Work has been too tough and nerve wracking ever since i moved into the new department more than 5 months ago (ya, time flies), not to mention colleagues who are of no use to the team but somehow manage to survive at work inspite of doing nothing productive. Ya, life is a big bunch of surprises.  The ones who work are questioned when there is a lapse on their end, but some people just laze around at work and unashamedly take the salary at the end of the month and no one even bats an eyelid.

Anyways, over a period of time have steeled myself to ignore such characters and sideline them.  There are others who are enthusiastic about work and they are the ones who really encourage me to look forward to going back to work daily.

But this week off was a much needed one.  Have been doing nothing but having good home cooked food, having my regular post lunch naps, wandering aimlessly around the city, reading books on the couch and most importantly watching the financial markets melt the world over.  Watching this self inflicted wound by the US not only to itself but criminally exporting its problems to the worldwide economies is simply mind boggling to watch.  Not to mention morons like Alan Greenspan openly bragging that this debt ceiling is of no issue to the US as they can print as much dollars they want.  Now beat that.

The funniest part of the whole debt problem is the reaction from China which blasted the US for its uninhibited funding of its consumerism by debt.  But why is China so worried about the debt downgrade of the US from AAA to AA+ by S&P ?  Its because China holds more than a trillion dollars worth of US debt.  The more irony comes from the fact that just a few months ago, some so-called Chinese thinkers were threatening to dump dollars that China is holding in the form of its foreign reserves to show who the boss is.  Which makes one wonder, if China dumps the dollar, which moron in the world wants to buy it?  And if it dumps the dollar and the value of the dollar takes a nosedive further eroding the value of the reserves its holding, who is China threatening in the first place?  Its like cutting the nose to spite the face.  The whole fracas reminds me of the saying that i had posted sometime earlier in this blog….

“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” – J Paul Getty

China today finds itself between the devil and the deep sea.  On one hand it needs to keep the yuan weaker by buying up all the dollars else the export oriented economy that China has carefully built up over the decades will collapse.  With thousands of riots happening countrywide, the Communist government doesn’t want another disaster on its hands.

And its not easy to make a complete turnaround of the economy from an exporting one to a local consumer led economy.  The transition takes years to happen. So, it keeps buying up dollars to keep its own currency cheaper and with the US dollar collapsing to newer lows, everyone is at their wits end trying to hold things together.

So, what to do now?  Nothing much..if you have money sit tight or start buying into blue chips in small tranches.  For the ones who sold off their equity holdings a few months earlier, i have nothing but admiration for your foresight.  For those who plan to sell during the collapse now, there is nothing more foolish decision than that.

Gold is scaling new heights daily as the US dollar loses its value.  Its gonna be a turbulent few months ahead.  Sit tight, there is much more trouble ahead.  Like the Oracle of Omaha, Warren Buffett once said…

“Its only when the tide goes out that you learn who has been swimming naked”

Pictures courtesy: Now Public, Guardian, wmpoweruser

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I decided to not only save a small part of my salary but also start investing. Real estate was out of question as it required a bigger monetary commitment and i was loathe investing in land that could some day be encroached and i would need to run around the authorities and people in power to get them evicted.

The next best option was the stock market.  It didn’t require a huge upfront money and also because of Systematic Investment Plan (SIP), i could invest a small amount every month in the mutual funds.  Also because of demat, it was easy for me to buy small number of shares of the companies that i liked.  Since my knowledge of economics, finance and the stock market in general was a big zero, i had to educate myself.  I attended a few seminars, but at the end realised that they were nothing but big money making scams.

This is when i truly realized the power of the internet.  With some great help from Google uncle, i jumped headlong into an intense 12 month study of the stock markets. I searched for information like crazy on equities and mutual funds. By then i had more or less realised that i was going to concentrate primarily in the Indian stock markets.  A developing economy which
was consistently clocking above 7% growth every year and a huge market, i realised that if i could get in early, i could probably ride a 20-30 year long boom.

