Invest the SIP way

Mutual funds are equity based products with the potential to offer high returns but only if one invests properly and stay invested long term. Most of the investment in Mutual Funds in India happens during the year end as part of the tax planning. Most people end up buying units at one time basis depending on the market prices. If the stock market is high they end up buying units at high price and if the markets are down they get the units at a low price. So it’s all a matter of chance.

Majority people in India are not much aware regarding the functioning of the stock market. And investing directly into equities without proper knowledge is dangerous. The safest way to gain exposure to equity is through mutual funds. But buying units of mutual fund at one time basis makes little sense. The best way is to acquire the units over a period of time. And one can do this through the SIP (Systemic Investment Plan) route. All Mutual Funds offer this facility to the investors. SIP allows you to invest a certain amount per month/quarter in Mutual Funds over a period of time. This investment can be as low as Rs 500 and there is no maximum limit. So when you buy the units through SIP route you do not have to worry about timing the market. In SIP method, you buy the units regularly on the prevailing unit value. And this gives you the benefit of rupee-cost averaging. Under rupee-cost averaging your monthly SIP amount buys more units when prices are low. And when the markets high, you end up buying fewer units as the prices are high. This is a good discipline since it forces the investor to commit cash at market lows, when maximum investors are tensed and are exiting the market. Through SIP your entire capital is never at risk. And over a period of time your average price paid per unit also comes down. SIP allows you to use the inherent volatility of equity prices to enhance your returns.

Investing in Mutual Fund through SIP might not offer you a terrific rate of return but in the long run it offers more return than conventional savings schemes like bank deposit and post office savings. And the risk is also significantly less.

Ecommerce – Is India following the footsteps of US?

Ecommerce – Is India following the footsteps of US?

In the US, Ecommerce is a huge market and is one of the few segments which did not witness any drastic slowdown despite the financial crisis. The reason is the convenience it provides to the buyers and the sellers. The buyers can shop from the comfort of their homes. The seller finds it extremely cost effective to host a virtual store than a brick-and-mortar one. Although industry analysts have cut growth estimates for Ecommerce in 2009 compared to 2008, most of them believe that ecommerce growth will return in 2010 in the US. A recent Forrester Research report has indicated that total US online sales is expected to touch $176.9 Billion in 2010 compared to the projected $156.1 Billion in 2009.

Compared to the US, currently India’s e-commerce market is painfully limited with a slow growth rate. Ecommerce is a tough nut to crack in India. Approximately 50 million people in India have access to Internet but just two million have broadband connections. And ecommerce needs broadband to thrive. With credit cards being forced into the hands of customers by banks, yes, there are tremendous possibilities. And with broadband penetration increasing every day and computer prices going down, one cannot help but be optimistic about the growth of Indian ecommerce market. But the biggest hindrance in the ecommerce uptake is perception. Indians are so used to touching and feeling the thing before making the purchase that despite having some of the best ecommerce portals we still prefer the old way of buying. This is a cultural thing which takes quite some time to overcome. But still it will be worthwhile for businesses in India to take a serious view of the nascent ecommerce market. The scenario is improving albeit slowly and increasing your company’s online visibility can yield significant results. So that when the tide turns you are ready to sail!

Startup Time

I am planning to buy a Digital SLR shortly and lot of research is going into it. Whenever I buy something I research. I have got duped a couple of times due to lack of research so these days I am extra careful. My research for DSLR camera has thrown an interesting concept called ‘startup time’. In digital cameras this matters a lot. You press the ‘Power’ button in the camera and then how fast the camera is ready to shoot determines the start up time. This is very important if you venturing into some serious photography because photographic opportunities come suddenly and thereby you need a camera whose response time is super quick. And Digital SLRs have generally a startup time of 0.2 second, which is pretty fast. But never had I realized that this startup time will apply to my life also when I go for a pee in my office bathroom.

I work for a pretty big IT giant. They have eight offices in Delhi/NCR. Out of these eight offices, seven are built in huge premises with every modern facility. Cool Swanky! You feel like working when you enter these buildings. I have worked in five of them and I can say by experience that productivity is directly proportional to the kind of office building where you work. Now the office in which I am working currently is not like the other seven. It’s a blot on the reputation of the company. This building is almost 20 years old and looks like a godown from the front. The air conditioning system is historic and so is the furniture inside. Everything gives you the feel of a senile old man desperately trying to survive. God knows why they have not renovated this office.

