Wednesday, December 17, 2008
Discovering Uttara Kannada
We are going on a road trip after a long time. The last trip that we took by road was to Coorg in April. This time, we are planning to visit Yana, Gokarna before landing at Devbagh island at Karwar for a couple of days of relaxation. We will come back via Hubli, partly fulfilling my long standing dream of driving from Bangalore to Pune.
More bailouts
So, now the Indian government is going into baliout mode. I wonder what it is, China envy, if you can come up with a 500 million dollar bailout, so can we.
There are a couple of problems here
- The Chinese government is rolling in cash with huge surpluses. The Indian government is broke and the true magnitude of how broke is hidden because they keep items like fertilizer/oil subsidy out of the budget statement
- They are targetting the wrong segments. I completely agree with help for the auto and textile segments. But realty? Come on.
- They're trying to make it cheaper to get loans for homes/cars etc. But what they don't realize is that we Indians are among the most risk averse people in the world. When the future is so hazy, why would people go out and take a loan even if it 2-3% cheaper than a couple of months ago?
Talking about realty again, no amount of stimulus is going to turn the situation around till prices come down to reasonable levels. Charging 80 lakhs for an apartment that falls apart in a couple of years is just not sustainable. Even if you give it a fancy name and come up with great looking brochures and websites. Has anyone considered the average income level of people in this country before taking prices to such absurd levels?
It's the same with automobiles. We're seeing a war of words between the auto companies and banks. The auto companies are saying that banks are not bringing down the interest rates fast enough while the banks are saying that no one is actually approaching them for auto loans. The auto companies were blinded by the boom years and thought that the cycle of people upgrading their cars every 2, 3 or 4 years will continue forever. They didn't realize that when people are uncertain about their jobs, cars are one of the easiest purchases to defer.
Overall, I am extemely uncomfortable with the whole bailout idea. My reasoning is simple, we had many excesses during the last few years primarily caused by a huge oversupply of money. At some point the bubble has to burst before things get back to normal. But, by throwing more money at the problem, aren't governments just postponing the inevitable and setting us up for an even greater bust?
There are a couple of problems here
- The Chinese government is rolling in cash with huge surpluses. The Indian government is broke and the true magnitude of how broke is hidden because they keep items like fertilizer/oil subsidy out of the budget statement
- They are targetting the wrong segments. I completely agree with help for the auto and textile segments. But realty? Come on.
- They're trying to make it cheaper to get loans for homes/cars etc. But what they don't realize is that we Indians are among the most risk averse people in the world. When the future is so hazy, why would people go out and take a loan even if it 2-3% cheaper than a couple of months ago?
Talking about realty again, no amount of stimulus is going to turn the situation around till prices come down to reasonable levels. Charging 80 lakhs for an apartment that falls apart in a couple of years is just not sustainable. Even if you give it a fancy name and come up with great looking brochures and websites. Has anyone considered the average income level of people in this country before taking prices to such absurd levels?
It's the same with automobiles. We're seeing a war of words between the auto companies and banks. The auto companies are saying that banks are not bringing down the interest rates fast enough while the banks are saying that no one is actually approaching them for auto loans. The auto companies were blinded by the boom years and thought that the cycle of people upgrading their cars every 2, 3 or 4 years will continue forever. They didn't realize that when people are uncertain about their jobs, cars are one of the easiest purchases to defer.
Overall, I am extemely uncomfortable with the whole bailout idea. My reasoning is simple, we had many excesses during the last few years primarily caused by a huge oversupply of money. At some point the bubble has to burst before things get back to normal. But, by throwing more money at the problem, aren't governments just postponing the inevitable and setting us up for an even greater bust?
Tuesday, December 16, 2008
Satyam's downfall
In the past decade where we have seen scandals like Enron, sub-prime crisis etc, really surprises anymore. In
The response was immediate with analysts and institutions blasting the move. Ramalinga Raju came on CNBC and bumbled his way through a tough Q&A session. The ADR tumbled by over 55%. All this reaction led to a withdrawal of the acquisition.
I’ve always thought of Satyam (and by association, Raju) as a follower rather than a leader, someone who had no original idea or vision and was always aping the big three of Indian IT (TCS, Infosys, Wipro). His commitment to IT was always suspect. Even if you take away the moral and ethical concerns, the fact that he wanted to diversify into real estate essentially shows where his true interests lie.
I think this is the beginning of the end for Satyam. With its reputation effectively in the toilet with respect to corporate governance, any sane investor or institution is going to dump the stock. This coupled with the tough economic situation is going to lead to very tough future for Satyam. I wouldn’t be surprised to see that it is a shadow of its former self in 2 years time.
