Illusion of Safety

Posted on Leave a commentPosted in Investment

Do you think debt schemes/income schemes of Mutual Fund are 100% safe. The redemption is T+1 so, when ever you need money, its available for redemption.

Hold your answer for time being.


Let me put it differently, if you understand the risk associated with Mutual Fund Investment : Do you know, why few debt schemes have slightly better returns? or Even Treasury Schemes (Liquid Plans) are not 100% safe.  Normally, while investing, we look at only Fund House and do not care to read the finer points. Investment in AA papers is as good as AAA papers, and rating hardly matters. Right.


As we know, the return we get from any Investment is directly linked and in proportion to the risk we undertake. Its called the Risk Premium. Seldomly, in real life, we understand the actual risk. We only perceive the risk. Neither statisically, we understand the actual percentage of risk. And therefore, we agree on lower return in debt/income fund v/s equity fund, ( return of 8-9% – pre tax vs/ 12% – post tax ) assuming and naively believing that risk associated is very low as compared to equity funds. Thus, returns ought to be low.

How wrong, we are.


Just read this :  (embedded link, click to read, relevant information)


J P Morgan have invoked the rare tool available with Fund House. They have gated the redemption. Why? Because, due to Default by Amtek Auto Industry, huge fund is locked, and if there is run on Scheme, they may not be able to liquidate all investment at once and have cascading effect on all the schemes. Its like domino effect. Thats what happens, when there is run of money on Large Bank, like in the event of some bad news, all of sudden every one rush to withdrawn the deposit. When Bank puts ceiling on withdrawal or Government or RBI imposes restrictions, its called Capital Controls.  We do not believe the possibilities of such event, but just like Black Swan events, these situation does arise.


The investment is all about diversification. Wrong.

The investment is all about diversification of Risk.


This is fundamental mistake every one makes. The equity has 300% more risk than Bank FD. Intuitively, we associate Debt/Income/Liquid funds with Bank FD and does not provide additional risk premium. We are Wrong. The risk associated with Debt Fund is lower than equity but certainly much higher than Bank FD. Again, i am not advocating, equity over debt fund, all I am saying is, understand the underline risk.

So next time, do not believe that Debt/Income Fund are risk free and redemption is only a day away.


State of Economy – III

Posted on Leave a commentPosted in Economics

If you need little context, read first two post.


State of Economy – I

State of Economy – II


World Economy seems to be hanging in balance. Indian Economy seems to be taking a Pause. Are we de coupled from China or that matter world Economy. I don’t think so. Now I am convinced about near term – upto 6 month – 1 year Indian Economic Outlook – Bearish. Real Estate – More bearish.Will Stock Market decline further, most likely


What should be Done.


Embedded image permalink

Chart is self explanatory. Do not sell. This does not apply, when to Buy. Hold on to Cash. Do not Jump in buying.

Your Strategy needs Strategy.

Posted on Leave a commentPosted in Interesting Idea

Every day begins with some routine staff, peppered with some surprises and unexpected crisis, requiring immediate response. That’s normal day for all of us.

What we do : We adopt some working method to deal with each situation, a time tested formula to deal with each set of challenges. We can also call it “Strategy” Though, its sound like a Buzz Word, but the truth is : we need Short Term, Near Term and Long Term Strategy.


Your reaction, every one does, whats big deal. Unfortunately, we are not taught about Strategy. Mostly, our strategy or defence or action plan, what ever you call, depends upon heuristic or at the best, few learned techniques mostly by trial and error methods, that seamlessly integrated into your work routine. Are we missing something? Does my strategy is relevant in the context of the work I do. That’s both personal and official question, we grapple everyday, albeit without realising.

If you agree: Read the below excerpt from the HBR book, I am referring in the post.


You think you have a winning strategy. But do you? Executives are bombarded with bestselling ideas and best practices for achieving competitive advantage, but many of these ideas and practices contradict each other. Should you aim to be big or fast? Should you create a blue ocean, be adaptive, play to win–or forget about a sustainable competitive advantage altogether? In a business environment that is changing faster and becoming more uncertain and complex almost by the day, it’s never been more important–or more difficult–to choose the right approach to strategy. In this book, The Boston Consulting Group’s Martin Reeves, Knut Haanaes, and Janmejaya Sinha offer a proven method to determine the strategy approach that is best for your company. They start by helping you assess your business environment–how unpredictable it is, how much power you have to change it, and how harsh it is–a critical component of getting strategy right. They show how existing strategy approaches sort into five categories–Be Big, Be Fast, Be First, Be the Orchestrator, or simply Be Viable–depending on the extent of predictability, malleability, and harshness. In-depth explanations of each of these approaches will provide critical insight to help you match your approach to strategy to your environment, determine when and how to execute each one, and avoid a potentially fatal mismatch. Addressing your most pressing strategic challenges, you’ll be able to answer questions such as: What replaces planning when the annual cycle is obsolete?; When can we–and when should we–shape the game to our advantage?; How do we simultaneously implement different strategic approaches for different business units?; How do we manage the inherent contradictions in formulating and executing different strategies across multiple businesses and geographies? Until now, no book brings it all together and offers a practical tool for understanding which strategic approach to apply. Get started today.