India was then just starting off.  The BSE Sensex was then around 4500 (it has since climbed to 21,000, then fell to 9000 odd and is now back to 19000). I remember reading an Indian business magazine that pointed to a target 8000 for BSE Sensex in a few months time.  I chuckled to myself at the audacity of that heading.  But still deep down in my heart somewhere I had the belief that we were looking at something spectacular that was about to happen.

Imagine a country of a billion people and with the economy clocking 7-8% annual growth in GDP, it was sure to hit a trillion dollars soon and if the rate of growth could be kept up, then the next trillion could come in 8-9 years.  Yes, there were and are lots of things that could derail the growth. Terrorism emanating from Pakistan being just one such issue. Poverty, rampant corruption (that has become a norm these days), a closed economy, religious and regional violence…many issues could be an impediment to India’s growth and thus hit my investments in the market.

But honestly, when you realise that you are in the pits, the only way to go is up.  I took the risk and opened a demat account.  Tata Consultancy Services (TCS) was getting listed on the Indian stock markets for the first time ever in 2004.  I applied for the IPO and was allotted a measly 7 shares at 850 rupees each.  I was disappointed at not having been allotted more. Nervethless,  i held on.  A few months later the stock hit 1400 rupees.  I sold off at almost 550 rupees profit per share.  I made more than 3800 rupees (not accounting for taxes) in a few months by investing in TCS.

I had tasted blood.

Target 2015 continues….

Above target picture courtesy: David Hawkins

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The one thing that i believe that i always lacked is the ability to chase people to get my things done.  This is something i have slowly started to work on.  Iam happy living in my own cocoon.  Takes time for me to open up and as a result, i have a small tight group of friends and for someone else to enter the group, it takes time.

But for some reason, i have seen people open up to me easily.  I dont need to know a person for long before they confess their intimate secrets to me.  Dunno if i give them some kind of comfort or is it something else.

Meanwhile for some strange reason, i have started believing that my days as an employee is coming to an end. Sooner or later i want to do my own thing.  This has been going round in my mind for long. But honestly, i cant figure out what is that one thing that i want to do.  If nothing, i want to take a break, finish the NCFM certifications and if possible get certified as a Financial Planner.  Later on, start my own consultancy or investment firm.  Also would love to learn more about trading, commodities and stuff.

If only i could make some time to pursue all these interests.

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My dad introduced me to the blue box of Nivea when i was in school.  3 decades later, i still use it.  Not only do i use their moisturizer, but body cream, chap stick and not to mention Nivea face wash. I love their soap too and wish that they come out with a shower soap soon so that i can use that.  Iam a complete Nivea person.

The other company IBM is considered the grandfather of computing.  Go here to see the wonderful site of IBM chronicling the 100 years of its history.  Some of the best innovations that have come out from the company, the website is a must read.

Laptops, PCs, Mainframes, Supercomputers, Messaging software, Webservers, Artificial Intelligence, Routing, Switching, Backend…you name it, IBM does it.

For many people believe that IBM is a pure IT company.  Not true. go to this website to read about the super work it does in the field of Biotechnology, Medicine, Space, Sports, Chemistry, Mathematics etc.

I started off my career working on IBM software, Lotus etc.  After having worked on competing products, you have to admit that there is something about the things that IBM makes that make them tick.  Afterall, to clock $100 billion revenues per year is no small feat.  At a time when companies with barely any revenue are quoted at 100 odd P/E on the stock markets, IBM’s stock is at a rock solid US$ 170 with a P/E ratio of about 14.

Here’s wishing many more decades of success for both companies.

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From being in debts of more than 40,000 rupees to employees sponging off the resources of the airlines by assigning even their grandchildren as dependents and mooching discounted airfares to having offices across the world where hardly anyone flies, Air India and Indian Airlines combine are nothing but a disgrace to the image of India.

What the striking Air India pilots don’t mention in their litany of complaints is how at a board meeting earlier this year they vehemently opposed any curbs on their royal privileges — “passages” or free return trip tickets for their family. And even refused to accept the private airline definition of “family”.

Unlike private airlines’ employees, who have restricted passages and specific definition of family to include only immediate members such as self, spouse, dependent children and parents, Air India’s definition is far more generous.