There are two bathrooms in this office, one in the ground and the other on the first floor. I always use the first floor bathroom despite having my seat in ground floor. The ground floor bathroom is chaotic with only 2 peeing stations, two wash basins and two latrins or as I generally call them Nirvana Chambers. The First floor bathroom has four peeing stations, two wash basins and two Nirvana Chambers. This bathroom is bigger and has less rush compared to the ground floor one. I use this always unless my stomach requires some very fast Nirvana where I have no other choice but to the rush to the ground floor bathroom. Off late the peaceful first floor bathroom is having many visitors. I guess the reason is the front corridor, which in winter gets abundant sunshine and draws lot of employees for “Dhup Shekna” session. After getting warm they quickly enter this bathroom for the release session. This has created a nuisance in my life. I am a private guy. I hate peeing when others are also simultaneously peeing beside me. Its not because I have some defect or something else. It’s because there are a lot of guys who while peeing looks down at the other’s person’s peeing activity. This is extremely irritating and extremely embarrassing. Wish I could tell them “Concentrate on your instrument please. Mine is working fine. No need of extra concern brother”. But somehow I adjusted myself to this problem when a new problem popped up. One of the wash basin tap refused to work any longer. I our company it takes a lot of time to get things rectified. So it’s already two weeks but the tap is still out of order. As a result there is a rush at the wash basin. And here comes the concept of startup time. Suppose four people enter the pee area simultaneously. Now the one who finishes the pee session faster will have the first access to the only tap available. Rest three have to wait in a line. And some times, as most people will agree that despite having the instrument positioned it does not pee instantly. It takes a few seconds to deliver. Now whoever has the most responsive instrument starts the pee faster and concludes the session before the others and thereby gets the first access to the basin. Few seconds delay in pee delivery means waiting at the wash basin, which is such a big time waste. And as the bathroom is not cleaned often the wait become more intolerable. So in order to avoid the wait I am googling a lot on how to make the pee instrument respond faster to the call of duty. And you never know. My instrument may just become the fastest peeing machine in the whole world. What say?

Behavioral Finance

Behavioral Finance is something which is attracting a lot of attention these days. Increased volatility in the markets has brought psychology back into economics. Now what is Behavioral Finance? “Behavioral finance attempts to explain how and why emotions and cognitive errors influence investors and create stock market anomalies such as bubbles and crashes”. So questions like why people make errors despite knowing everything, why people start following others despite not knowing the details, why people start taking decisions without any solid logic can be answered through Behavioral finance. According to Warrant Buffet, “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ…Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” But very few people have this temperament. Most of the best brains go wrong. Herd mentality takes over. Why? You know the answer.

Recently I got a fine example of this theory. There is a very senior guy in our office whose main motive for coming to office is to chat with people. He has no work and is unallocated for the last one year. So he keeps moving from desk to desk and keeps chatting on various topics. If he visits a person, he spends at least 15 minutes there. Doesn’t matter even if the other guy is in the middle of an important call. He will wait. Today he came to visit my friend. I sit just opposite him and so I tried my best to not to look at him. My friend had no escape route. They started discussing on stocks. My friend then suddenly called me and asked “Can you please explain to Sir why his ULIP is not making any profit for the last three years”?

Well I had no way out. I was forced to join the conversation. I asked him to give me some details about his ULIPs, his switching strategy etc. He told that he had invested around four lakhs in a ULIP some three years back. He is presently at a 30% loss. Now this looked strange. Achieving this kind of a negative return in the Indian equity market over the last three year is next to impossible. Something must have happened. I asked him where he has parked his money. He told in the growth fund which has 80% equity allocation and rest debt. Then I asked him if he keeps switching frequently. He told yes. Whenever the markets go down he switches his money to a debt fund which has 80% allocation in debt and rest in equity. This he does to protect his money. Whenever the markets go up significantly he switches his money back to the growth fund again. Now I understood. To put this simply let us assume he has bought his ULIP units at Rs 10. Over a period of say six months his unit value becomes Rs 14. He is in profit. Now suddenly the markets tank. His fund value goes down. When his unit price goes down below Rs 10, he panics. Let’s assume he sells of his units at Rs 9 just to cut down his loss and puts the money in a debt fund. When markets goes up and the unit value moves up to Rs 15 he switches his fund to the growth fund (80% equity allocation) again. So he ends up buying units at Rs 15. This strategy he diligently followed over the last three years. No wonder he is at a huge loss. When I explained him how he was making a loss every time he is switching he was thunderstruck. I could see grief in his eyes. I felt pity for him.

