Back From Holiday, With Notes…

Bangalore was fantastically refreshing, with mentionably better weather. Much  has happened in the last few days, so I’ll use this post to link-comment.

Europe was downgraded (WSJ) by S&P – France is no longer AAA, and Italy is BBB-, just above junk. Portugal is junk. Step back and think about this a bit: The US is no longer AAA, and their stock market, their bonds and their currency have only gone up. Nobody cares about what rating agencies think. The point they should have been downgraded was two years ago. Right now, the rating fellows are just saying “oh, ok, we also agree that there is a problem”.

The rating change in itself is not such a big deal. It would be if – and I say if – funds and banks were forced to buy only the top AAA rated assets, or if the assets became AA then they were forced to put up more […]

By |January 16th, 2012|Categories: Readings||2 Comments

Readings: Bank Risk, Carbon Credits, Kingfisher

Nine Lakh Cr. stuck in risky sectors, says Firstpost. Even a 10% loss on that will hugely hurt bank capital, but the figure is exaggerated.

There is an enormous difference between a market opinion and a market position”, says Peter Brandt. A great post by an experienced trader. Lose your opinion before you lose your money; it’s silly to tell traders how they were wrong a month back, perhaps.

EU Carbon Credits have fallen off a cliff (From barchart.com)

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Stocks like SRF and Suzlon get income from selling CERs, and if the prices have more than halved, the stocks will see a decline in income. But the stocks have been beaten up so badly it might not even matter!

Kingfisher grounds 15 more aircraft. Can’t afford maintenance expenses now. That stock […]

By |December 19th, 2011|Categories: Readings||1 Comment

We Need More Equity Investors: McKinsey

The coming shortage of equity investors by the Economist, quoting a report by McKinsey. 80% of the world’s financial assets of $157 trillion are held in developed economies, where people are ageing. Pension funds are maturing and they withdraw from equities. Emerging market investors hold most of their assets in debt, very little in equity. The crash in recent years – 10 years of nothingness in the US, 4 years in Asia, 20 years in Japan etc. – have prompted an exodus from equity markets. Finally, financial investors like banks will have to sell equities to create capital for regulatory norms such as Basel III.

This means by 2020, there is an “equity funding gap” of $12.3 trillion, unless things change dramatically. (But things will change dramatically. IMHO: There is no equity funding gap – valuations will come down to levels where they attract investors. )

US households have 42% of non-retirement financial assets in shares. […]

By |December 13th, 2011|Categories: Readings||3 Comments

Random Reads: The Big Fight, Social Media, UID Kaput?

The Big Fight between Ma-Mu and John K about the demise of Taggle, the kamikaze (or not) act of Air Deccan, and how we should not do things. I think it’s good that we do proper post-mortems of companies without looking at the ego lifting parts of the pieces involved (“I said Air Deccan wouldn’t work”, “Not till after it was dead”, etc.)

The story is of a much-chased space (“deals”) spoilt by the small fact that no one thinks getting a haircut for 80% discount at Rs. 200, implying a regular price of Rs. 1000, is a good deal. And then the “pivot” to sell electronics, of all things. And investor panic buttons were on, as they usually are. Of a smart team chasing a formula chased successfully before, and the local dynamics hurting before helping. The point to learn is: when you fail, fail big, boss.

John K and the Taggle team are […]

By |December 9th, 2011|Categories: Readings||2 Comments

Readings: Farms, Prepayment Penalties, VC Movies

By |September 7th, 2011|Categories: Readings||Comments Off

Readings: Edible Oils, Real Indian Story, Italian Mints

A few interesting things to read over the 2-day trading holiday:

Italian town printing its own currency to escape austerity (Reuters)

Nidhi Nath Srinivas on the edible oil industry (ET).

Read @moneybloke about KS Oils, which has fallen a magnificent 80% in the last year, from highs of Rs. 80 down to Rs. 10 today. (Disclosure: I went long at 32. I ignored my stop losses on the way down and exited at an average price of 21 or so. But it  was a small position, so I console myself.)

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(Promoters pledged shares and financiers sold them as the stock collapsed). Directors have resigned. Rumours abound of the promoter losing his shirt on Palm oil futures. Risks to the Indonesian plantations persist, with some government bans that might happen. Tough […]

By |August 30th, 2011|Categories: Readings||1 Comment

Readings: Warming, Bonds, Book Writing

Krugman blames global warming for "popular rage" from lack of food. Sadly, this is really shallow. We’ve had food crises for ages, and we only had a relatively nice period in the last 10 or so years. That we’re warming is a fact, but it’s not that humans are influencing it, regardless of the so-called consensus. Rage against food prices is usually the straw that breaks a camel’s back – people are usually pissed off about other things, like corruption (and Egypt *is* a prime example).Blaming a "vast leftist conspiracy" is just a strawman.

12 steps to get things done. (The Kirk Report)

A great post on Bonds: Bond Trading 101 (Pragmatic Capitalism)

Food has 50% weight in the New CPI, and housing, 10%. Releasing 18th Feb (CPI)

James Altucher on writing books with details. (The Altucher Confidential) Incredible – just 14,000 of his "Trade like a hedge […]

By |February 8th, 2011|Categories: Readings||8 Comments

Readings: Guarantees, Neta-Babu, Term Plans

Readings after a hiatus:

Dhirendra Kumar takes a jab at the labour ministry for asking for a “guarantee” of equity returns. The labour min seemingly asks for a guarantee and a minimum return – yeah, what’s different between that and buying government bonds, one would think. The EPFO looks screwed, with the corpus of 5 trillion (lakh cr.) that needs to pay out either 8.5% or 9.5%; if they fall short, they will need the government to put in money.

