Blogs

The Value Of Money

From Manish Chauhan's Facebook page, I got to this fascinating video about the value of 5 rupees (by Veyilon Thirai, Tamil with English subtitles)

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I've had my instances in my childhood too, of knowing the value of money. It would cost two rupees for three minutes at a video game, and you had to finish the seven or eight levels of Super Mario in that time to qualify as a champ. It would take me a couple days running errands, like getting milk or vegetables, where my folks would let me keep the 50 paise or so that would be left over as change. (I'd ask if I could keep it, but most of the time I just wouldn't give the small coins back :) )

Ramki on DLF's Sudden Rise, and My View

In a recent Conversations piece, I spoke with Ramki about a few stocks, and in them was DLF. The suggestion was to buy DLF only if it dipped to 185, but since then the stock tapered down and has rallied like crazy. Ramki has mentioned this on his blog -- and kudos to the fact that he's admitted that the stock didn't quite follow through!

A few days back, during my interview with Deepak Shenoy, I had suggested that one should wait for at least 185 to buy the stock as I continued to be bearish for that stock (it was trading around 210 at that time, in late Feb). I returned from my holidays and looked at the chart, and wow, this stock has rallied some 30% from a low of 208.50. So what happened there?

Put mildly, I was caught on the wrong foot. Let this serve as a reminder to all that no technique can assure a positive outcome, no matter how (supposedly) clever the analyst is! So how can one guard against serious losses, then? First of all, understand whether the recommendation is to BUY or SELL. When I speak of a preferred buy level, it is not a recommendation to sell. A buy or sell recommendation will come after considering various factors. It has to be a low-risk trade either way, but always bear in mind that there is still ‘some’ risk. To survive in the market, we need to ensure that the risk we take is affordable. So we decide both our position size and the stop-loss level when initiating a trade.

If you ask me what one should do in DLF now, I will probably be loathe to give you a straight answer, because the signals are still conflicting. Why chase something that already went wrong?

This is deeply humbling and one of the reasons why I keep stop losses is the fact that sometimes stocks misbehave. You can't obviously over analyze the stock to find reasons, but the entire market is up and has taken DLF with it.

At Pragati: Open Up The Rupee

Last month, I wrote for Pragati on issues with Paypal recently and why the real solution is to Open Up The Rupee:

PayPal, the company that pioneered payments and money transfers on the internet, recently announced a change in the payment system for Indian residents, by setting a limit of $500 per transaction. Furthermore, users cannot use money credited to them to directly buy goods or services—they will have to get the money paid into their bank account first. PayPal said this change was made in order to comply with Reserve Bank of India (RBI) regulations and, regrettably, did not give any further details.

Many Indians use PayPal—shoppers who buy books or software online, electronic retail entrepreneurs, and freelancers who are paid online for ad hoc or small projects. Typically, they would receive and store money at Paypal, and use it to pay for goods or services, or to make small donations. With these new changes, they must withdraw any received money immediately so the intermediation costs go up—users can still pay others through PayPal with a credit card, but that means paying fees at both ends of the transaction.

The limit of $500 per transaction hurts the bigger players who heavily relied on PayPal as it is trusted by their US customers. Now they have to tell customers to split transactions into chunks of $500—a process that is tedious and appears unprofessional.

The new regulation was announced in a circular by RBI, which stated that the Foreign Exchange Maintenance Act (FEMA) laws do not allow for storing of export proceeds abroad. PayPal is therefore required to put all such money into a pooled account at a “Category 1 I-Bank”, and then transfer it to the exporter’s bank within seven days. The seven-day limit is the RBI restriction, wherein interest needs to be paid above that time (in addition, you have to be a bank); PayPal is required to report in detail all transactions over the $500 limit.

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(Read the full article)

Indian Private Banks - Most Expensive in Asia

A CLSA report I got by email recently had this graph which stunned me:

CLSA P/E by country

 

Sokol is not So Cool

image David Sokol, (now former) executive at Warren Buffett's Berkshire Hathaway, recently disclosed that

  • he bought 2,300 shares of Lubrizol on December 13, the day he told Citi to arrange a meetting between Lubrizol and Berkshire for a potential acquisition.
  • Supposedly the first overture was rejected by Buffett.
  • By Jan 7, Sokol had bought 96,400 shares of Lubrizol.
  • Soon after, Berkshire bought Lubrizol, and David S. made off with $3 million as per today's valuation.

Video: China's Ghost Cities and Malls

An incredible video by the Australian SBS DateLine on China. 64 million apartments are empty!

 

Inverted CD Yield Curve

Quick post about CD yields today. CDs are Certificates of Deposit, trade in the fixed income markets at sizes of a crore or more, and are issued by banks. Think of them as big fixed deposits. This data is for 29 March 2011.

CD Yields 29 March 2011

Making Data Open For India

Nikhil Pahwa makes the case for Open Data In India.

Earlier today, we received an email from a Government of India organization (we’ve been advised not to name them), asking us to remove certain posts that we had published, on the basis of data published online by them. We’ve been publishing our analysis of publicly available Government data relevant to the Internet and Telecom domains since our inception almost three years ago, and are now pro-actively seeking more data from the Government for our data journalism initiative MediaNama Charts; Our take on this unexpected take-down request:

- We do not believe that raw data published online by Government organizations, for citizens to peruse, is or should be under copyright.
- Our act of analysis and reportage on the basis of that data is not a case of copyright violation, and any move to prevent us from publishing the data or asking us to remove it impinges on our freedom to report on developments, as a media organization.
- We could have acquired the same data by filing Right To Information Act requests, and published the data, so why ask us to remove it?

I would be horrified if the Indian Government actually tried to defend the copyright that they may or may not actually have (since that data is available for public domain use through RTI anyhow) . I use government produced data often, and it would be a shame if they refused to let us actually use the data, while at the same time publishing them for public consumption. They could try and go to court and that is a deterrent in that many of us don't have the money or time to fight a court case - but if it comes down to that I'm happy to share in the costs and time, regardless of who is attacked.

Continuous Positive Days

If the Nifty closes positive today, it will be the sixth consecutive day it has closed up. Does this usually signify a turnaround?

The answer can only be gotten from past data. Let's see what happens in the past if we look at six day continuous positive days and find out what happens on the day after that. I took the Nifty data since 1994, and did a quick back-test.

Assume that if the Nifty is up 6 days in row, I buy it on the Sixth day, and sell it on the immediate next day.

Real Estate Return Guarantees And A Warning

I got a couple of emails that asked me about the new phase of real estate offers that go something like this:

Beetle Suite Ad

(Yes, it's real. Actual screen shot of this page)

Other variations of such plans are like this:

  • Take a loan, and builder will pay your EMI! Till possession.
  • Get 1% return per month on your money until possession.

What's this all about? A guarantee of a return?