I think this is a very good example of behavioral finance.

Touch Of Class

The place in Delhi that baffles me the most is Sainik Farms. This is an illegal settlement in New Delhi and is a supreme testimony of open disregard for law. For the ignorant, Sainik Farm was basically a large tract of land in Delhi left by the government to maintain the greenery. The rich and the powerful bought lands over there for farming purpose. Instead of farming they created huge farmhouses. Now how this happened is anybody’s guess. In India when you are rich, you can play a little with rules and laws. It is your birthright. Lot of politicians have their farm houses here. Mani Sankar Iyar is one of them. I came to know the history of the place very recently when we went there to visit a friend of my wife. When he told that his house lacks electricity connection and all the power comes from genset, I got puzzled. A house worth crores doesn’t have an electricity connection! He then explained me. And he also added that Sainik Farm is on the verge of becoming legalized. Great!

Recently I went to this place again. This time I went there for a party in which I was the host. I was giving my belated birthday party. We went to the place called “Touch of Class”. This place was suggested to me by my wife. I initially protested. Any eating place in South Delhi is always expensive. And a place in Sainik Farm is bound to costly. My wife showed me the menu card online. God bless the person who invented the Internet. I agreed to go there. But the main reason for me agreeing was not the moderate food price. They have a wonderful concept where people can carry their own booze. And people who frequently drink and eat outside will agree that it is the booze which burns a hole in the pocket. So I wanted to visit the place. All my close friends were invited. One of my friend whose birthday party was pending for long wanted to sponsor the Vodka. I gladly allowed him to do the honor. I think he had some doubts if the amount of Vodka available for him in the party will be sufficient. So just to be on the safeside he indirectly wanted to get more. And he has has some geniune reasons to drink a little extra. Afterall he is extremely dissatisfied with his love life. All of his friends are getting married or engaged. He remains single still. So whenever he gets an opportunity to be with near and dear friends, he gets drunk. And he vents his frustration out. And we have no other way out but to listen.

I warned all my friends to reach the venue 7pm sharp. I threatened everybody with dire consequences if they got late. Everybody reached on time except me and my wife. My upcoming investment banker friend was the first to reach. And he was greeted a by a huge board “Liquor is not permitted inside”. He gave me a panic call. I told him not to panic as the board is there just for the sake of it. The place is yet to get a license for liquor. And even if they don't allow us to drink we can drink somewhere else. No big deal. I cheered him up. And i added "Your goal is to go to jail for the largest banking fraud in world's history. And you getting pissed off by this fucking board. Think of a way out. To become a big fraud you have to be a big manage master. Improvise. Innovate". This was too much for him.

The atmosphere of the place is captivating. We sat in the open garden. This place “Touch of Class” is a huge farmhouse with lots of trees and flowers, which the owners have converted to a fine restaurant cum pub. It is ravishingly spacious. I liked the place. We started off with our drinks and Tandoori Chicken. My friend Chandan and his girlfriend arrived late. They got lost. Sainik farm can be a real maze if one does not know the way. We had our dinner and left the place around 11pm. My friends gifted me a T-shirt which looks to be extremely Zango. A friend of mine couldn’t attend the party. He is our mountain guy, a man who wears hills and valleys in his sleeve. His love for nature has taken him to dangerous places. A man who spent his childhood close to the ravines of Chambal. Aggression is in his blood. But looking at him no one will believe in his agression. Get more closer. You will find the real person. He wakes up uttering "Breaking News". Now why breaking news, its a long story. But to put it shortly he has a journalist heart. He unfortunately had to go to office for some urgent issue. Well when you start getting a hefty salary, I guess people expect you to be working on Saturdays and Sundays.