About 100 years ago: The New York Stock Exchange decreed that commissions of 1/8% is sacred, it will be charged for all transactions, even outside the exchange. From then to now, what a difference. (That’s about 15 basis points, still lesser than what delivery transactions in India tend to cost)

The National Housing Bank (NHB) has increased the risk weights and provisioning for housing finance companies (HDFC, LIC Housing Finance etc.). Loan to […]

By |December 30th, 2010|Categories: Readings||5 Comments

Readings: Bank Elite, MFI, MoneyLife, 99ers

A Secretive Banking Elite Rules Trading in Derivatives by NYT. How the big bankers won’t let in the small guys into the market they control and keep opaque.

At Forbes, In India, Size Does Matter. On how the MFI industry has screwed itself by going national, rather than local. Yeah, that’s true of countries too – when they’ve borrowed from foreigners, it’s that much more palatable to say “let’s default”. And bankers, who only originated credit and packaged the loans they gave to other people. When you don’t know the person who lent you money it’s much more morally acceptable to default in a crisis.

From JagoInvestor, MoneyLife helps a real estate customer get his money back. Indiabulls had encashed cheques (blank cheques!) of a borrower without even lending him […]

By |December 12th, 2010|Categories: Readings, SKSMICRO||2 Comments

Readings: Japan, Expert Advise, Sec Theater

Japan, after the bubble. An old piece but amazingly informative about how real estate screwed that country. In the same context, WSJ on the London Real Estate Bubble.

Moneylife finds that expert advise is often wrong, with a recent example. Forecasting is such a joke.

Chastity, Poverty and Obedience in store for Ireland.

Oh, and they’re blaming the Sensex 1.3% fall on Korea’s tensions. Forget that – the stock went up 1.5% on Monday, I suppose because then the Koreans weren’t tense. And it was down Friday because the Koreans got a foot massage. This reason attribution is so silly.

Hilarious: The TSA in a US airport confiscates a pair of nail clippers from a soldier travelling with a rifle. It can’t get better than this:

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By |November 23rd, 2010|Categories: Readings||Comments Off

Readings: China Raises Rates, Coal India, Bond Yields

China takes rates up 25 basis points. Inflation, it seems. Lending rates are now 5.56%.

Coal India’s 15,000 crore IPO is 1.7 times oversubscribed.

Coal India IPO statistics

For the record: I looked at the IPO document, realized I don’t understand a darn thing about coal, and know just two things:

  • The P/E is 15 or so. This is a commodity. Big and all, but they won’t get a single paisa from this IPO (it all goes to the govt).
  • The issue is already oversubscribed, but retail will perhaps get full only by 21st (when the issue ends)

I’m not subscribing – there are better opportunities out there. (Biocon – yes, even now. […]

By |October 19th, 2010|Categories: Readings||3 Comments

Readings: Dubai, Making Money, A Big Listing

NYT: Canceling Dubai Property Deals Is Nearly Impossible Watch out, there’s an Emaar IPO coming up in India soon.

Ritholtz: Do You Wanna Be Right, or Do You Wanna Make Money?

If you are constantly fighting the tape, if you missed the run up and are now whining about it, let me steer you to esteemed technician Ned Davis of NDR. In his 1991 book Being Right or Making Money, Davis tells the story of missing trades, investments and rallies because they did not fit some expectations of his regarding the economy or valuations or other factors. The title of his book and of this post comes from a  more senior trader, who simply asked him: “Do You Wanna Be Right, or Do You Wanna Make Money?”

Sounds like India, man.

Career […]

By |October 6th, 2010|Categories: Readings||1 Comment

Links: SKS CEO, SEBI Outrage, Cover Stories

Moneylife is pissed with SEBI. I’m not in favour of their arguments; though some of them are forced through for no reason (such as KYC or KYD being made compulsory). Removal of entry load is awesome, as was the trail commission removal at the request of the investor. The point is: If we don’t do these things suddenly, people will not wake up and decide to pay the advisor separately. Imagine if doctors were getting paid by the medicine companies, and offered their services to you for free – would you go? Really? Yes, pharma companies pay docs even today; but that amount isn’t much compared to what they charge patients – and because they charge you, you don’t find them recommending Rs. 500 worth drugs every time you visit them with a fever.

SKS Microfinance fired its CEO Suresh Gurumani yesterday, leading to rumours that it was […]

By |October 5th, 2010|Categories: Readings||2 Comments

Munger’s Chutzpah, Overheating India, PMI

Mish is pissed at Charlie Munger’s Gall, Chutzpa and Unmitigated Effrontery when Munger thanked God Bailouts were given rather than handouts. I agree with Mish – this is rich, coming from a guy who benefited hugely from the bailouts. To tell the working classes to “suck it up and cope” is very very insensitive, and is the exact kind of argument that will provoke the average american to poke him with pitchforks if the tables turn violently. At this point, there is probably enough outrage to say that if there is another crisis, there will be zero public tolerance for a wall street bailout. Which, I really think, is a good enough reason for the people in power to do anything they can to prevent another crisis – precisely because next time, there will be no financial system to speak of. But I digress.

Niranjan Rajadhyaksha asks if […]

By |September 21st, 2010|Categories: PMI, Readings||2 Comments