MJ

MJ – two letters are enough to bring the whole picture of the legend in one’s head. The ‘King of pop’ will not perform again in this world. He was scheduled to perform ‘50 comeback concerts’ in London O2 Arena from July 13, 2009 till March 6, 2010. It would have been single highest earning & most popular event in the music would, which now will never take place.

He was no doubt one of the most popular persons of all times. To some he was known for his heart thumping music, to some he was known for the all the controversy came under the title of child molestation, but the one reason he should be known & remembered forever is the message he tried to convey to the whole world for more than half of his 50 year life – Peace. He dedicated very large part of his work & a lot of time for the one noble cause – to make this world a better place for the next generation.

Yes, I do like the most popular singles of his viz. Thriller, Bad, Dangerous; but the ones I really venerate the legend for are The Earth Song, We are the world, Heal the world, Have you seen my childhood, Gone too soon – just to name a few. If you ever had any doubt about the greatness of the legendary artist or his message, I’d suggest you listen to the songs, even better just watch the videos. If you don’t have tears in your eyes after watching each one of these then you can doubt your humanity.

I really think it was curtains on the one of few angels of peace too soon. His work here was not done. He’s ‘Gone too soon’. Of course the Legend that was MJ will live on eternally through his singles but I still wonder, will he rise back from his tomb to complete his work like in ‘Thriller’ or will this day reverse to take us to the glorious past like ‘The Earth song’. For most of the world the news has still not sunk in to make the effect. Many of them are wishing for his soul to Rest In Peace. But there is one thing we really need to do so that he could really RIP – each one of us has to vow that we would do all it takes the to do what he preached for, to make the world a better place for the generations to come – ‘Heal the World’

May we always remember the eternal Legend of ‘King of pop’ for all the right reasons & may he keep doing his ‘Moonwalks’ in the heavens as he’d be doing in the hearts of his fans – amen!

Disgusted by Investment Bankers

I am finance professional with aspiration to become a significant investment banker in the global market. So with the same motive I do keep a close watch on capital markets & respected Investment Bankers of India & world. Rakesh Jhunjhunwala is considered to be Indian version of Warren Buffet & a highly respectable Investment Banker, or so I used to think before today.

The reason the title of the article reads the way it is is that I watched his interview on CNBC TV18 today. Refer this link to get a brief of what he said. I should make a disclosure before I say anything further, I Really used to adore him till today. But in this interview all he was doing is to show that he knows how to count & he knows the technical levels of Nifty. He uttered all possible numbers in the span of 10 minutes or so. Thank god he stopped short of saying that Nifty could see a level of 1500 or may be say 8000 this year.

He said one of the scenarios could be that Nifty hits 6100 or higher then comes back to 3300-3500 & consolidates for 3-4 years at that level. Again in another question to him, he said he is really sure about the GDP growth in India & we could see a double digit GDP growth number in coming years. So now can anyone tell me if he is so sure about economy, then how on earth the scenario he mentioned is possible? To hit double digit GDP growth numbers the Nifty constituents have to grow at least by 20% y-o-y, which justifies a P/E ratio for Nifty of about 20-22 at least. Nifty current earnings are about Rs. 210 for the FY08-09. There is no negative growth in earning of Nifty as a whole. So assume 5% growth on Nifty which is the most pessimistic figure I can come to as of now. This still gives earnings for Nifty of about Rs. 221 for FY09-10 & range for Nifty would be 4400-4800 going by the history. Remember this is my most pessimistic target! So how could you justify a double digit growth for GDP from now on & still reaching levels of 3300-3500 & consolidate there for 3-4 years. There is only one sane explanation for the prediction; India would need to go through one of the worst recessions since 1991. Then may the god help us!

The only conclusion I could reach after watching the interview is that either Rakesh Jhunjhunwala has no clue where the markets would be heading (which I think is highly unlikely) or he is just trying to fool the viewers in the bright sunshine. In both cases I sincerely feel he should not be appearing on TV & expressing his opinions. Because the all the Investment bankers on Wall Street have earned very bad name for themselves in the downfall of Investment Banking as we used to know, & he should not add to the bad reputation. This is really detrimental for the people like yours truly, who aspire to be an Investment Banker & I sincerely do no wish to stand in the line of a breed that becomes most despicable after the politicians of course. So my earnest requests to Rakesh Jhunjhunwala is either guide people to right direction or just say, “I have no clue where market is heading.” or “I would not like to tell you & lose my opportunity to make money from it.”