So my advice to all the people who want to drink and eat in a good place but don’t want to spend say Rs 200 per bottle of beer, “Touch of Class” is the place to go. Try it once. Food is excellent. Check out the menu online at http://ncr.foodiebay.com/restaurant/delhi/touch-of-class-sainik-farms-1538.html. You gonna enjoy the place. But make sure you drink a bit because when you gulp down a glass or two you start enjoying things better. Just kidding. Although the place has no liquor license and does business in a hush hush way, it is doing well to a section of the population. And palms of the government officials are getting greased too. A win win situation for all. Long live our democracy. Long Live India.

Open Letter to Mr Pranab Mukherjee

Dear Mr Pranab Mukherjee,

Let me admit at the very first that I respect you very much. You are one of the very few senior politicians in India completely untouched by corruption with high level of integrity and uprightness. But the way your Congress party is taking decisions off late is not praiseworthy. You are slowly getting surrounded by too many dirty characters. And you know it. But you don’t have options I guess. To be in power you have to be in the power circuit. But there is a saying, “A man is known by the company he keeps”.

I am writing this letter because I want to highlight one issue, which has caused immense problem and suffering to our family. This issue was created by the West Bengal Pradesh Congress Committee (WBPCC) by declaring a 12-hour Bangla Bandh on July 17, 2009 to protest against the attack on some Congress MLAs at Mangalkot. I understand what happened to the MLAs was unfortunate and the guilty people should be punished. But I am not sure what benefit Congress got by calling this 12 hour Bandh. Common people like me got harassed by this Hartaal. Do visit a railway station after calling a bandh. You will understand the level of suffering Mr Mukherjee.

Bandh is an inherent culture in West Bengal. Part and parcel of Bengal life. CPM had done it for the last thirty years. Trinamul does it at every opportunity. And off late your party has also joined the bandwagon. Good going as far as the image of Bengal is concerned! It’s no surprise that industries and opportunities are running away from West Bengal.

Mr Mukherjee, you know it very well that Strikes and Hartaal serves no purpose. But still your party called the Bandh which was a grand success. Entire West Bengal was shut down for 12 hours. As far as my understanding goes, this bandh was successful not because people felt pity for the Congress MLAs getting beaten but because they were afraid of Congress goons roaming in the streets. Everybody is afraid of their life these days. People are getting killed for silly reasons. And defying a bandh is a serious crime. Isn’t it Mr Mukherjee? Strangely Mamta Banerjee was not happy with the Bandh. I quote her “we don’t encourage wildcat bandhs and strikes”. So according to her the 17th July Bandh was a ‘wildcat bandh’. Your party workers are wild cats according to Miss Banerjee. What an audacity from her part! Good one. I agree with her opinion.

You must have read umpteen times how bandhs affects the lives of common people. This letter will reveal how this bandh caused serious suffering to our entire family and to especially to my 64 year old father. Please do not stop reading this letter. I request you go ahead. I am sure this information will touch you. So please don’t stop reading this. Maybe it will open your eyes and you might suddenly decide that bandh serves no purpose other than harassment. And you might start respecting the Supreme Court ruling, which declared bandhs as illegal. And its only possible in India to ignore Supreme court verdicts. Balls to the court!

My father, a retired BSNL employee was not keeping well for the last few weeks. My parents stay alone in Panskura. I am the only child of my parents. I was forced out of West Bengal some five years back due to economic reasons. Jobs are very few in Bengal. Presently I am working with an IT company in Delhi. And I am doing well.

A week back my father had a stroke. He was immediately rushed to a local nursing home. Luckily, it was not a fatal one. After few days he was discharged but then his speech started getting incoherent. He started having periodic convulsions. He was again admitted to the nursing home. All this happened in my absence. Although my mother desperately wanted me to go on with my life in Delhi and not come home wasting valuable “Earned leaves”, I decided to go. I love my parents just like your children loves you Mr Mukherjee. I decided to take my dad to a good hospital in Kolkata. Panskura is a small place and does not have good healthcare facilities. I arranged my Howrah-Delhi Rajdhani Express ticket for 16th July, 2009. The train left New Delhi station sharp at 4.30 pm. The train was supposed to reach Howrah Station at 10.30 am next day, ie, 17th July. From there it will take me a maximum of 2 hours to reach home. So accordingly I made my plan. I called a friend and asked him to keep a car ready at 1pm and wait for me at my home. The moment I reach I will take my dad for treatment to Kolkata. I informed my uncle to be prepared to accompany me to Kolkata. All was planned. Everything was ready. I spoke to my dad over phone while I was on train. He was extremely happy to know that I was coming home. I told him not to worry. I informed him the moment I reach home I will take him to a big hospital in Kolkata. He will get the best treatment. He was a happy man.