According to Air India, an employee’s family, entitled to travel free with him/her, includes: spouse, children, step-children, parents, brothers, sisters, sons-in-law, daughters-in-law and even grandchildren up to 12 years.

Even those who have retired are entitled to passages. “This has led to a situation where former Air India employees, currently employed with private airlines, avail passages on Air India,” said another executive.

Read the full article : Me, my family, my son-in-law: Pilots want a freebie parivar.

Iam someone who has borne the brunt of the whimsical attitude of the airline and have sworn off flying the so called national carrier for years.  Also make it a point to educate all friends and family not to fly Air India – Indian Airlines ever.

At a time when the private airlines are providing such good service and have proved that they can do well inspite of no support from the government, its an utter waste of money to spend even a single rupee to keep the pathetic airlines running.

The simple point that Air India is monstrously in debt and that it would be ridiculous to up already high salaries now seems to be one the government is unable to make forcefully enough.

Possibly the government’s culpability in bringing Air India to this pass makes it speak softly in argument. The merger was poorly thought out; and the decision by an empowered group of ministers in UPA 1 to take on additional debt to purchase a new fleet is now being seen for the folly it was. That decision was born of the misguided belief that the Centre has a duty to “revive” Air India, a mantra that has been repeated by one civil aviation minister after another. We now, post-reshuffle, have a new minister in charge, Vayalar Ravi. The last thing that he needs is to have this albatross around our necks for the foreseeable future. The wise move for Ravi would be to acknowledge that past decisions have dug Air India into a hole of mismanagement and debt — Rs 40,000 crore deep — from which there is no escaping. Wiping out Air India’s debt would cost several times more than the Centre spends on rural health annually. This is not an expenditure that a government can justify — especially on something in which the private sector has amply demonstrated its ability to satisfy the public’s needs. Instead of throwing good money after bad, the time has come to stand up and say: yes, Air India must be shut down.

Read the full Indian Express article editorial here.

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Yup, its tough to believe that a man who lives such a colourful life, flies over the pacific and atlantic oceans in a balloon, jumps off planes, does all kinds of wierd stunts to keep his business in news was dyslexic as a kid.  He had trouble reading, was one of the worst student in class.  But started off his life running a music store, which moved on to record label (Virgin music), music business to one of the most loved airlines in the world (Virgin Atlantic) to running a telecom company (Virgin telecom) to tens of other business.

The book starts off with his exploits on trying to cross the Atlantic in a balloon where he cheats death to his childhood life and then to his music business where his label published such world class music groups like the Rolling Stones, Phil Collins, Janet Jackson etc.

The dirty tricks that British Airways use to discredit, defame and try to kill the small and fledging Virgin Atlantic is also described in vivid detail.  The end of which Branson sues the whole top brass of British Airways and gets not only monetary compensation, but also an unreserved apology from the British Ariways brass.

Virgin Group founder Richard Branson says one of his prime business criteria is “fun.” Fun made Branson a billionaire, and few business memoirs are one-billionth as fun as Branson’s, nor as niftily written. Not only does it relate his side of near-death corporate experiences, it tells how the chairman literally cheated death by gun, shipwreck, and balloon crash.

Branson’s empire–now encompassing interests in an airline, pop music, soda pop, e-commerce, and financial services–began when the dyslexic 16-year-old dropped out of school in 1968 to found the British magazine Student. His headmaster said, “I predict that you will either go to prison or become a millionaire.” Briefly imprisoned for dodging customs selling records, Branson got his first million by releasing Tubular Bells, a maverick recording all the stuffy executives rejected. (1998′s Tubular Bells III puts the series’ sales over 20 million.)

Despite wild tales of Branson’s wife-swapping and Keith Richards fleeing naked from Branson’s studio at gunpoint with another man’s woman, the most shocking parts of the memoir concern British Airways’ James Bond-like “dirty tricks” campaign against Virgin Atlantic, resulting in the biggest award for damages in English history.

