Kings and Rulers - Can we do away with them?

It took us decades – to get the colonial Britishers to leave the Indian shores! We tried – rebellion, partial governance and finally Satyagraha to get the much deserved freedom. Freedom from being ruled by a force, that never belonged to this land. But in a giffy – less then few hours – we had the next set of rulers!!!

The so called leaders of the masses suddenly took the form of rulers. People who had been amongst us and people who were part of us – were suddenly – out of nowhere – a different class! And this class of people was not the raja or maharaja – neither the czars nor the colonists! They called themselves the politicians / ministers! The claimed that they were born to serve us and the hidden agenda was to rule us!! Self sacrifice was the visible motto where as stealth and greed was the invisible motto!!

And the common man – with the absence of common sense – and the lack of looking at the creative side of the new class of rulers – submitted himself – to another time and pace of ruling!! Well – while I leave the issue of how the common man is being ruled – the basic question arises – Why do we - if at all we - want to be ruled!!

There are numerous theories that are floating on the net and in books from respected publishing houses. A single search command generates a few hundreds of thousands of links that take you to the reasons for having the need to be ruled!! In the following lines – I summarize my understanding of why the human being (or should I say average Indian) – wants to be ruled – when – in history – he fought against rulers who ruled the average man!

The theory is that collective strength is better than individual strength – and there by the human population comes together to fight away any adversaries. But soon the collective group looks out for one person or group of persons who can carry out the arbitrage exercise in case of conflicting ideas. The rules were laid out and the arbitrator had assuming powers to rule or over-rule ideas / suggestions, etc. Soon this arbitrator was writing the rule set and calling for policing / war rules in case of non-compliance!! Soon this arbitrator become the king who could decide what needs to be done and there were subjects of this king who never challenged his / her supremacy and simply followed was ordered by the king!!

And the answer to “Why the rulers want to rule the common man” is that only when there are dumb subjects that the master is all worthy!! Only amongst the idiots does the intelligent man have maximum recognition”

In an ideal condition – when there are no external threats – the king and the subjects reach equilibrium. But for the ruler who is intelligent – is it very difficult to showcase a non-existent threat and continue to rule??? The case in point here is the Karnataka Politics – its over few months now that the house of representatives is dissolved and there has been little or no affect on the common man. What was done by a council of ministers in now being done by the Governor and his advisers. It’s a huge saving on the exchequer!! But then again – the common man is getting ready to case his vote and elect his preferred ruler – oooopsss – his preferred leader!! A common mistake committed by the common man!!
Cheers and be happy – being ruled for ever!!!

Plastics, Detergent and the Dams – Whats common about these three?

The title looks rather misleading – according to my “general” knowledge – there can be nothing common between all the three words. However – an approach from an empirical view point makes it clear that all are – when not managed properly –disastrous for the humankind.

Lets start with Plastics – the popular belief is – plastics when – produced with the right specifications – are good! They help us in managing our environment better – by saving trees. The harsh reality is (as advocated by various proponents of save environment) – plastics have infinite life – once created – they cannot be destroyed!!! The best that can be done is to re-cycle them and use them over their infinite life space. Phew – at least the word – “recycle” – brings a small smile on the eternally frowning faces of the environmentalists. Now – another – Yorker – in front of the Indian population (as I am not sure of world statistics) – is – more than 20% of solid waste generated in India is plastic waste and even more alarming is the fact that – this 20% is in non-recyclable form i.e. the plastic covers are so thin that they cannot be recycled!! When we speak of compounding value (refer this term at any of the investing sites) in case of investments – it brings a broad smile on the face of the investors!! But what happens when this compounding effect happens to the 20% of non-recyclable plastic waste – scary enough!! Stop getting scared and start addressing the issue – by way of using jute – and in the worst case – at least use - recyclable plastic!! In my opinion lets give the plastics a finite life (let the technocrats put their grey cells to use and discover organic plastics – that have limited shelf life) and there by improve the quality of the finite human life!!

