Sunday, February 26, 2006
Quotes
In god we trust, everybody else brings data to the table. -N R Murthy, Infosys
Meeting the deadlines is not good enough, beating the deadlines is my expectation.
- Dhirubhai Ambani, Reliance
I worry when times are good. – Anand Mahindra, M&M
Ultimately, everyone in the world is going to die, but we must die last.
– Anil Agarwal, Vedanta resources
Tuesday, February 14, 2006
Adventure capitalist: Jim Rogers
Just finished reading Adventure Capitalist by Jim Rogers. Well I picked up the book expecting some tips/fundae on Investing and stuff but it turned out to be more of a travelogue.
But Jim Rogers with his travelogue makes investing a very simple game by talking at very macro level …essentially answering where the country is headed?
Let s see some of the basic questions that will answer which country is headed where?
Median age of Population?
Demographics determine whether the country is heading towards progress or busy feeding his old/tired. Japan is a case in point, where the population is highly skewed to old age, which puts a lot of pressure on the working population. Countries like Ireland and India are to benefit from the young population. USA is to face the same problem with retirement period of baby boomers coming close.
Would like to digress here ………….I am just wondering if the same could be applied to some of the PSUs in India. MTNL is a case in point – relatively old and huge staff mainly being retirement benefits makes it tough for the company. Auto manufacturers in USA (GM) are also suffering from the same. Currently GM is benefiting from the rising interest rates in USA, as it is has maintained the funded status of its retirement benefits.
Corruption and bureaucratic hurdles.
The amount of money/FDI coming into a system/country is inversely proportional; to the levels of corruption and bureaucracy in a country. This in case of Jim Rogers can be measured by the ease of getting a visa and the no of days taken to process.
India scored relatively low in this account with corruption very rampant.
Type of government
By type of government – it does not matter whether the country is a dictatorship or democracy – but by the nature of policies and thinking at the government level. China prospered under the Premier and so did some of the Arabian nations where the Oil barons knew how to use the oil resources. However, countries like Indonesia and Nigeria inspite of rich oil reserves continue to be poorly managed.
Work culture
The Germans restructured themselves twice after being totally devastated by the world wars...each time emerging as a stronger country. The Chinese exist in difficult topography with little to boast about. But they were successful in using their population from a problem to an opportunity of low cost labor. The work ethics of CHINA is what makes it’s growing at 8-10%. Compared to this there are relatively many countries in the Africa endowed with rich deposits of minerals and food stuffs. But the economies are so used to GRANTS from the IMF/world bank that they have stopped working at all.
Well the book is a fascinating reading giving a broad framework to analyzing countries. The frankness with Jim Rogers writes he may get him killed some time – will update you on this Later.
But Jim Rogers with his travelogue makes investing a very simple game by talking at very macro level …essentially answering where the country is headed?
Let s see some of the basic questions that will answer which country is headed where?
Median age of Population?
Demographics determine whether the country is heading towards progress or busy feeding his old/tired. Japan is a case in point, where the population is highly skewed to old age, which puts a lot of pressure on the working population. Countries like Ireland and India are to benefit from the young population. USA is to face the same problem with retirement period of baby boomers coming close.
Would like to digress here ………….I am just wondering if the same could be applied to some of the PSUs in India. MTNL is a case in point – relatively old and huge staff mainly being retirement benefits makes it tough for the company. Auto manufacturers in USA (GM) are also suffering from the same. Currently GM is benefiting from the rising interest rates in USA, as it is has maintained the funded status of its retirement benefits.
Corruption and bureaucratic hurdles.
The amount of money/FDI coming into a system/country is inversely proportional; to the levels of corruption and bureaucracy in a country. This in case of Jim Rogers can be measured by the ease of getting a visa and the no of days taken to process.
India scored relatively low in this account with corruption very rampant.
Type of government
By type of government – it does not matter whether the country is a dictatorship or democracy – but by the nature of policies and thinking at the government level. China prospered under the Premier and so did some of the Arabian nations where the Oil barons knew how to use the oil resources. However, countries like Indonesia and Nigeria inspite of rich oil reserves continue to be poorly managed.
Work culture
The Germans restructured themselves twice after being totally devastated by the world wars...each time emerging as a stronger country. The Chinese exist in difficult topography with little to boast about. But they were successful in using their population from a problem to an opportunity of low cost labor. The work ethics of CHINA is what makes it’s growing at 8-10%. Compared to this there are relatively many countries in the Africa endowed with rich deposits of minerals and food stuffs. But the economies are so used to GRANTS from the IMF/world bank that they have stopped working at all.
Well the book is a fascinating reading giving a broad framework to analyzing countries. The frankness with Jim Rogers writes he may get him killed some time – will update you on this Later.
Monday, February 06, 2006
10K and more...
The Sensex today touched the 10k mark, rising by 237 points. While the Sensex continues to rise to newer levels and achieving higher growth, analysts continue to remain BULLISH on the Indian market. Every positive movement in the Sensex is followed by a host of market/investment guru proclaiming – “I told you so”. Some of the more sophisticated analysts talk about the secular performance of the Indian industry and attribute stuff like Stabilizing politics, conducive policies, liberalization, infra boom, Capex cycle, benign interest/ inflation rates and blah blah…..
Every person who has been bearish on the Indian markets seems to have been proved wrong with the earlier Sensex targets becoming current “strong support” levels. Well I do not blame anybody as I had earlier mentioned its part of their business - be it analysts, fund managers.
The Nifty is currently trading at 18 times trailing earnings as compared to 14 times about 12 months before. Generally a steep rise in EPS is marginally cushioned by a decline in earnings multiple, ensuring a moderate rise in indices. However, currently we see that the while the EPS has risen far above the normal trend line so has the P/E multiples, which is clearly signal of a lot of optimism built in the current share prices, even with interest rates slowly being pushed.
Going by Past indices correction it is very clear that the higher the rise, the harder will be the fall. While the probability of a Harsh Mehta, Ketan Parekh kind of event is rare as the multiples aren’t at alarmingly high levels. However, I probably feel an internal political calamity could cause harm. Anyways returns from the current levels are not going to be great.
So be better be sure of what you are invested into and be ready to hold it for long periods.
Subscribe to:
Posts (Atom)