Here it is finally - the secret of George Soros's $$$$$:
Market turning points are strongly correlated to the sales of backache medicine. Track sales of the latter, and you will get the perfect indicator for the former. Easy step to much moolah!!
If you dont believe me, hear it here from the man himself (courtesy: The Times London)
“It’s as if you’re a jungle animal, and you see another animal facing you. You have to make a decision: fight or flight? Your hair stands up and you growl and you decide, ‘Am I going to attack because I’m stronger or am I going to run away because otherwise he’s going to eat me?’ You are very tense. And that’s the tension that gives you the backache."
Tuesday, March 31, 2009
Thursday, March 26, 2009
Foot in mouth
Equity markets across the world seem to be on steroids. Almost all of them have risen about 20% in the last 2 weeks. The US Dow Jones has just recorded its best 10 days since 1938. The Indian Nifty has risen 500 points from 2525 to 3025 in exactly 11 days. Is there something cooking? Are the bad times over, and will everything else be back to the good old days? I fear not (note that I am speaking specifically for the Indian markets). Reasons follow:
For one, I dont think the real economy has really bottomed out. Indian FY09 Q3 GDP growth was 5.3%, but looking at monthly statistics on exports, IIP or bank credit, it does not seem as if this is the end of economic deceleration. True, the markets discount everything around 6 months in advance, but it seems to me that we have not really suffered yet for the sins of our government (12%+ fiscal deficit!! a dubious record)
Secondly, 2 weeks ago, I distinctly recall multiple investment banks and brokerage firms (CLSA, Kotak, ML, Morgan Stanley, self styled 'experts' on CNBC TV18 etc etc) shouting from the rooftops about an imminent fall to 1800-2000 on the Nifty (ie a 20-25%) fall in the market. In 2 weeks, the world has not suddenly changed. The fact that these dudes are now saying the worst is over is perhaps the best indicator that its not
Thirdly, mature markets in the US and Europe are trading at lower valuations (many companies at bankruptcy valuations) than those in India. The governments there are inviting private investors to partake in the upsides while limiting the risk substantially (this is essentially the $1 trillion 'bad assets plan'). So there are better investing opportunities in mature markets, thus automatically limiting fund flows to emerging markets like India
Fourth, and perhaps most temporarily, there is a huge overhang of potentially disastrous electoral results in India very soon. Who wants to bet money on an uncertain outcome?
Predicting the markets' direction is akin to putting your foot in your mouth. For all these reasons, the markets may still run up substantially from here. But I'm not betting on it!
For one, I dont think the real economy has really bottomed out. Indian FY09 Q3 GDP growth was 5.3%, but looking at monthly statistics on exports, IIP or bank credit, it does not seem as if this is the end of economic deceleration. True, the markets discount everything around 6 months in advance, but it seems to me that we have not really suffered yet for the sins of our government (12%+ fiscal deficit!! a dubious record)
Secondly, 2 weeks ago, I distinctly recall multiple investment banks and brokerage firms (CLSA, Kotak, ML, Morgan Stanley, self styled 'experts' on CNBC TV18 etc etc) shouting from the rooftops about an imminent fall to 1800-2000 on the Nifty (ie a 20-25%) fall in the market. In 2 weeks, the world has not suddenly changed. The fact that these dudes are now saying the worst is over is perhaps the best indicator that its not
Thirdly, mature markets in the US and Europe are trading at lower valuations (many companies at bankruptcy valuations) than those in India. The governments there are inviting private investors to partake in the upsides while limiting the risk substantially (this is essentially the $1 trillion 'bad assets plan'). So there are better investing opportunities in mature markets, thus automatically limiting fund flows to emerging markets like India
Fourth, and perhaps most temporarily, there is a huge overhang of potentially disastrous electoral results in India very soon. Who wants to bet money on an uncertain outcome?
Predicting the markets' direction is akin to putting your foot in your mouth. For all these reasons, the markets may still run up substantially from here. But I'm not betting on it!
Wednesday, March 25, 2009
Top 5 careers
While on the road trip, at Pushkar I had an intriguing thought. What if I could choose any alternate career. What would I like doing best? Initial thoughts run to the following:
5. Travel writer - a no brainer. Travel all over the world (preferably luxury resorts :-) and write about the experience. Will need to guard against getting jaded with new places
4. Book cafe owner - chill out with lots of books and coffee, hopefully meet interesting people. Will need to guard against lack of physical activity and potential boredom
3. Trekking guide - beautiful scenery, good physique which will develop (hopefully!) with all the huffing and puffing. Will need to keep finding new routes
2. Professional footballer - the beautiful game, adulating (female :-) fans, tons of money. Will need to maintain fitness obsessively
1. Trader - never a dull moment, use of brain as well as emotion, potential big payoff. Need to have ample capital to start with
Would be good to hear other ideas!
A dangerous recipe
On a recent road trip, I learnt a deadly new way of knocking back vodka: vodka pops.
Recipe courtesy Kholu (aka Juicy Bytes):
Recipe courtesy Kholu (aka Juicy Bytes):
- Mix one peg of vodka with equal amount of lime flavoured areated drink (Mirinda Lime or Limca recommended) in a glass
- Vacuum seal with palm of hand
- Shake violently till mixture is frothy
- Pop back immediately in single gulp
- Repeat after 10 minutes
After 3 such pops, life becomes very beautiful. Emperical (personal) evidence says that upto 6 pops cause no grevious bodily injury.
