IPL Terminologies

What they don't tell you in IPL sponsorships ( much like what they don’t teach you at Harvard). All imaginary

DLF Maximum - really denotes the amount of time you have to wait after booking an apartment with them

Citi Moment of Success - really denotes their success in palming off those billions of losses into the taxpayer kitty via a US Govt bailout...

Karbonn Kamaal catch - really means their success in finding yet another scape goat to buy one of their phones

MaxMobile Timeout - really denotes what their Network will do to you when you are right in the middle of the most important telephonic conversation of your life!!!

Why did God create everything?

Most religions of the world tell us how the world and all living beings were created. However, there is hardly any explanation ( from my limited knowledge) on why God created the Universe, the World and all living beings.

I have heard that according to Christianity ( I believe it is in the Genesis), there is a mention on why/ how light was born. “And God said, Let there be light: and there was light.” Apparently, the light was made before either Sun or Moon was created: therefore we must not attribute that to the creatures that are God's instruments, which only belong to God.

Hinduism takes a similar approach to explaining it. The Mandukyopanishad takes a shot at explaining the why part. According to Chapter 1 verse 7,

“As the spider sends forth and draws in its thread, as the herbs and plants sprout from the earth, as hair grows on the head and the body of a living man—so does everything in the universe arise from the Imperishable.”

The moment the word Creation is mentioned, we tend to think of God as being separate from the creation, as if He is a pot-maker, collecting mud and making pots from it. This verse above from the Mundakopanishad completely denies this scenario- that the Creator is separate from the Created. The Created, much like the web, are part and parcel of the spider ( The Brahmam).

In the above, anaology, one may argue that the spider weaves the web for it’s personal gratification ( and hence the suggestion that God’s creations too are for similar reasons). However the second analogy of the herbs and plants, to me, seeks to fortify the argument that there was, after all, no real purpose behind God’s creations, and that the act of creation itself is as a result of his “Lilas” or , crudely put, “playfulness”. The sprouting of herbs and plants on earth is without motive and devoid of any specific reasons. Now, to counter any possible argument that the Brahmam or the Supreme is inert or lifeless, perhaps the third analogy of hair growing out of the living man is given- signifying a Conscious Living, Vital personality- full of positive energy.

A better analogy, in my opinion, was given by Suki Sivam in one of his discourses. He describes how a child brings out his toy box, takes some play things to outside the house, plays till as long as he feels like, and in a manner he feels like, and the moment he thinks he has had enough, he takes them back into the house. Can anyone ascribe any reasons for the child brandishing his wares in the first place? Or the way he played? O rthe duration? Nothing but whimsical. Suki Sivam agrues that God’s creations are like the child’s play – no motives can really be ascribed.

Suki Sivam goes one step further to argue that it is pointless to delve into why God created the Universe and the living things, and in particular, mankind, as if to answer the question “why was I born?” in the first place. He mentions that instead of spending on the why part, we just need to acknowledge the fact that we all are here, along with all of God’s other creations, and , instead, focus on what we need to do till the time we all are on this earth. Makes common sense, doesn’t it?

The iPigs are coming

This is the age of i. Anything from iPods to iPads, everything now-a-days is christened with an appendage “i” . Perhaps it connotes the EGO of the self , or the self-centric approach to life that the Human Race has taken to, in the 21^st century, and coincides well with the technology mania that has gripped much of the 21^st century.

I decided to fall in line. After all, “i” pervades all, and “i” am no exception. The result , is iPigs – a rip-off, if you will, from the clichéd acronym. No, I am not manufacturing ham as yet. And I am still keeping my hands off Farmville (that contraption for time-pass in am even larger contraption for time-pass Facebook).

iPigs, in my fantasy, are the five European countries , which could ultimately contribute to the demise of the Euro as a Unifying currency in the European Union. Switzerland, Denmark and a handful of other countries were wise to keep their hands off the Euro, while a few other Big Brothers bit the bullet in the late nineties, and now are busy licking their economic wounds. The cause of the wounds? iPigs, of course.

Ireland, Portugal, Italy (to a lesser extent), Greece and Spain constitute the iPigs. In my opinion, these never deserved a strong currency like the Euro, in the first place. Everyone knows the value of the Lira before Italy embraced the Euro. Or, for that matter, the Escudo in Portugal. If ever you visit these countries, the disparity is there for all to see. Germany, France and the other Big Brothers are well and truly ahead of the pack in terms of material prosperity of the people. This is aptly backed by economic data.

Case in point – exports from Germany, in 2009 are estimated to be only a fraction lower than that of China, in US$ terms. Contrast that with Greece, which runs a budget deficit of close to 14% of GDP. Clearly shows that it does not produce enough to qualify to be in the same Industrial league as its more illustrious cousins across the Adriatic Sea. In normal times, the IMF would have swooped in and branded Greece a Banana Republic by now. But then we are not living in normal times! The pressure on IMF from the USA and Euro Zone, to desist from such “unwarranted” branding is palpable.