Courtesy : HBR

Very interesting read. The books is very short. Probably, first time, I have come across a book that deals with the issue hands on with such simplicity, and without any pretence.



Posted on Leave a commentPosted in Uncategorized

Do you think of reading a book? Pick up few books and know for sure, you can’t finish it. Then a simple website could help you decide, which book to buy. It will tell you, how long, you will take to finish the book.


They have collection of nearly 12 million books. It forces you to read a small excerpt, count your reading time and give you estimated time, you will take to finish the book. It also give you basic theme of book.

Still, need a better approach.

My rule of Thumb:

Do not pick up book that has more than 250 pages, excluding, references. Unless its a Fiction.

Do not pick up book with small or narrow typeface.

Buy more books then you can read.

Read 4-5 books at a time, despite loosing focus on a single book.

Still, the most important question; How to find time, And which book to read. One thing is sure, you can’t force yourself to read, unless, you have innate desire to read or you believe genuinely, need to acquire worldview.

One best way is to expose yourself to the books. If you don’t like reading, don’t force yourself. How and Which Book to read, will come easier for you, if you Enjoy Reading. Can reading be made enjoyable. Yes, start with something, you feel you will enjoy, and not something which people tells you to read. Or start reading something, that will enhance your knowledge or helps you in your day to day Working Life in anyway. If you can improve your presentation, your conversation with superiors, helps you place your thoughts across, automatically, it will make reading more pleasurable. Its like acquiring a new Good Habit. A positive feedback loop is what you need.

Just like learning, reading habit can be acquired at any age.

What Should be my Net Worth?

Posted on Leave a commentPosted in Personal Finance

Income, Expenses and Investment. The most complex triumvirate, we deal with every day. Other day, one of  my dear Friend, commented, our life is like, Matrix Revolution, we are all living in a simulation, and playing a game of Monopoly. As you know, in Monopoly, we buy, we sell, we hold on to the asset, we pay fine and ultimate goal is to have more money with you.

Today, I stumbled upon the Article, a question, probably I never asked, though, it must have been playing back of my mind all through. To put it more lucidly, the question defines very clearly, For what we were always been working for, without realising.


What Should Be My Net Worth?

The question is not what IS but what Should be?

The Author of the book Millionaire Next Door, defines it very simply.


Your total  Pre-tax Income X your Age / 10 = Your Probable Net Worth Less Inheritance, if any.


The final amount is not relevant, it hardly matters, whether its X or Y but underline Idea is. By simple formula, with every passing age, our Net worth Should increase. If you are in 30’s it should be 3 times your Pre-tax earning…and in 40’s it should be 4 times….

Does it have any connotation to Learning and Growth. Or Can we define our Net worth in terms of our knowledge, skills, abilities or such other parameters?

Now, think of multiplying these with your increased age. The question could read like.

What is my level of Competence?

And the Formula would be:


Clarity in your thoughts/abilities/skills X Your age/ Years of Experience = Level of Competence. More the Better.


Philosophically, we are never happy with what we have, but by this Benchmark, If you are above the expected Net worth Criteria, you are in top 2% of the People in India. Theoretically, with qualification, a plush job/business, you are already in top 2%, but are you with in top 2% of your chosen field?

I think Answer to Financial Net-worth is irrelevant, once your attain a high level of clarity and thus competence.

So Be Happy, and Enjoy Long Weekend, Not Worrying about Triumvirate.


How Messaging/Chat is changing the World/Our Lives

Posted on Leave a commentPosted in Mobile

The post is for those who are interested in Technological Changes and How Mobile Computing is taking over our lives.   Every one use, the Whats App, its becoming ubiquitous tools for social communication. The use is omnipresent, the small traders and service communities now thrive on Messaging.   Look at the simplicity. Whats App is the single most easy example to demonstrate how Mobile Computing, is taking over the world.   Have we every thought, how people learnt Whats App?   The design simplicity, easy use, no complex jargon, integration with the mobile application, seamless flow of data, voice, video in any format. But the most important. Above all…No one is taught to use it. You do not need any computer, keyboard or other knowledge. Design is so intuitive, even 80 years old can learn, starting from Setting up to collaborative tool.   With the backdrop, have you heard of WeChat. Yes. How its functioning. No. To know the way the messaging is becoming center of our universe, you must read a ground-breaking article on We Chat. How its integrating all the services. The Messanging is becoming a Web Page on the Internet, and becoming a tool to connect all other services. I do not desire to spoil the joy of reading the unadultered version, thus, putting a period here. Read the Article is Here.

End of Commodities Boom.

Posted on Leave a commentPosted in Economics

Interesting Data.

Have we ever thought, price of commodities can go down? But its happening. Worldwide, commodities are at lower than 2008 level. Does it indicate anything? To me, it means, the global economic boom is subsiding.

Purely on Demand/Supply Rule.


Embedded image permalink

Check another chart. %age drop in commodity price.