Though it’s filled with famous names, witty quotes, and pulse-pounding accounts of lunatic balloon adventures, it is as a business thriller that the book really scores. His instinctive bet-the-ranch tactics could cost him all, or earn another billion. Either way, Branson will likely remain the most entertaining entrepreneur in Europe

-source: Amazon

Losing My Virginity: How I’ve Survived, Had Fun, and Made a Fortune Doing Business My Way
Author – Richard Branson
Pages – 416
Publisher – Crown Business

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This book is a look into the next 100 years by George Friedman (no relation to Thomas Friedman of the New York Times).  George Friedman is the chief executive of STRATFOR, a private global intelligence firm he founded in 1996. He has spent more than 20 years teaching political science and has commented extensively on security and defense issues.

Though its difficult to accurately predict what can happen next year, Friedman lets his thoughts into the next 100 years based on the situations and issues that have shaped the past 100-200 years.  Based on this he comes to the conclusion that in the next 100 years, the major powers of the world would be (hold your breath) USA, Japan, Poland and Turkey.

He goes on to describe that by the end of the current decade (2020), China would have disintegrated and Tibet liberated with active participation by India and China will either go back to its closed doors policy or become a non-entity.  Yes, China has to keep up its blistering growth or else there could be serious trouble among its population which has no other outlet to express its disenchantment against the communist government.  But to think that the communist government hasnt thought about it and doesnt have a plan B is difficult to imagine.

The author asserts that the United States power is so extraordinarily overwhelming that it will dominate the coming century, brushing aside Islamic terrorist threats now, overcoming a resurgent Russia in the 2010s and 20s and eventually gaining influence over space-based missile systems that Friedman names battle stars. Friedman is the founder of Stratfor, an independent geopolitical forecasting company, and his authoritative-sounding predictions are based on such factors as natural resources and population cycles. While these concrete measures lend his short-term forecasts credence, the later years of Friedmans 100-year cycle will provoke some serious eyebrow raising. The armed border clashes between Mexico and the United States in the 2080s seem relatively plausible, but the space war pitting Japan and Turkey against the United States and allies, prognosticated to begin precisely on Thanksgiving Day 2050, reads as fantastic (and terrifying) science fiction. Whether all of the visions in Friedmans crystal ball actually materialize, they certainly make for engrossing entertainment.

source: Amazon

There are a lot of issues on which i dont agree with the author of the book.  Other than a few instances, Friedman makes no mention of India in the whole book.  He says that India would be a regional power with no impact on the global affairs.  I cant understand how he manages to just discard a country that could have 1.5 billion people by 2050, the world’s top 5 standing army, one of the best airforce and naval power, not to mention an economy of at least $ 20 trillion by 2050 (conservative estimates).

I tried making a small comparison chart of the countries that are supposed to be significant players (according to Friedman) in the next 100 years versus India.  A cursory glance at the figures and its easy to see why the book is way off on its prediction.

* Data belongs to year 2009
** All figures are in US dollars
*** GDP & per capita is PPP
**** Data sourced from CIA website

But he goes on and on about Turkey and Poland being significant leaders in Europe who will militarily crush the rest of Europe.  There is hardly any mention of France or Britain.  Germany according to Friedman would be on the decline.  Agreed on that, but to dismiss the German power with regards to Turkey and Poland is simply too far fetched.

He also speaks a lot about Mexico which could be the top 10 economies by 2050, but no mention of India which could be the top 3 economy by 2050.  The author looks too enamoured by USA and believes that they will maintain status quo into the next 100 odd years.  Of course, no one believes that US will just lie down and die, but to imagine that the disastrous economic policies pursued by USA would have no impact into the future is a bit too far fetched to believe.  As for Japan, its negative population growth combined with its insignificant economic growth for the past 20 odd years have dented its abilities both on the economic as well as military front.  As a country that doesnt encourage any form of immigration, Japan will be in deep trouble as it has to cope with a rapidly graying population.  If it opens its doors to immigration, its will have to face a lot of social tensions.

The book is a good read, if you are into fantasies and would love to have a good laugh.  Surely not a book to be taken seriously.