The end result is I have lost one of my most venerable deities to cheapest level of lying & obfuscating hapless investors who are already floundering in darkness.

Changing money habits

These are tumultuous times, where no one is sure about which way the global economy or the capital markets are going. In such scenario there could be many changes in the way the countries try to tackle the slowdown & recession. So it makes doubly important to keep track of the changes in the policies & adjust your money position accordingly. Here are few changes that took place which could make you change your positions.

The biggest indicator that could signal a bull-run is falling bond yields, which clearly explains the current upsurge in the capital markets. So if you are holding positions in cash or debt, a little portion (@ 10% of your holdings) at this point can be transferred to equity with a long to very long term view. Especially if any of your Fixed Deposits in banks are maturing at this point, you can see that you are not getting as high interest rates on them as you might last year. All the Central banks are pushing the interest rates downwards in order to boost the economy according to Keynesian theory. The sectors that you can look at are Banking & Capital goods, which have been battered badly in the current fall & seem to have considerable upside once the bull-run gathers momentum. Equity diversified Mutual Funds can also be a good option.

There is a clear disincentive in pledging new money to Bank FDs. The Rates offered by banks on deposits may go even more south because of new directive given by RBI on the interest calculations on the savings accounts. Currently the interest on savings accounts is offered on the lowest balance of the account between 10^th & 30^th of the month. This system will be abolished beginning from April 2010 & the banks have to offer interest on everyday closing balance. This changes the Asset Liability Management of banks a lot. The interest outgo to savings accounts will be lot more than current year, so to reduce total outgo they will have to pull down the interest offered on Deposits right from this year to maintain their interest margins consistent. Given the benefit of liquidity Savings accounts could be a better bet to Fixed Deposits. This also works well with current inflation level.

If you are planning to buy your first home & you are well assured of your jobs, you can go in for current Real Estate & Home Loans rates. Do verify the fall in prices in the area you are interested in, if there has not been much correction in prices, you might want to wait for some time as on an average the real estate rates have corrected by at least 30% throughout the country. My suggestion is to go for fixed rate with reset clause after tenure of 60 months (@9.25%) instead of floating as there could be good amount of volatility in the interest rates in coming 5 years & upside risk is high on floating rates.

In all these changes do not forget the basics of liquidity. You need to have fair amount of cash to manage your day to day needs & EMIs, in case unforeseen circumstances force you into joblessness.

Crossroad of life

I'm standing stranded on the clueless isle

Shortest distance to life a cent & one mile

 

My compass asking me for next direction

Searching for even a mirage of destination

 

Sleepless for nights, eyes begin to sore

Wordless hum of wind; can stand no more

 

Walking over amorphous stones in the mist

Wondering if I stumble upon my alchemist

 

In dearth of love, in search of the destiny

Such mundane life trying to make harmony

Raison d’être

I always have been pronouncing myself as a true ‘Agnostic’ person, but to do so without taking opinions of the believers & the atheists equally would just be a prejudice. I always wanted to get the perspective of our great religious manuscripts ‘Bhagwadgeeta’, ‘Koran’ & ‘Bible’ equally. Being a proud Hindu I eventually started with ‘Bhagwadgeeta’ to know what really drives the people to believe in God so blindly. The reason I am a proud Hindu is that I believe that Hinduism is not a religion but a lifestyle in itself & the most important value it preaches is Tolerance. That is one quality the world needs today in abundance.

Let me first explain the true meaning of the word ‘Agnostic’ before I go ahead. Agnostic is a person who believes that you cannot know the whole & complete truth by any means, neither by science & nor by religion. After reading the “Bhagwadgeeta’ I have become even a stronger Agnostic than ever before. There is one biggest reason why I say science cannot help you know everything - the Birth & Death. Science till now has not been able to explain the phenomenon of beginning & end of life as we know it. What exactly happens when you are born or when you die? Today’s science has reached to a stage where you can replace each & every organ of the human being but there is no way to put the life back in a dead body, at least not that I know of. So the science cannot give you the complete knowledge.