When I woke up next day, I found the train stationery. The gates of the compartment were wide open. There were lots of police in the platform. It didn’t look like a regular stop. I asked an attendant what’s going on. He told that there is a 12 hour Bandh in Bengal called by Congress. So the train will be waiting here at Dhanbad. I asked him how long we have to wait? He was not sure.

The train waited for 9 hours in Dhanbad. Our train left Dhanbad station at 4.30 pm and reached Howrah station at 8.30 pm. And the moment I got down, I got a call from my uncle. He told that my dad’s condition is critical and they are bringing him down to Kolkata. He told me to book an ICU bed in some big hospital there. I started calling up mu acquaintances in Kolkata for hospital references. Everybody advised me not to go to government hospitals. Please take note of this. Nobody has faith in government hospitals. They are not for the common men because common men die over there while the VIPs are given excellent treatment. That too free of cost! You are a VIP Mr Mukherjee. You have so much power that you can close down a state whenever you like. But this I guess is CPM’s fault. They are in power for more than thirty years. But the day your party comes to power holding the hand of Miss Banerjee, you must look in to this.

Anyway let me get back to our ordeal. After consulting my friends I decided to take him to Calcutta medical Research Institute. A neuro ICU was booked. My Dad arrived at 11pm and was rushed to the emergency. It was difficult to hold back tears seeing his condition. He was having continuous convulsions and his eyes were bulging out unable to bear the pain. Few people can withstand that scene. Few nurses moved away unable to bear it. But then why I am saying this to you. Politicians are people made of steel. They hardly feel the pain common people undergo due to their whims and fancies.

The doctor told he is having a neuro stroke and shifted him immediately to the ICU. I was asked to pay Rs 15000 immediately at the billing section. I paid the money. And then it was pure waiting. My dad regained consciousness after 48 hours and was kept in ICU for a week. Mr Mukherjee did you ever have any of your close ones in ICU anytime? To understand our mental condition you need to experience this pain and agony. Every second was a tensed second. Every minute a painful one.

By God’s grace my dad recovered after 2 weeks. We had to spend quite a lot for his treatment. But that doesn’t matter. But then what would have happened if we didn’t have the money? What would have happened if my dad was a poor man and me an unemployed graduate. I can imagine the pain of those people who do not have the money for treatment. Mr Mukherjee I have spent virtually 15 days in the hospital. I have seen lot of crying faces. I have seen quite a few dead bodies been taken out. Seeing death face to face makes one evaluate one’s life. And I am no exception.

Mr Mukherjee, now I want to ask you finally what have you guys gained from this Bandh? If there was no Bandh I could have admitted my dad in Kolkata by 3pm. He would have got the best possible medical attention, which he was not getting at Panskura. He got the stroke attack at around 8.30 pm in the night. Don’t you think your party is responsible for the pain he suffered?

Mr Mukherjee you are too big a person to be moved by this kind of news. These things happen in India every day. Hundreds of people die every day due to lack of medical treatment and if my father would have died it would have made no difference. After all he is a common man, an unknown citizen. When will this suffering stop Mr Mukherjee? The day we all are dead? George Orwell once said: “Nothing stands still. We must add to our heritage or lose it, we must grow greater or grow less, we must go forward or go backward”. Where are we all going Sir?

Regards
You humble servant, the bloody common man.

The Noble Cat! My Hero!

What is the best thing that you have seen till date? I am sure this question will be difficult to answer for everyone with the gift of vision. So many things we see every day! Thousands of visual memories are stored inside. It’s extremely difficult to choose one.
If I would have been asked this question even few weeks back I would have struggled to provide an answer. But now I have my answer. The answer was disclosed to me while I was on my way to Kolkata airport last month.