The Next 100 Years: A Forecast for the 21st Century
Author – George Friedman
Pages – 272
Publisher – Doubleday

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The scams were always happening. Its just that only now they are unraveling.  Does anyone remember the time when buying a scooter, ambassador car, telephone etc used to have a waiting time of years.  Today, you can throw in some money and take your pick.  Liberalisation has in fact brought down corruption a lot.  Earlier not a single file moved in the government office without bribe being paid.  Today a lot of government job can be done on the internet without the need for stepping into an office.  Just a decade ago, the government run PSU banks ran amuck. I remember having the misfortune of going to the banks to create a Demand Draft and know the headaches I had to endure.

Today, the private banks have revolutionised the business.  Hardly anyone of the present generation visits those PSU banks. The PSU banks are bending over backwards to win their business. Getting a driving license is not a chore anymore too. Many of the government work is either become efficient due to private sector competition or due to the introduction of technology.

Does it mean that all is hunky dory?  No, it isnt. The poor even today have to endure the red tape of the government.  Getting the loans granted by the government in their hands is at the mercy of the officer who is disbursing it.  After a catastrophe, the government declares an ex-gratia.  But the official overseeing the disbursal will make sure he get his cut before the money is given.  This trait of feeding over the dead body has been prevalent for decades.  Today, its a bit more difficult as you can call up the media to raise a muck and make sure the money is disbursed faster without any corruption in between.

So, why is it that so many scams are surfacing?  Truth is that the scams have been in our midst for decades.  Kalmadi was not involved in the sports graft for the first time.  He is a survivor in that business for decades.  His family and his cronies have made millions over these years.  People knew that yet didnt raise the muck because it was mostly hidden.  One didnt have access to all the information. Today the Right to Information (RTI) act and other kinds of citizen & judicial activism has increased. People are more aware of their rights and hence all these skeletons tumbling out.

Another reason is because the political parties themselves use these scams to settle scores. Its a simple theory which goes like… you expose one scam of mine and i do the same about you.  None of them are about public welfare nor is that only one political party is responsible for the mess.

Both the BJP and Congress are 2 sides of the same coin.  Both corrupt to the core.  If you were believing that the BJP led NDA was supposed to give you an alternative, you were living in a fools paradise. The NDA and its constituents are as equally bad as the UPA if not worse.

The Radia tapes doesnt reveal anything new.  Its a known issue that during the license permit raj of the 70s to 90s, businessmen used to pamper the politicians in power so that they could bag business or made sure that some of the laws were tweaked in their favour.  Today with lots of bidding and laws being online, its gone down to a large extent.  Even the media was nothing holy.  Currying favour with the media to carry their side of the story by politicians and businessmen was the norm earlier too.  Today its given a respectable name like Corporate Relations or Public Relations.

Anyway what i find baffling is the common man’s surprise at all these events.  Let’s face it.  We Indians have corruption engrained in our DNA.  We are taught from young on how to circumvent the rules, how to bribe the policeman to get away, to bribe the municipality to extend the height of the house by another floor etc.  If there was no TDS, am sure none of the so called “middle class” in India would pay taxes.  In fact the middle class of India are the biggest hypocrites you can encounter.

How did Raja, Kalmadi, Chavan, Yeddyurappa, Karunanidhi, Lalu, Mayawati etc come to power?  We voted them to power.  To satisfy our silly egos, to protect our so called religious casteist, regional beliefs etc we vote them to power.  Integrity is not something we are known for.  Everything and anything goes.  We are good at masking our incompetence with the national slogan of chalta hai attitude.  As government officials, we take bribe to do our work.  Our police takes bribe from the mafia and look the other way as they go about killing innocents and trading in arms and drugs.  We ourselves screw up our society and then blame all and sundry.

The rot is set.  Its a part of us.  Its in our system.  Its in our blood.  So, lets look within ourselves and cleanse ourselves as we go about uprooting this cancer of corruption from our midst.

