I've added to the Nifty short: it's now a 500 quantity short rather than 200.
Bharti has lost money but I have a stop loss at 745. The rest are ok, and I expect a rally to take profits down; still, in the longer term it is good to stay short.
Since Aug 12, the porfolio is up 20%. Not too bad, but not phenomenal either.
Soon, a number of us will be out of jobs. There won't be anything to do, so we'll do something more than lighting candles. That something will involve violence. And it will be incited by jokers like our politicians who sat through the entire drama without showing an ounce of the real Indian fire in their belly.
And why should they? What am I doing? What right do I have to complain when some of them are actually visiting the site and talking to people, while all I do is twitter what comes on TV?
(I respect RR Patil. The Maharastra Home Minister was there at 2 AM, at the Taj, talking to people, figuring out the action. THen he left, which was again sensible because he's a minister with very little op-expertise of this sort, and the cops would have had to protect him.)
But I respect nobody else. The Thackerays were conspicuous in their absence, and no one seems to care, because we now know they only attack helpless people who can't fight back. Modi, who has a record of battling terrorism with terror, isn't much solace - and he went political, which was taken in bad taste. Manmohan Singh said something in such a sissy way I feel ashamed to have him as my leader. Advani has josh but that crackling voice and age of 80 - I don't know man, I don't want to have our army provided leadership from a hospital.
Our president has absolutely no clue, and she's supposed to be the ultimate leader of the army. We have a bunch of jokers out there leading our country, and all we can do is light candles.
What is the point of lighting candles? Candles are frikking exact photocopies of our stupid response. We'll stay lit long as long as the wax is around, and after we die and are forgotten.
We'll light candles? And that will somehow convince the families of all those dead that we mourned for them? That such a thing will not happen to them, or indeed, to us anymore? We'll light a frikking candle?
If we have to light something, let's light a fire under our own arse. And under all those who were supposed to be working but weren't. Under A K Antony, our defense minister, who had mentioned in April 2007 that since we secure road and air, the next attack could come from the sea. Under Manmohan Singh, for not firing that sissy Shivraj Patil. Under ourselves, for not voting and for not standing up against the establishment. And for not finding someone worthy enough to vote for.
And let's actually do something. Let's work on what went wrong, and how we can fix it. Let's find out who's willing to do this at the political level, and root for him/her. Let's find out why the military is underfunded and what we need to do. Let's provide technical and physical support to our starved police forces. Lighting candles is all fine, but the fire can't just go off like a candle.
Lighting candles makes us feel like we "did something". We did not. By lighting a candle you contribute a sum total of: NOTHING.
Let's start a revolution. But not by lighting candles.
This is all happening 40 kilometers from here, on the other side of the creek. I'm helpless. And furious. And very belligerent, towards the terrorists. I want revenge, definitely, and I definitely want answers to why we can't work to eliminate such people from existence?
But that is difficult. People will be bad, because they can. What we can do is to create a better reaction philosophy and a better process for the intelligence.
What do I mean?
I had suggested, long back, after another terrorist attack, how I planned to create a fund to help kill these terrorists. I think it's time to revive that thought. Pay people to kill terrorists, and to eliminate every single terror preaching bastard from the planet. This applies to all kinds of terrorists - the ULFA and LTTE included. Let's get the bastards.
Indian federal bond yields dived to three-year lows on Wednesday after China's rate cuts spurred expectations the central bank would soon follow suit, encouraged by forecasts of a further dip in inflation.G-Sec yields had gone up on Monday and Tuesday - I have bought a gilt fund (Prudential ICICI Gilt fund, Investment Plan) which has gone up nearly 3% in the last week alone. It was up 0.7% today.
I wonder if I can buy G-Sec's directly - I saw a paper ad today by ICICI about how you can buy GOI bonds, but these are not tradeable and you won't benefit by falling yields. Typically a 1% drop in interest rates increases prices by 1-2% (dropping yields by that much) But if you can't sell your bonds (i.e. if your bonds are "not tradeable in secondary market") then you don't get any advantage.
