows that the Judiciary is slow and nothing will happen. It is really painful to see likes of molester cop Rathore to again get a bail after years of struggle by the affected family. His smile is a tight slap on the face of the system which is giving no justice to people who are suffering.

In my lifetime I have not seen any powerful person to get the real taste of prison, be it the actors crushing laborers on road, be it the politicians involved in serious crimes, be it powerful people exploiting every little person for their individual gains or be it influential people inciting violence and hatred in the minds of people of the country. Anyone can do any thing here as long has one has muscle power, money power or influence on the system. Sanjay Dutt can be a lone exception to this case.

Even in so called consumer court it takes years to get a judgment.  In case you miss any of the hearing the case is rejected. In case the accused party misses the hearing the court is adjourned. Even if you get the decision in your favor after years of effort, the other party can move to the civil court which will again takes years for judgment.Thinking of all this a common man just drops the case and just feels cheated.

We are doing all kinds of reforms in India, how about reforming the judiciary. No Jessica Lal killers or Ruchika's molester should go out of the hands of our legal system. No person should be able to bypass the judiciary of the country.

De'ja' Vu , The Great 2008 Recession

Summer of 2008 was simply unforgettable. Recession was tough on us as the students as it was on the people who were employed in various corporations. I can never forget the time, maybe that was a good thing which keeps me grounded all the time.

The recent times has so many similarities with the recessionary times. It simply feels like a de'ja' Vu. Various similarities are:

1.  Sensex nearing all time High:  The levels are just a ting lower than the previous high which followed a crash.

2. A Big IPO lined up in the form of COAL India , similar to Reliance Power IPO which turned disaster in the end.

3. Precious Commodities at all time High: The Gold and Silver almost touching all times high.

4. Inflation nearing Double Digits

5. Strong Rs and weak dollar : The rupee has touched almost 44 to a dollar


6. US trade deficit: Widening to $ 40 Billion/ month which is scary .

7. Excited  Retail Investers : Participation in recent IPOs have been really out of ordinary .

8. HR hiring anyone with a degree like there is no tomorrow.

9. Real State prices doubling every 6 months . 

I hope it doesn't goes the way it went last time. The fundamentals looks much better this time . Lets see how it goes, I am optimistic this time.

Empty CWG Lanes

Its been 2 days that the common Wealth Games are over. CWG lanes are now open for the general public and I must say its a big relief from every day traffic hassles . There has one really interesting observation. People are still not using CWG lanes and they continue to use the other crowded lane. It is really surprising. What can be the possible reasons for the same :

1. People don't know that CWG are over: Since the CWG lanes still shows CWG written over it, people are not choosing it to avoid fines . Likely to happen, knowledge about current affair of an average Delhi hunk is not debatable. They at time even dont know about who is the chief minister of the state .

2. People showing anger and boycotting CWG Lanes: Highly unlikely.

3. Human Programming: As the people are using only non CWG lanes from past 13-14 days, they have been subconsciously programmed to use only the non CWG Lanes or we can say , they want to take the usual roads and are avoiding the roads less traveled. :)

Whatever may be the reason, I am just loving it !