I strongly suspect that the Euro as a single currency may not see the light of the next decade.

Everyone is calling out the fall of the US$. But it continues to defy everyone. In my opinion, that is not because of any inherent strength in the US economy or the dollar itself, but the TINA factor ( there is no alternative). If people have to pull the rug from under the Dollar’s feet, where do they then park their funds? The Yuan? Chairman Mao will surely be turning in his grave. Gold? Bretton Woods made sure that gold will not take tha spot any more. The British Pound? That currency’s strength is history now. The Yen? Of late, the Yen is the punter’s paradise, being used ( and abused) for carry-trade. And Japan is a declining economy, and I do not see the Yen taking over. That leaves it to the Euro… hmmm, think of the Portuguese and Greek currency becoming the de facto reserve currency. I am sure the world is yet to come to such a pass.

At the risk of being snubbed, I stick my neck out and predict two things:

• Strong chance that the Euro may not survive as a single currency of the EU for too long, given these vast economic disparities.
• I suspect that the Deutsche Mark, in such a scenario, may well make a comeback, and with a bang.

Eurozone decline

On my recent visit to Europe, I had observed something that was unprecended. Something similar to what I had seen in Australia in the late 90s and early 2000s. During my past visits to Europe, I had observed that all things at boutiques and super-markets were horrendously expensive on a dollar-on-dollar basis, compared to the rest of the world. But, most of the articles were manufactured somewhere in the Eurozone, and things had just started flowing in from Eastern Europe. Chinese goods were few and far in between.

Things have turned topsy-turvy since then. The prices remain as high as ever. The supply side is the shocker, though. The percentage of Chinese-made goods has increased dramatically. This is shocking, because, I found the same cheap goods that we find in other parts of the world, strewn all over the pavement shops, as well as supermarkets, in Europe, and to me, that goes against the grain of the classical European psyche of a quality-consicous population. Even more shocking is the amount of fake goods being peddled on the pavements and pavement shops, much to the detriment of the branded goods companies.

To me, Europe may be undergoing what the USA underwent starting the end-70s – compromise on quality and focus on cost management. Who does that approach benefit in general? The “entrepreneurs” in Europe, of course. They are able to source goods a fraction of what they used to pay for earlier, and still maintain the same price points – meaning bountiful profits in the short term. The Chinese manufacturers are, of course, happy with the copius exports that will keep their factories humming.

What are the ramifications in the long run, of this trend, apart from the apparent compromise in quality of goods? Firstly, local manufacturing will suffer significantly lower outputs, and even large scale closures. However, many of the EU countries have a solcialist fabric, and firing workers or closing down factories is not as easy as in the USA. This would precipitate a crisis with the European business owners, who will face a double-whammy of falling output and high fixed costs with no flexibility. They may eventually lobby and get the Governments to absorb this unreasonable cost of doing business. But then, who ultimately bears the cost of all this? The poor tax payer, who already pays upwards of 50% at peak income tax rates, in many EU countries.

Secondly, if the Govt blinks, and allows retrenchments ( which in any case wont be easy), then job losses will mean purchasing power of the people will come down significantly, like what is happening in the USA today.

In short, this is likely to lead Europe to a USA-like situation, in the future. As of now, job losses are not as significant as they are in the USA ( with the possible exception of Germany), but for how long can the hold off?

To me, this puts the question of the Euro Zone in future, as an economic bloc.

Investments in the Indian markets- 2010

Guys, I sometime back, I had mentioned that I started entering the indian
markets, post election results May 2009. Since then, I have invested in
roughly about 90 different stocks, with an everage return of about 40%. Nothing
great, considering the fact that the Sensex then was about 14500 or so.
Marginally better than the index rate of return, but nothing earth-shattering.
Some stocks have risen very modestly and some have been multi-baggers, but
overall, quite a muted performance. And I am not unhappy with it. Reason? - I
had exited the market just before the elections, expecting yet another hung
parliament. The people proved me wrong ( no thanks for that), but by the time I
quit the market, I had booked quite decent gains, since Oct 09. Remember, I was
practically out of the market from Aug-2008 till Oct 2009, since I believed that
valuations had then hit the roof.

Cut back to Jan 2010. The market currently trades at a FY 10 PE of 20+,
indicating that upside potential is limited. On the other hand, with the
impending meltdown 2.0 of the US Financial system ( God know when and how much
that will impact), the downside risks in the shorter run appear to be high. I
am not yet pulling my money out of the market, since I see free money, derieved
from near-zero interest rate funds in the US and Euro zones - what is commonly
referrred to as carry trade- continuing to drive the Asian markets higher.
Remember, other Asian markets have given even better returns over 2009 than the
indian market. The trick now, is to time the exit and wait for yet another
round of correction.