The ICICI web site says GOI 2003, and I assume that's a WTF.
I'm not quite sure but right now I think corporate bonds will be a good buy if the secondary market has trades. I don't know why we don't promote that market - bonds are a fantastic set for trading, and today bond trades can dramatically change the marketplace especially if we allow derivatives on them (bond futures, interest rate futures and options etc.)
The establishment is not in favour, obviously, because this is their turf. Neither is the government - why else would these bonds be non-tradeable, and non transferable? But these are lame excuses. Still, I don't know how to answer the very basic question: if less than 3% of Indian savings are in stocks, why will anyone bother with bonds?
We can't force people to invest; we can only make it attractive. Today there is so much "value", and we have no long term capital gains taxes, we have much lower transaction costs than, say, 1998, and yet, very little new money is coming in. (Although, says SEBI chief Bhave, we've seen retail pouring in over 5000 cr. in the last few months. Wow)
Bond funds then, will have to do. Most of them are not honest. The Gilt funds invest in fixed deposits, the bond funds do shady deals and mask them with illegible names and all sorts of weird things are happening out there - please keep yourself informed of fund portfolios before you invest.
The idea is to have this entirely online, through a Skype listen-only conference (for the most part), using online shared whiteboard software and a shared presentation. Details will be ironed out once I know we have enough interest.
Course duration: 2 hours or so. Keeping this open but will not exceed three hours.
Contents:
The entire audio will be recorded and placed online later as an archive.
Cost: Free. I reserve the right to eventually make this a business, but right now it will be free.
Are you interested? Please comment on this post, send me mail (deepakshenoy at gmail) or enter this form.
Update: Thanks for the response! I have received more than 200 registrations and I will provide more info in further posts.
Note: Suggestions and comments are much appreciated, even if you think I am not the right person to learn from. I've always liked to train, as it helps me learn too. And yes, this could be a future calling, I don't know.
Now I'll maintain a trailing stop loss of about 10% on each position, just to ensure things are ok. I might choose to add more later this week, for the December expiry.
His derivatives bet (Buffett Crosses Over To The Other Side) has come back to haunt him. Berkshire Hathaway's profits fell 77% in the last quarter, on lower income. That was a given, since he's exposed largely to housing (interiors, pre-fab), consumer excess spending (netjets) and finance (Moodys, Amex).
But the biggest problem in the income,not yet truly recognised, is the $37 billion derivative bet. Buffett, as most of us know, wrote puts on the S&P and other indices, with an exposure of $37 billion, last November. He got $4 bn in premiums. These are about 40% down today, and the net loss, marked to market, is $14 bn I would imagine.
Buffett doesn't have to put any collateral (or mark-to-market margin) because he's rated AAA. Even if downgraded, Buffett won't have to put up too much collateral:
A credit rating downgrade would likely not be material. Berkshire would have to post "nominal" additional collateral on derivatives of "far below 1 percent of assets" if Berkshire lost its "triple-A" ratings, Buffett's assistant, Jackie Wilson, said. It was posting no such collateral as of Sept 30, when Berkshire assets totaled $281.7 billion.A theory doing the rounds (round one and two) is that people who bought the puts are spooked that Berkshire is now a credit risk. One says that ah, even if the rating goes down, Mr. Buffett gets away with very little collateral. This therefore is driving up the cost of Berkshire CDS - insurance in case of a Berkshire default - to nearly 5%, of 500 basis points.
Another says that Buffett's $5bn Goldman investment was primarily a way to provide extra collateral through the broker of these puts; I doubt that, since that would be too sweet a deal. (equity and collateral? Uhem)
Buffett himself believes US unemployment will go higher than 8%. (My personal belief is that it could go to 15%, totally random, number picking from free air) In that case, all the negative news will drive the stock lower, CDS higher, and in general create collateral needs out of nowhere.