It was a Saturday. Our flight for Delhi was at 12.25pm. My wife and I left our home at Panskura around 7.30am. We planned to take a train to Howrah from Panskura station. We reached the station only to know that the trains are not running for the last two hours and no one has any idea. I could not find the station master. Been a Bengali and by virtue of spending twenty years in Bengal amidst bandhs and strikes I got the signal. And considering the CPM Trinamool standoff, it will take some time to resolve the crisis. I can’t wait for the resolution. I hired a local cab and told him to take us to the airport. The guy never went to Kolkata before. Both of us convinced him that he can do it. Been a driver he should be ready to go anywhere. We are not asking you to take us to the jungles where Maoists stay; we want you to take us to the Kolkata airport. We convinced him that he can do it. My wife gave him some extra confidence by saying that she knows the route and will guide him. He was convinced. Our journey started. After going smoothly for a while we faced a huge traffic jam. Lots of cars were turning back. We enquired. Some hawker union has blocked the highway demanding the government to look into some of their issues. As usual. Bengali Bandh culture. My driver turned the car back and took an alternate route. Both of us got tensed. We have to reach the airport by 12am. The driver informed that the alternate route will increase the journey by around 30 km. We both were flabbergasted. My wife gave a “cursory monetizing look” at me. This phrase “cursory monetizing look” is my invention. My wife always throws this at me when she wants me to pay some extra money or give some tips with the bill at the restaurant. I told the driver to hurry up and not to worry as I will compensate. And he pressed the gas! Money means motivation! Money means more gas!

Despite the driver’s best intention, our car could not cross the 30kmph mark. It was a one way road. In normal circumstances this road hardly gets any traffic. But lots of people are taking this route due to the blockade. So traffic was heavy from both the direction. The road passed through semi village areas. Soon our car entered a small market and got stuck in a jam. It looked like a weekly bazaar as most of the shops looked temporary. As the car inched forward I saw the unforgettable scene. There was a fish shop just meters away from me. And although few customers were present I could not see the shopkeeper. To my greatest surprise instead of the owner there was a cat sitting lazily at the left side. A cat manning a fish shop! Fish and Cat never go well together. It’s a deadly combination. The cat kept looking at the fishes with eyes half closed. I could feel its greed despite its responsible position. The car moved forward. I turned back and kept looking at the shop. Soon the owner came back and took his position. So for about five minutes the shop was totally in the hands of this cat. For five whole minutes, it was the cat that guarded the fish shop. Not a single fish went missing!

Oh Cat! My Cat! How could you do this? Nobody has ever associated a cat with honesty, integrity and uprightness. But you have proved them wrong. I admire you. You are inspiring. For five long minutes it was just you and the fishes. You took care of them. You protected them. I am not sure how would I react when I am given the responsibility to guard a huge amount of money. Probably I would pocket a few currency notes when no one is around. But your self control is enviable. Now I can understand why cats were worshiped in the ancient ages. There is a proverb “Keep an eye on the cat and another on the frying pan.” This is not for you.

The great American satirist, P.J. O'Rourke in his book Modern Manners: An Etiquette Book for Rude People wrote “Cats are to dogs what modern people are to the people we used to have. Cats are slimmer, cleaner, more attractive, disloyal, and lazy. It's easy to understand why the cat has eclipsed the dog as modern America's favorite pet. People like pets to possess the same qualities they do. Cats are irresponsible and recognize no authority, yet are completely dependent on others for their material needs. Cats cannot be made to do anything useful. Cats are mean for the fun of it. In fact, cats possess so many of the same qualities as some people (expensive girlfriends, for instance) that it's often hard to tell the people and the cats apart.”
Well Mr. O’Rourke, I think you need to see this cat before you can write off the cat as irresponsible. Well some are but that does not give you the right to paint the entire community in one color. I am sure one day you will meet an angry cat you will confront you for this blasphemous write up. And this angry cat will also show you that men are not the only dangerous creatures in this planet.

This image of the cat will remain with me forever till the time I have a memory loss or I say good bye to the planet. Now, whenever I face any difficult situation in my life, I always think of the cat. If the cat can manage the fishes without tasting a single one of them, why can’t I do the difficult things? The Cat has changed my life. Whenever a problem arises I close my eyes and this of the Cat and say in Obama tone, “Yes I can”.