Detergents war has been on – for several years now!! Every notable brand challenges the consumers to prove that their detergent is not effective!! And in the bargain – the naïve consumer believes that he has bought the best product!! But the persistent use of detergent seeps into ground water resources – uses up the oxygen for chemical disintegration. The usage of oxygen by detergents – deprives the flora and fauna, of the survival element of life, in the areas where the detergents seeps into the ground water sources. So can anyone live up and say no to detergents and use natural cleansing agents?

Dams – needless to say – have had many advocates – for as well as against them!! And there has been enough political dramatics!! Dams that have been in news - dams built over Narmada, Cauvery, Krishna, Godavari, etc. While the dams bring in water for the survival of human and animal population across the parched dry lands and also tame the wild rivers – they also destroy the landscapes by deforestation - deprive the poor and marginal farmers of their livelihood and no need to mention the destruction inflicted on the sane and civilized animals (as humans are racing towards insanity and uncivilized living). And there have been so many instances – where in – to save the crops and population at a distance of few hundred miles – dams have been built – and in the very near vicinity – the poor and marginalized farmer – is deprived of water – and hence faces severe loss on agriculture.
If only I had used earthenware, used natural elements and stayed simple – I guess I would have achieved – at least partially – A SIMPLE LIFE OF SUJAY!!

Progress Can Kill

Another lazy Sunday, with lot of mist and fog, of a cool winter day in the cosmopolitan city of Bangalore. With sleepy set of eyes, picked up the paper and browsing thru. Same news all over again. Politics, killings, failures and success stories of most of the greedy people. Nothing different from yesterday. The only difference is the news is more dirtier, more gruesome and more disturbing.

Well, three articles, one after the other, posted in three sequential pages, in the same newspaper,have made me alert and opened up eyes to the full.

“Greenpeace activists try to stop whaling”
“Progress can kill”
“Is progress always good”

In the first article the news item covers the aspect of Greenpeace teams trying to save the endangered hunch back whales. The cat and mouse rat takes place at the south end of the globe, where the GP activists are chasing a killer boat!! And why are the killer boats on such a suicidal mission? “Greed for fast money” and the money at stake is derived by killing life form that, in spite of its “gigantic size”, could never match to the cruelty levels of human being.

In the second article – as the title suggests – that progress – at a super fast pace – and with highest levels of greed – can be disastrous. The author speaks about every growth – has to stop at a certain level and achieve balance. If the growth is beyond a certain sustainable and acceptable levels – it becomes CANCEROUS!! The rule is universal and there are no exceptions to the rule. A population that grows beyond acceptable levels, money and greed, performance, etc - all follow the same rule. When corporates continue to grow, at a rapid pace, they create causalities in the form of heavier consumption of resources and there by destroying the world we live in!! So to summarize – “Progress can kill”. According to the author of the referred article – everything should slow down / stop after a desired level is achieved. For example – the countries double digit growth should happed and once the basic requirements are met and the country’s population has a sustainable life style – the economies should grow only at a level where consumption and production supplement each other.

The third article re-emphasizes the fact that what is good for one need not be good for the others. Progress to some is disastrous to others. The author of this article referred to the “progress” the British introduced to the Andaman islands. The result of introduction of “progress” was catastrophic. The natives of Andaman islands, were driven out of their livelihoods. They were brought out of the forests and brought in to “homes” in Port Blair. And the result was – unable to match to the new environment and unable to cope to the new surroundings – the 150 babies of the Andamanese who were brought to port Blair died below the age of 3 years. And the disaster continued at such a rapid pace that today – hardly – 53 people of that entire race are alive and the reproduction of the tribe has stopped completely!! In the name of progress – we the civilized – have completely killed a tribal race!

In my personal opinion – while I don’t deny that progress is good – at a non-cancerous level – we all should try and live with nature and try not to create a flawed world where everyone suffers – rich and poor alike!!

And again these three articles have reiterated my strong belief to achieve “A simple life of Sujay”

Cheers and GOD bless all!!

Inflation - The silent killer

When it comes to complaining about rising vegetable prices, we are in good company - even the Prime Minister's wife does it. That is not however the reason why the Reserve Bank of India aggressively monitors inflation.

Inflation is basically a measure of prices in the country. It is measured by something called the WPI - wholesale price index, which factors in prices of basic goods and commodities in India. It is usually indicated in percentage terms. So if the WPI is 5.6%, then it means that wholesale prices have risen by 5.6% over the same date last year.