My recommendation for those of you who think they have missed the current run is
- WAIT for the correction, and then get in. If you dont want to wait, then the
next best alternative is - invest regularly in small and equal amounts every
months, and ride the ups and downs, with a view to staying in the market for the
long haul.

On the sectors, I had written in this forum in Oct 2008 about my contrarian
positions that I was then taking in SUGAR sector, since I believed that it was a
cyclical business. My sugar portfolio has given my close to 300% returns since
then.

If there is one sector that I see as contrarian right now, it is REALTY sector.
But I am not willing to thrown in my hat just yet. Reason? The impending
interest rate hike, which I expect to take place between March and June. That
will dampen activity in the sector even more. The other industry that will be
affected by interest rate hike is the two-wheeler biz. The car makers are
realtively more immune to it.

Sectors to watch out for :

1. Banking , Auto and Realty - without these three industries showing good
growth, there can be no India Growth Story.

2. Cement - has excellent potential with infrastructure gaining importance , but
I expect a glut starting 2H 2010 with all new capacities expected in 2009 coming
on streaming ( due to delays) this year.

3. Steel - grossly over-rated . There is a glut in world steel production, and
the Chinese are cutting down on further investments in Steel factories. Without
the American consumer growing in the real sense of it, there can be no growth in
commodities.

4. Sugar - has more or less had it's run. Expect heavy political noises to bring
down the prices. Add to it, Brazil is expecting a good crop this year, and that
will help stabilize prices.

5. Power - invest only if you have the appetite to wait for 5 years. Returns
wont be immediate.

6. infrastructure - has had it's run. Upside will be selectively good. Pick the
right companies to invest, and stay invested for the long term.

7. FMCG, Pharma - I am never a fan of these over-hyped industries.

8. IT Inudustry - virtually none.


Any specific stock picks for me? Short-term - NONE ( infact exit the market).

Long term - if I were to invest today for the long haul, here are a few picks -

1. Axis Bank - has the best potential among private sector banks in terms of
growth . Be aware of impending interest rate hikes, and expected increases in
NPAs ( write-offs) across the sector.
Sate Bank of India - as long as Indian Government transactions continue to
happen through SBI, expect it to do very well.

2. Crompton Greaves - I expect this to become an Indian MNC over time. Has the
management expertise, and the vision for it. Over-priced right now - wait for
corrections.

3. L&T and Reliance - the usual suspects . There can be no India growth story
without these.

4. BEML and BHEL - strong and steady orderbooks in their respective fields.
Strong execution capabilities. Plus possible further divestment.

5. Shree Cements - Extremely strong balance sheet. Strong growth of over 28%
compounded YTY. One for the cement industry. Expect short term pricing pressures
due to impending glut.

6. Renuka Sugars - strong managment, diversification into Brazil in a big way.
Risks - sugar is close to peaking, if not yet already there.

There are a few other small-cap stocks that I am risking my personal bet on.
Either turn-around cases, or companies with good order visibility and
comparatively low PE even today. They are far riskier though.

I have shared with you, my actions so far, and my thoughts on possible picks.
These are purely mime, and in no way constitute any recommendations for you.
Please do you own homework before deciding what is best for you.


Have fun, investing ( and punting) in 2010!

Cheers... Dilip

Food and mankind

We are living in jet age, where the name of the game is swiftness. Everything is in the fast lane - including food. Many ancient cultures had strongly believed that the secret to mankind's well-being lay in the kind of food being consumed and the way it is to be consumed. Hinduism strongly advocates that the main cause of health problems is not lack of food but conflict within the body due to "incompatible" food.

Today's fast world seems to have thrown all age-old and tested food practices away. One of the main requirements of food- freshness , has been compromised for the sake of "convenience" ... courtesy the refrigerator at home, and deep-freeze devices in shops and super-markets. No one has apparently questioned the wisdom of storing foodstuff in plastic containers, and the kind of chemical reactions plastic may undergo with such food, and their consequences. Cling-wrap plastic clings to all kinds of fruits, vegetables and ready-to-eat food closer and tighter than the eager girl clinging to her boyfriend in the Metro station. We all know the almost foregone consequence of those two love-lost souls clinging, but what about cling-wrap on food? No one knows how a strong ingredient like turmeric can react to plastic when stored in plastic bottles and sachets.

Is this the price we all have to pay for being "modern"? Does leading a fast life necessarily mean that we compromise on our health by artificially creating conflict in the body through "contaminated" food?

Is this natural part of human evolution? Or is Kalki on His way here sooner rather than later?

The other side of the Outsourcing coin

Recently, I happened to visit the USA on work. I was in Raleigh, North Carolina for over a week, and had gone round the town with my cousin, who lives there.