Thursday, November 27, 2008
Mumbai terror attacks
I don’t know how or why, but this morning I got up at 4:30 am and couldn’t go back to sleep. So, I made myself some coffee and proceeded to check my email and Google news reader. One of the feeds that I read mentioned about the usage of Twitter, blogs, flickr etc in reporting the Mumbai blasts. I clearly remember thinking why it is a story today when the blasts happened quite a while ago. I attributed it to a reposting and went on. Around 6:00 am, I went to Rediff to check on the cricket score when the enormity of the terrorist attack hit. I switched on the TV and watched for a while, but after a while I just couldn’t take the tamasha that these people were turning it into.
I was angry, really angry. The anger prompted me to write an open letter to our country’s leadership.
To
Dr Manmohan Singh
Prime Minister
Dear Dr Singh,
By now, you would be well aware of the attacks in Mumbai. Though I live in
Here are a few things that I would like you to do
- You keep saying that terrorism has no religion. Yet, we have seen an amazing game of double standards being played out in the media. An elaborate case has been concocted against Pragya and Lt Col Purohit and the media has gone to town heralding the rise of “Hindu terrorism”. Can we have the same sense of purpose in all terrorism cases? Do not let vote bank politics play a role in the investigation
- Do not negotiate with the terrorists. They may kill a few hostages, yes that is damaging for the people and their families, but the damage to the country that is caused by your capitulation is far worse.
- If reports are true and
Going by the past record of your government, I have 0% confidence that any of my wishes will come through. But I live in hope, because the alternative is to live in fear. That would mean giving in to the terrorists.
Sincerely
An Indian Citizen
Thursday, November 20, 2008
Futures trading
I had been looking at futures trading for a while, but always maintained a healthy distance from it. My friend Shashi was constantly pushing me to give it a try, my relationship manager at ICICI kept calling me every day with updates on the market and trading strategies, but I had resisted.
The thing that changed my mind was the falls that we saw in October. I could only watch as every single investment that I had made (stocks, mutual funds, PMS schemes) went down in value by 25, 35 and even 50% in some cases. It seemed that the least risky way to make money was going short. Given that we follow a same day settlement, short selling in the cash market meant day trading. In my view, that is just gambling and it has never worked for me in the past.
So, I have made my first tentative steps trading in futures, a month ago. I set a few ground rules for myself before I started
- Set aside a small amount of money and do not take positions beyond this. Ensure there is adequate margins available so that the broker does not close out the position
- No day trading, I don't have access to a trading screen or my broker's website most of the time. So, most orders would be placed at the start of the day
- Very conservative stop losses. This was the most difficult decision for me. My reasoning is that most people put very conservative stop loss, which in a volatile environment gets triggered very easily. While this may limit thier losses, it would also rule out opportunities for gain in the longer term
- Restrict the trading to the NIFTY and a few stocks that I had been following for a long time. At this time, I've picked 5 of them (Bharti, SAIL, Reliance, TCS and Infosys). All of these are fairly volatile and extremely liquid
I did have a few stomach churning sessions towards the end of last month when I had a buy on NIFTY at 3300. Over the next few days, it dipped to 2300, and I was down by almost a lakh of rupees. I wasn't prepared for such a big loss right at the start, so I broke my rule #1 and paid up the additional margin. Thankfully, the market retraced to 3200 and I was able to exit with a much smaller loss.
Other than that single transaction, it has been a really good month. I've been lucky in making the right calls both on the short and long sides. I know this won't last forever, there will be the inevitable bad call, but as long as I keep my head and not get carried away, I'm hopeful that it will give me some good profits.
Of course, this will never make up for the losses elsewhere, but in a general gloomy outlook, every bit of good news helps.
The thing that changed my mind was the falls that we saw in October. I could only watch as every single investment that I had made (stocks, mutual funds, PMS schemes) went down in value by 25, 35 and even 50% in some cases. It seemed that the least risky way to make money was going short. Given that we follow a same day settlement, short selling in the cash market meant day trading. In my view, that is just gambling and it has never worked for me in the past.
So, I have made my first tentative steps trading in futures, a month ago. I set a few ground rules for myself before I started
- Set aside a small amount of money and do not take positions beyond this. Ensure there is adequate margins available so that the broker does not close out the position
- No day trading, I don't have access to a trading screen or my broker's website most of the time. So, most orders would be placed at the start of the day
- Very conservative stop losses. This was the most difficult decision for me. My reasoning is that most people put very conservative stop loss, which in a volatile environment gets triggered very easily. While this may limit thier losses, it would also rule out opportunities for gain in the longer term
- Restrict the trading to the NIFTY and a few stocks that I had been following for a long time. At this time, I've picked 5 of them (Bharti, SAIL, Reliance, TCS and Infosys). All of these are fairly volatile and extremely liquid
I did have a few stomach churning sessions towards the end of last month when I had a buy on NIFTY at 3300. Over the next few days, it dipped to 2300, and I was down by almost a lakh of rupees. I wasn't prepared for such a big loss right at the start, so I broke my rule #1 and paid up the additional margin. Thankfully, the market retraced to 3200 and I was able to exit with a much smaller loss.