But even if inflation sounds like yet another burden that common people have to deal with, for the banking and financial system players, inflation is the centre of their universe. The reason: inflation erodes the value of money and hence the return on investment.

If inflation is 4%, it means that a lunch costing Rs 100 last year will cost your Rs 104 today. Hence your Rs 100 should have grown by Rs 4 in one year for you to enjoy the same standard of living. Hence for you to have a 'real' return on your investment of Rs 100, the interest rate should be more than 4%.

Hence when inflation rises, interest rates need to rise to ensure that investors get 'real returns'. Rising interest rates means:

• the cost of loans for both companies and individuals increase.
• falling asset prices thereby reducing the value of individual and corporate assets - be it land, homes, shares, bonds, gold - almost immediately.

Hence rising inflation numbers tend to scare off investors in bonds and shares since the value of their portfolio declines.

The examples and simplicity elicited just give the importance of inflation. Many a times - it is proved - that the destruction caused by inflation is many times more than dropping a 100 nuke bombs....

Thanks for the patience and wait for my next blog on "The Wonderful feelings of being a father"...

Cheers and GOD bless all!!

The investing Mantra - PE ratio

The Intelligent Investor – Or How To Atleast Sound Like One !

The road to upward mobility is best travelled by name-droppers. While Page Three parties might be the epitome of air-kissing and social name dropping, the corporate world has its own special version. It's called Jargon Spewing. The more jargon you throw at colleagues, bosses, vendors, the more likely people will regard you as intelligent and well read and in-the-know. So if you want to impress that snooty colleague in the next cubicle with a few well-chosen technical terms, make sense of all the jargon splashed across the pink papers, or most importantly, avoid having the blank I'm-too-dumb-to-write-my-own name kind of stare on your face when people around make complex-sounding statements at you, here's a primer:

I. India is expensive; Investors reconsider fresh investments; Valuations look attractive

Valuation comprises 4 words really - Buy Low, Sell High. Words we hear often and from people who seem unconnected to the stock markets - your grandma, the local grocer or even your family jeweler. Yet, behind this seemingly simple line, resides a very complex world. How do we know what is low, what is high and how do we measure it?

The terms 'Low' and 'High' are relative terms - which means that for their value to be understood they need to be compared to something. But for that we need a common parameter of comparison. This is where P/E comes into the picture

P/E ratios are typically used as a first-cut measure by investors to determine if a stock is overvalued or underpriced and whether it makes sense to invest in it. The P/E ratio or Price Earnings Multiple is calculated by dividing the price (of a share) by its earnings (EPS or earnings per share). It means that for a given level of performance by the company - EPS, the market has priced the stock at a particular level - P.

Take for instance a company, Xlerate, in the biotech space. Say, the company's stock price is Rs 240 and its EPS forecast for the year is Rs 8, then the PE for Xlerate is 30. However 30 per se means nothing; it doesn't signify if the P/E is high or low and whether one should buy Xlerate stock.

To take that decision, one needs to compare the P/E to other stocks in a comparable category or industry. So if most other stocks in the biotech industry have P/Es of around 40, then Xlerate could be undervalued - given its P/E is 30 and lower than the industry average, and hence its 'valuation seems attractive' However there could be two reasons why the market has priced it lower than the rest of the companies in its category: Either the major local and global investors are unaware of the company and its performance and hence haven't been able to value it correctly, or they think the stock purposely ought to be priced lower than competitors due to reasons like bad management, expected slowdown in performance, inadequate ability to deal with future/competition, etc.
Similar to a stock, foreign institutional investors who have allocations for various countries also compare India (the major indices - Sensex and Nifty) to that of other emerging markets. If most of the other emerging market indices P/E s are at around 12 and India's P/E is at 17, then India is considered 'expensive'

So thats about the PE in a nutshell - am not sure how many of you have followed this. Bricks and roses are welcome. Assuming that i am still a self styled finance guru - am planing my next session on what most of us hear about but cant relate the topic to real life - INFLATION!!

Promising to make the next post before the inflation numbers are out the next time!!

Cheers and happy work after a long holiday season!!