But again neither can the religious books; at least I did not get any such enlightenment from ‘Bhagwadgeeta’. I never said I’m an Atheist either. I believe in Lord Ganesha for umpteen reasons. But there are many references in ‘Bhagwadgeeta’ where Lord Krishna says to Arjuna that he is the true origin of everything & you should only pray to him & not to other deities. This is so much against the Tolerance that I believe in. How one God cannot tolerate praying to other God, I cannot know. There have been umpteen references of the ‘Karma’ in ‘Bhagwadgeeta’ but most of them were pejorative. Lord Krishna says that ‘Karma’ binds your spirit in your body & prevents you from getting Moksha (The ultimate liberation of spirit). There have been references where it says that caring too much about your family your mother, father, wife, children is an obstacle in achieving Moksha. It also says that you suffer excruciating pain in your mother’s womb & that’s how the suffering of life starts & you should try to get rid of these cycles of life & death. & there is only one way to achieve it, Yoga (In the version I read the translator interprets it as Praying to Lord Krishna, which I beg to differ to).

All these views are so much against the beauty of life. There are so many beautiful things you can do in your life, such as love, to your mother & father, to your wife & children & to the whole concept of life. If you live life just thinking about the death (& Moksha thereafter) then where & how do you fulfil your Karma? If you cannot truly & fully devote your love to the people who love you & care for you, then how can the God offer you Moksha for doing such heartless deed? There is absolutely no mentioning of the concept of love in ‘Bhagwadgeeta’, if there is anything close to it, it’s again derogatory. Also there has been no emphasis on the females in the ‘Bhagwadgeeta’; not even Goddesses. There has been no mentioning of right & wrong or sins & good deeds as we know them. I can surely say these things thanks to 3 years in my High school when I learned Sanskrit, so with little explanation of tougher words I can understand ‘Bhagwadgeeta’ myself & I’m not completely dependent on the translator’s view for that. (I knew it would come into use some time in life & I’m thankful to the fact that I learned it devotedly at that time!) I must say that these are my personal views & If they hurt anyone’s feelings, then that is not my intention at all!

So in conclusion, this reading of ‘Bhagwadgeeta’ has made me think deeply on a spiritual level. Yes, I do have lot of earthly ambitions that I have to achieve & I am like a million miles away from it, but then again the satisfaction in life does not come from money (& other earthly things) alone. & the sooner you understand this the better for life, as there would be fewer things to repent about later on. I seriously am trying to understand my Karma here, but that surely is not only praying for Lord Krishna alone & may HE forgive me for that.

Some capitalistic recollect!

Well, this recession has given me a lot of time, thanks to the great capitalist concept of lay-offs. So I’m getting some time to do my favourite thing, rumination! I am prone to pretty weird ideas and people close to me can corroborate that. I have been saying in my previous blogs that, it seems the ‘self proclaimed’ greatest capitalist nation - USA has been trying to solve all its capitalist follies by finding solution the communist way. Just look at AIG, Bank of America, and not to mention GM asking for more & more Federal bailouts. All these corporations have been greatest loss maker in the current financial downturn. Well to be precise, GM has been the laggard for a lot longer time, making spectacular losses for nearly a decade now. The very existence of the firm amazes me. Why have they not filed for bankruptcy at the start of this millennium & handed over the assets to a more efficient user like Toyota for crying out loud? What’s wrong in that, especially in the light of US not minding in financing the Federal budget deficit by selling their papers to more efficient (capital surplus) countries like Japan or China (more than $1.5 trillion combined)?

This brings me to my prime objective behind this article, if you really believe in Capitalism then why on earth you are relying on the Communist way to fix up the mess you created with your belief. Why not go back to ground zero & start looking for the clues to rebuild it. I am a firm Capitalist believer & I can’t even stand the idea of Communism. Just to strike an analogy, Capitalism relying in Communism for rescue out of the current financial mess is like Man relying on God to rescue him from the global warming situation. If you have got yourself into this deep trouble then you better think fast & stick to the basics. Well, I’m not just complaining about the situation, I actually have a probable solution in mind.