Above pictures courtesy: Akalol & Indiabuzzing

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A win for Congress-RJD would have been a trip back to the stone age for Bihar. Nitish Kumar has got an overwhelming mandate from the public.  No matter how much the Congress tries to portray that the win for Nitish was nothing but a rejection of Lalu’s politics, they cant deny the fact that people have virtually rejected them too.  For the party ruling at the center to win /lead in less than 10 seats in a 243 member assembly is a new low.

People are increasingly voting for roti-kapada-makaan and other necessities in life.  No one bothers about reservations, mandir-masjid, communal and other caste politics anymore.  There is a whole new generation of kids who have been born post the 1991 liberalisation.

The new India demands development.  Hope the Thuggerays in Bombay realise that probably they need to stop beating up the migrants from Bihar.  Sooner or later no one would want to end up in the corrupt and crumbling Slumbay Bombay anymore.  Hope the corrupt Congress in Maharashtra gets the message too.   Not to mention the constant feuding AP Congress.

3 Cheers again to Nitish Kumar for his developmental politics. May his tribe increase.

PS: Guess what is the other heartening news?  The complete rout of the commies

Above picture courtesy: IBNLive

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Most surprisingly, it was engaging and i was never bored.  Considering the short attention span that i have and the trouble i have listening to a 5 minute talk without my mind wandering off;  I managed to hold my concentration well to listen to the whole book.

For starters, the book is not exclusively about the investments of Warren Buffett, its just a part of that.  The book is all about Buffett, the man, his family, friends, investors, rivals (if any), his fears, his interests, his integrity, his failings, his winnings.

If you are someone who idolises Warren Buffett, then stay away from this book.  It does present him in a not-so flattering way.  There are constant references to how Buffett shies away from confrontation with people, his little quirks, his almost complete dedication to his work that he almost ignores his wife who loves him unconditionally.  The ignorance leads to separation of Buffett and his wife (but they never divorce).

Its said that when the book released and Warren realised the not too flattering account of him in the book, he distanced himself from the author of this book, Alice Schroeder.

The book starts with a detailed background description of Warren’s parents, Warren’s growing up days. His almost obsessive pursuance of money from a young age.  At a age when youngsters of his age are busy playing, Warren distributes papers, chewing gums, pepsi, works as a caddy etc to earn his pocket money, file income taxes for the first time at the age of 14.  Warren’s interaction and working with his guru, Benjamin Graham is also mentioned in the book and also Graham’s influence on Buffett.

At the age of 11, he buys 3 shares of Cities Service Preferred for himself, and 3 for his sister Doris.  He sells the shares at a small profit and then looks on as the stock price goes up 10 times.  That’s when he learns his first lesson. And that is “If you really believe in the company, then the holding period for the stock is almost forever”

His investments in Coca cola, Geico Insurance, General Re, Borsehims Jewelry, Net Jets, Star Furniture etc is legendary. Not to mention the down to earth and modest nature of the man who stil stays in the same house he bought in 1957 for about $31,500.

Inspite of being the world’s richest person he doesnt indulge in the usual rich people’s intersts like yachts, jewellery, mansions, ranches etc.

For someone who was known as being tight fisted when it came to donating money to his own children, he decided to donate a significant amount of his assets to The Bill & Melinda Gates foundation.  The following saying by him highlights his thoughts about wealth

I don’t have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It’s like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don’t do that though. I don’t use very many of those claim checks. There’s nothing material I want very much. And I’m going to give virtually all of those claim checks to charity when my wife and I die.

Some more quotes by the man which i have found interesting over the years i have read about him.

• It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently

• Only when the tide goes out do you discover who’s been swimming naked

• You only have to do a very few things right in your life so long as you don’t do too many things wrong

• I always knew I was going to be rich. I don’t think I ever doubted it for a minute.

• I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

• I buy expensive suits. They just look cheap on me.

• If past history was all there was to the game, the richest people would be librarians.

• Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

• Price is what you pay. Value is what you get.

• Risk comes from not knowing what you’re doing.

and my most favourite one….

• Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

The Snowball: Warren Buffett and the Business of Life
Author – Alice Schroeder
Pages – 832
Publisher – Bantam

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