Is this kind of fear unjustified? Is Buffett truly untouchable - and therefore, people are being idiots? Market prices are irrational a lot of the time, and unreasonably low in bad times. Yet, in a market that is driven by trust, we are seeing a serious lack of trust. And that has taken businesses down - Bear and Lehman - for good reason, that they were overexposed, and the revelation brought them down. Buffett is exposed, much more than is usually comfortable, and the news is likely to take the stock value much lower.
It may not go to zero though - there is enough cash on their balance sheet to cover the damage, and even if the S&P halves from here, they have enough assets to pay back the whole exposure by selling them (and will leave money behind). But we are not a rational market, and we will underpay. I doubt this is the end - watch for another 50-60% drop, more bad news, more revelations. (The SEC has asked for info. People will be watching like hawks)
Sandeep Jadhav, a 27-year-old professional in India’s outsourcing industry, had only seen the good times. He worked hard as a support technician in the local subsidiary of an American software company and took home an annual salary of about Rs 5 lakh.This story hits home in a number of ways.He frequently bought expensive sarees for his wife, toys for his eight-month-old son and cricket gear for himself, maxing out on his two credit cards. In December, he planned to take a home loan and buy an apartment in the Kanakapura suburbs of Bangalore. Last week on Tuesday, Jadhav was called in by the vice-president of his company, handed a month’s salary and sacked on the spot.
“I signed the letter, took my cheque and walked out without speaking a single word. It was all over in five minutes,” said Jadhav, reliving the moment. The vice-president told him that he was being terminated due to “bad market conditions”.
...
Despite being pink-slipped, Jadhav himself holds no grudges against his employer of one-and-half years, Dulles, Virigina-based Everest Software, which makes products for small and medium businesses. “If Yahoo, IBM and Microsoft , all big companies with huge cash reserves can lay off, why not smaller companies which lead a month-to-month existence?” asks Jadhav pragmatically.
In the last few weeks, most of his colleagues in the company have been fired, too. “I was one of the last to be shown the door because I was one of the better performers,” he says.
The slowdown in India’s outsourcing industry, the mainstay of Bangalore’s economy, is showing up in unexpected ways. The city’s restaurants and drinking lounges are reporting a 30 to 50 per cent dip in revenues. A publicly-listed real estate firm has slashed prices of apartments. Others have introduced low-end options. Rush-hour commuters are even talking of de-clogging in the roads during peak times as outsourcing workers prefer taking the company bus or riding a two-wheeler to driving their cars.
In the last week, Jadhav has been frantically surfing the internet and scouring the newspapers in search of a job. He has dispatched his resume to a dozen companies unsolicited. He has fired it off to several placement consultants. He has attended three interviews so far but he has had no luck.
Jadhav may not yet have a job offer but he has a plan. “At the next interview, I am going to say to the company, give me a job, don’t give me a salary. Pay me only after I prove myself. I’m ready to go to that level.”
Jadhav’s wife Debadrita quit her job as a content editor at Yahoo when she became pregnant last year. The couple now has an eight-month old son. Jadhav has crossed the overdraft limit on his two credit cards and has run himself into a Rs-70,000 credit card debt. As he describes, “I am quite a spendthrift”. If he does not land a job in the next one month, Jadhav cannot pay his credit card dues and the card company will “come knocking to my door.”
You might think: who can have sympathy for the likes of Jadhav - the people who spent beyond their means. I am sure he doesn't want sympathy either, because it was a high risk, high return game - he enjoyed the returns when they lasted, and he will ride out the downturn too. The fact that he has a young kid and family and huge credit card debts means nothing - it's his responsibility and of course, eventually, the credit card company's problem.
Jadhav is not unique, or different. Hundreds like him have stretched themselves to the limit. I know some of them, and all of them are resilient enough to last out a downturn. We needed a recession to get rid of the madness; and what doesn't kill us will make us stronger.
Copyright (C) Deepak Shenoy 2011
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