Thursday, March 12, 2009
Mark-to-market: necessary evil?
Your house is burning. It is causing destruction of value. Because of your burning house, neighbourhood houses are also burning. There is a lot of destruction of public property - telephone wires, electric poles, roads, water pipelines etc. etc. The local municipal fire tender is fighting the blaze, but is losing the battle. Then, in one fell swoop, the mayor of your town manages to solve the problem of value destruction. How? She mandates - the burning of a few buildings is no longer is classified as fire. No fire, no destruction of value. Simple!
This is of course an exaggerated example, but to me it seems fairly analogous to what the US Congress is trying to do by forcing the Securities Commission and the Accounting Board to change conservative rules for carrying the value of assets on the balance sheet. Agreed, mark-to-market accounting rules are causing banks to take massive write downs, therefore requiring equity infusions. But changing the rule just because it is no longer convenient seems to me to be a travesty of facts. As an investor, I would want to know exactly what value my assets currently have, if they were to be liquidated today. I should not be able to hide behind illiquid or opaque markets. Because if this loophole is created, there is no way of knowing where it will end. Who is to say that a few more Enrons / Satyams / Hexawares would not continue thriving? Today these rules are causing taxpayer funding of tottering institutions. But the absense of these very rules may not even allow the rot to show any symptoms. In the absense of symptoms, the patient (or the institution) could just roll over and die suddenly, with little warning.
The truth, however bitter, is infinitely more palatable than falsehood! I hope sense prevails all around and politicians do not create a bigger mess of the already humongous mess that is the credit crisis.
This is of course an exaggerated example, but to me it seems fairly analogous to what the US Congress is trying to do by forcing the Securities Commission and the Accounting Board to change conservative rules for carrying the value of assets on the balance sheet. Agreed, mark-to-market accounting rules are causing banks to take massive write downs, therefore requiring equity infusions. But changing the rule just because it is no longer convenient seems to me to be a travesty of facts. As an investor, I would want to know exactly what value my assets currently have, if they were to be liquidated today. I should not be able to hide behind illiquid or opaque markets. Because if this loophole is created, there is no way of knowing where it will end. Who is to say that a few more Enrons / Satyams / Hexawares would not continue thriving? Today these rules are causing taxpayer funding of tottering institutions. But the absense of these very rules may not even allow the rot to show any symptoms. In the absense of symptoms, the patient (or the institution) could just roll over and die suddenly, with little warning.
The truth, however bitter, is infinitely more palatable than falsehood! I hope sense prevails all around and politicians do not create a bigger mess of the already humongous mess that is the credit crisis.
Tuesday, March 10, 2009
The ugly side of media
B-school placement season has just ended in India, and the media is full of ugly and inane stories on the fall in salaries on campus and the dramatic cut in the number of zillion dollar salaries. To me, this seems intrusive, misinformative and vouyeurism of the worst kind.
Firstly, there is something obscene in the media's obsession with salaries of freshly minted b-school grads. Speaking strictly from my experience, there is very little correlation between first campus jobs and eventual success in life. The placement process is so screwed up that the biggest factor in the decision making of a student is peer pressure and posturing. There is really no focus on area of interest, skills matching or and other long term parameter. I really think that b-schools should stop publicizing salacious details of pay packets, if only to stop the media's attention on short term and meaningless metrics of success.
Secondly, the poor students who are graduating this year are most likely under tremendous stress as it is - from family, friends, former colleagues and most of all their own expectations. Why gloat on their agony for this kind of stupid journalism? I just dont get it.
Firstly, there is something obscene in the media's obsession with salaries of freshly minted b-school grads. Speaking strictly from my experience, there is very little correlation between first campus jobs and eventual success in life. The placement process is so screwed up that the biggest factor in the decision making of a student is peer pressure and posturing. There is really no focus on area of interest, skills matching or and other long term parameter. I really think that b-schools should stop publicizing salacious details of pay packets, if only to stop the media's attention on short term and meaningless metrics of success.
Secondly, the poor students who are graduating this year are most likely under tremendous stress as it is - from family, friends, former colleagues and most of all their own expectations. Why gloat on their agony for this kind of stupid journalism? I just dont get it.
Chaman-e-bahar
My cute cousin (born and brought up in the US) primarily uses English as a medium of communication. On a recent visit to Hindi speaking relatives, she mentioned politely - "Aap ka chaman bahut accha hai". This had me in splits for quite some time. Technically, of course, she is absolutely right - literally translated, it means that your garden is very pretty. But having spent a substantial part of life in the hostel of an engineering college, I usually associate the word chaman with either 'ujda chaman' or 'chaman charlie' or the not-to-be-mentioned-on-a-family-blog 'chaman ch****a'.
There are quite a few Urdu words that are quite poetic and beautiful in their meaning (or even saying). 'Junoon' is one of my favourites. The English version (viz. passion) somehow just does not capture the madness or the obsession of junoon. Another quaint phrase is 'nosh farmayein' (try /sample it). One of the abiding memories I have of Ustad Bismillah Khan (on an interview on TV) was his use of 'Ama miyan', which somehow captured a lot of warmth and grace in it.
BTW - I did not know till some nifty searches on wikipedia that Urdu itself has its roots in the Turkish word 'Ordu', which means army encampment. The language started in the encampments off the Red Fort in Delhi c.1500 AD and was called Zabaan-e-Ordu (the language of the Urdu bazaar), soon to be shortened to just Urdu. Strange that something so poetic and charming has its origins in the violence of the military!
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