The fundamental of Capitalism is the Capital of the organization, the entrepreneur willing to take risk for the ideas he believe in. Putting his money & skills to the work to earn profits & name for him. He also can avail loans from financial organizations like Banks or VCs/PEs for funding the cause, but even they ask for the commitment from the entrepreneur in the form of initial investment. Now just look at the Feds from Capitalistic point of view, they are an organization, they have objective, they have budgets, but where is the capital (I mean Owned funds, not Capital Receipts)? In light of the latest budget proposed by Obama Government, which predicted a deficit to the tune of $1.75 trillion or 12.5% of GDP, isn’t this the most inefficient way of running the organization? Now my question is who made the rule that Government has to run only on debt? Why can’t Governments have owned funds? Why Governments can’t be run like non-profit organizations where they are accountable, even though they are not there to make profits but they have to break-even their operations in a consistent manner? Why the same does not apply to the Governments?

Many developing economies are run in the same manner, Deficit budgeting & Inflationary economy are their USPs. Given the situation of global financial systems, there needs a lot to be done to make good the losses made in foolhardy ventures taken over by umpteen organizations. If the Governments are bailing those organizations out, they can ask for capital in return to fund all the deficits they are bearing for the bail-outs. Otherwise this deficit can lead to another calamity in making; we could enter into galloping inflation worldwide, given the short supply of the resources. The point of contention is why the Governments have to be Communistic in design when the whole economy is strong Capitalistic in nature? Desperate times call for desperate measures, but then why not be desperate the Capitalistic way? I believe there are still many strong Capitalistic believers in US who could be willing to take the risk for their belief. So why not let the entrepreneurs do their bit for the revival of the economy? Why not look at the option of running the Government the Capitalistic way? Worth a shot?

One of my friends suggested me this link which corroborates my view.

The Young Managers, Mentors & their values

I recently went through a case study in Businessworld about YMs (Young Managers). It is about the reckless behavior of the Young Managers, their complete disregard to the seniors' suggestions & lack of readiness to learn from & correct their mistakes. Although I agree with most of the views in that case study, the thing that I thought was missing is the wrong values brought forward by today’s corporate culture. Where is the long term view of the things? All that today’s Corporates are worried about is bottom-line growth (Q-o-Q & Y-o-Y) & share price appreciation, at the cost of anything (Remember RJR Nabisco disaster?). Energy situation, Global warming & Sub-prime lending / over leveraged use of Derivatives causing current financial crisis to name a few.

Whilst this is the picture of values that you demonstrate to the so called ‘cream talent’ without significant experience & adequate EQ to get hold of the situation, what do you expect them to learn? The purpose of acquisition of the talent, their utilization does not seem to have any long term view per se. All the chores are directed towards one thing & one thing alone, annual results! How else would you explain the behaviour of cream talent like B. Ramalinga Raju in the light of ‘satyam saga’? All he was concerned about was the Y-o-Y bottom-line with complete disregard to the long term view of the business & the whole industry in turn. Or did he actually think that he could pull it off eternally (or did he not believe in the principle of company as a going concern)?

If the Corporates today were concerned about long term talent retention, would they not spend a significant time on grooming the talent they have acquired? But that is so not the reason of talent acquisition nowadays. The talent is acquired to fulfil a short term requirement, beyond which the utilization of the talent is not known to them. They acquire the talent keeping in mind that they are bound to leave after some period. So no need to spend time on grooming them or inculcating some corporate values in them. Where is the need of mentoring? In light of current financial crisis, the Corporates are offloading the relatively inexperienced talent without even giving them fair chance to prove themselves (again to sustain the short term profitability of the business & to maintain share valuations or what is left of it). After such an experience that is imparted early in their careers, do you expect them to ever be faithful to any of their future employers? Do you expect them to have any values other than saving their own skin at the cost of others? What can a senior manager or a mentor do in a situation like this?

In my view to conclude, the behaviour of the Young Managers of today is not a micro level issue but a macro level one. There are some very serious issues that need to be tackled about the manner in which the businesses are run nowadays. They are quintessential for survival of growth economics & capitalism as we know them.