Other than that single transaction, it has been a really good month. I've been lucky in making the right calls both on the short and long sides. I know this won't last forever, there will be the inevitable bad call, but as long as I keep my head and not get carried away, I'm hopeful that it will give me some good profits.
Of course, this will never make up for the losses elsewhere, but in a general gloomy outlook, every bit of good news helps.
Monday, November 3, 2008
A new champion is crowned
So, finally one of the most exciting F1 championships ended with Lewis Hamilton being crowned at the very last corner. It was a completely disheartening time for Massa, who initially believed he had won only to lose it at the very last corner as Timo Glock's decision to stay on dry tires backfired.
Though Lewis is a great driver, I feel that Massa deserved it more. He had two sure wins in Hungary and Singapore taken away by other people's mistakes. Lewis by comparision did not have a single retirement. If things had worked out, Massa would have won quite comfortably.
On the whole, bar the occasional race, I found that the F1 races were becoming extremely boring and for the first time in many years, I did not watch a couple of races. The farce of the safety car lottery also made it worse, I'd rather that the cars start overtaking each other on track. Hopefully with the massive change in rules for 2009, we will have a better spectacle.
My picks for the best drivers and races
Races: Canada, Britain, Belgium, Singapore, Brazil. Three of these were rain affected and two were influenced by the safety car. Anyone see a problem here?
Best drivers: Kubica, Vettel, Alonso, Massa, Hamilton
Most underperforming drivers: Kovy, Raikonnen, Bourdais, Button, Fisichella
Though Lewis is a great driver, I feel that Massa deserved it more. He had two sure wins in Hungary and Singapore taken away by other people's mistakes. Lewis by comparision did not have a single retirement. If things had worked out, Massa would have won quite comfortably.
On the whole, bar the occasional race, I found that the F1 races were becoming extremely boring and for the first time in many years, I did not watch a couple of races. The farce of the safety car lottery also made it worse, I'd rather that the cars start overtaking each other on track. Hopefully with the massive change in rules for 2009, we will have a better spectacle.
My picks for the best drivers and races
Races: Canada, Britain, Belgium, Singapore, Brazil. Three of these were rain affected and two were influenced by the safety car. Anyone see a problem here?
Best drivers: Kubica, Vettel, Alonso, Massa, Hamilton
Most underperforming drivers: Kovy, Raikonnen, Bourdais, Button, Fisichella
Nandi Hills ride
I had cycled twice before to Nandi hills, but never done the complete ride from Bangalore and back. The first time, ,I'd started from the Nandi cross on NH-7. The second time, we had started from Bangalore, but could not complete the ride back due to severe headwinds and a puncture. I was determined to complete it fully and finally did it yesterday.
Eight of us started off from Hebbal at 6:30. People kept dropping off and finally when we reached the base of Nandi, there were only 4 of us left. I had two goals on the climb, one to do it nonstop and secondly to avoid using the lowest gear. I achieved the first one, but the second one was too hard especially on the later stages. On the way back, we took the route via Doddballapur to avoid the hot sun and headwinds that are always present on NH-7. We reached Hebbal at 3:30, it was a ride to cherish.
Stats
Total distance: 106 km
Time from Hebbal to Nandi base : 1 hr 50 min
Time to climb to top: 50 min
Time to descend : 12 min 42 sec
Ave speed on descent: 37.5 kmph
Max speed on descent : 67.5 kmph
Time from Nandi base to Hebbal : 2 hr 5 min
Overall ave speed: 21.2 kmph
Ave speed excluding Nandi: 23 kmph
Eight of us started off from Hebbal at 6:30. People kept dropping off and finally when we reached the base of Nandi, there were only 4 of us left. I had two goals on the climb, one to do it nonstop and secondly to avoid using the lowest gear. I achieved the first one, but the second one was too hard especially on the later stages. On the way back, we took the route via Doddballapur to avoid the hot sun and headwinds that are always present on NH-7. We reached Hebbal at 3:30, it was a ride to cherish.
Stats
Total distance: 106 km
Time from Hebbal to Nandi base : 1 hr 50 min
Time to climb to top: 50 min
Time to descend : 12 min 42 sec
Ave speed on descent: 37.5 kmph
Max speed on descent : 67.5 kmph
Time from Nandi base to Hebbal : 2 hr 5 min
Overall ave speed: 21.2 kmph
Ave speed excluding Nandi: 23 kmph
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