Does it help India. Yes. We are biggest importer of Gold – and Second biggest importer of Crude after China. With China Slowing down, it bodes well for us, if worldwide commodities are in decline.

At least CAD – Capital Account Deficit is within Control.



New Core – Define Vision for Company @ Microsoft

Posted on Leave a commentPosted in Technology

Any one interested in learning, how to define the core business proposition, for Company, Individual, Diverse Group or for Own Business, this is must read. Even to learn, how to express idea clearly, how to set agenda and how to reinvigorate the company or how to write better English or Business writing, this is very informative.


Very interesting letter by Microsoft CEO – Mr. Satya Nadella to his Team.


This Article is very long, but if you visualize how Microsoft was pushed to the wall in last couple of years, and how Mobile Computing, Tablets and Cloud Computing has taken over the way we work and interact with each other, And how the new Microsoft is meeting the challenge and how turn around is happening; it is surely a fascinating read.

Link here.

End Note : After years, I once again used Windows – 10, and felt the new OS is refreshing, and approach by the Microsoft in building its product is top class. Upgraded from Win 8.1 in using Parallel Desktop 10 on IMac. Glitch free, hassle free upgrade and while working side by side with multiple windows, running at least other 10 core apps on OS-X on imac, never once Windows App carshed or saw the ubiquitous “Blue Window of Death”. Worth trying…the new OS.

Best Investment, Ever.

Posted on Leave a commentPosted in Idea, Interesting Idea, Investment, Learning, Self Improvement, Uncategorized

Below is the best Investment Advice by Mr. Warren Buffet.

“Invest in as much of yourself as you can, you are your own biggest asset by far.” — Warren Buffett

Very True.

Sounds very cliched, heard many times. Some how, when we read quotes, watch inspiring video, read essay or some other inspiring materials, we know what it is or what should be Done. Intuitively, we connect to it, but that means, our automatic thinking, or system-1 as Mr. Daniel Kahneman succinctly puts into his brilliant book, Thinking Fast, Thinking Slow. To understand the meaning behind the words, we must engage – System – 2 or measured thinking. If you do not know about the two system of thinking,  read the book, I have referred or do some google search, its a first step towards, what I am writing hereinafter.

The difficult part of  reading all these life altering philosophy  is “How to do / How to Invest in One’ Self”.

Let us understand, How to Invest in Yourself.

I have no Idea about How, nor I gave serious consideration, so I am as much in game with you, as explorer and certainly not as sooth sayer. Most of us have completed 5, 10, 15 years or more of Employment Schooling after we obtained our “Graduation/Post Graduation or Degree”. Mostly, we have graduated in our Choosen Vocation/Profession. In school, we have grades, exams; In real life, we have challenges, promotion, earnings. In school, we are taught by teacher, whereas we are required to Learn by Self. So answer is simple, LEARN.

Thats where we could find Answer to HOW?

We can not take coaching, tuition or classes. If you are lucky, once in a while, you attend a conference. We do not have concept of Mentor. To me, its a primary step; looking forward to some one, who could guide us in taking right decision. Its an important but only Half of How to Learn.

Second half, depends upon; looking the work you are doing very objectively. Even if its mundane, automated, monotonous, you can still learn from it, Learn to improve your multiple skill sets.

The skills that comes immediately to mind;

@ Business Writing.

@ Basics of Finance, Accounts, Investment.

@ Comprehension.

@ Judgement and Decision Making.

@ Elementary Technology.

@ Elementary Economics.

@ Tenets of Management. Getting Things Done.

@ Sharpening Leadership.

@ Reading on diverse subject.

These all does not require any special attention or time. If one integrate all these in day to day Work Flow, learning is automated. I am sure, you are doing something or other thing to keep learning. Hence, question of How to Learn can be found in day to day work life. Iam not referring to  a structured learning, that does not mean, its not important or relevant. If you work demands constant updation of knowledge/skills it automatically forces you on the path of learning. Unfortunately, for most of us, including yours truly, it requires some effort. And thats where the Answer to HOW can be found. Doing everything with fresh perspective, trying to move beyond obvious, thinking why it is done and why can’t it be done differently, how to improve, can I draft a letter bit better? Am I using various mental tools available in my day to day decision making, can new techniques be learned, can I Improve on what I am doing… I am not giving lecture, its the natural question that popped into my conscious thinking, while drafting. So yes, its completely unedited version..In fact, it also opened up my thinking…

Thus, Mr Buffett’s Wisdom is clear: Learn as much as You can, thats best Investment you can make in Yourself.  Investment also to be done in Health, Relationship, Deep Habits, Financial Health…But thats topic for some other day.

State of Economy – II

Posted on Leave a commentPosted in Economics

Today market crashed, though, I am not sure, whether we can say market crashed if it goes down by merely 1.96%.

Reason, Biggest Single Day Crash in China.

Once again : quoting from last post : China is a mystery riddle with Puzzle. And any geo political event can impact India, its economy and stock market.

So, While not be judgemental about one event, I would still say the Jury is still out, as to what will happen next.

I am not too optimistic about near term – 1 year for Indian Economy.

Thinking about equity market, are we entering a near term bearish phase? It appears.