I distinctly remember my earlier visit to the same facilities of my employer about four years ago. My colleagues in the US had recommended me a hotel as the one to go for, since it was not too far away from the office, and, more importantly, was right opposite a huge mall, which housed some of the biggest names in US retailing – Sears, Circuit City, Best Buy, et al, not to mention the usual Abercrombie, Toys r Us, and the plethora of clothes shops. And not to forget, the many options for eating, including a massive outlet of The Cheesecake Factory. I am a sworn veggie, and, not surprising, subsistence on the veggie fare in the US has never been a problem.

My visit in 2005 was memorable for a few things – I was awed by the sheer size of my office campus – about 13 blocks, with a capacity of over 25000, and a few assembly units housed in, as well. The second was, my difficulty in getting myself lodged in this hotel of choice- the waitlist was significant, because Raleigh used to be a bustling centre for Technology and Research. The third was the bubbly crowds thronging the mall in the evenings- I used to enjoy the time I had there, hanging out with my colleagues, chatting away on office-nothings, while enjoying the cheesecakes.

Cut to August 2009. The first surprise came from the hotel. I was able to get accommodation without a whimper. “This is the school vacation time and so people may prefer to visit the sunny beaches instead of workplace”, I thought to myself. The second surprise was in store at JFK. Gone were the long lines in front of immigration. Sure, they had added more counters to make the traveler experience a little smoother. “The biometric scanning system has surely reduced the service time per entrant, plus the added counters have eased the pressures”, I told myself. I landed in Raleigh shortly, and, surprise of surprises, the hotel was just not crowded. “Is it the school vacation time that is causing the drop in occupancy?” I asked the hotel front desk – and got back a wry smile in return. I still did not quite comprehend the meaning of it then.

I was greeted in the office by empty parking lots. “The same school vacation time”, I consoled myself, and immersed myself in meetings. As I interacted with the local folks, I could clearly see desolation and fear in their mannerisms. A sense of déjà vu, as it were. I was told later, that the occupancy level of these company-owned premises is only about 30%. I could see the symptoms of something sinister, but could neither fathom it in full, nor the undercurrents of it. As it turned out later, not just my employer, but almost all employers in that area, as in many other areas in the country, have cut back on jobs, causing unprecedented levels of low-occupancy.

The usual gathering for supper turned out to be rather unusual. The colleagues turned in, as usual, and we took a quiet corner of the Cheesecake Factory outlet, chatting away to glory. But the usual humdrum in the restaurant was missing. The crowds clearly were thin. I asked my American colleagues what the matter was. The same wry smile, in return. One of them finally down the remnants of the Screwdriver in his glass, cleared his throat, and told me something that was heart-wrenching. He said “blame it all on Outsourcing”. That is when reality hit me on the face. The Cheesecake stopped being cheesy from that moment. I was putting up a brave front in front of my colleagues, and kind of brushed aside that point, but deep inside me, I was badly shaken. I went through the motions of supper, got back into the cozy confines of my hotel bed, and was deep in contemplation.

Clearly, America is a nation in transition, but to me, in the path towards terminal decline. The 70s and 80s saw manufacturing jobs being put on those huge transcontinental cargo ships to Asia, never to return. “Motor city” (Detroit) soon turned into “city of rusted steel”. Manufacturing was all but wiped off the face of the Land Of Opportunities, to the point that even toothpicks were imported. America had then consoled itself in “moving up the value chain” by focusing on the Services Sector. But that did not last long, either. What started as a trickle of I.T. programming outsourcing, had soon turned into a deluge of outsourcing everything from simple programming, to backend office processes, to HR to R&D… this deluge has clearly inundated Raleigh and the other cities with jobless families, struggling to make ends meet. People have resorted to literally selling their family silver. “For sale” boards in front of what once were cozy homes for happy families are now ubiquitous.

The many I.T parks and the economic prosperity that one now witnesses in India, to me, are clearly at the expense of the US and other developed western Countries. For every house that has risen in value of a house in Jayanagar, Bangalore, from a few lakhs of Rupees not so long ago, I felt that one house in Raleigh (and other towns) is going up on distress sale, as it were.

The typical confused Indian in me suddenly woke up. “Is this not Adharma (injustice)? Is my country’s prosperity not directly linked with the downfall of another nation? Am I not prospering by pulling houses down on the other side of the globe?” The socialist within me explained “ well, the British did exactly this to India for centuries, plunging the country into penury from which we are struggling to extricate ourselves, and maybe this is pay-back time- after all the Chinese showed no such compunctions when manufacturing jobs were transplanted into China”. The sham of a scientist within me woke up and said “well, this is typical Darwinian theory – survival of the fittest. So don’t be too bothered, because, tomorrow, someone else will overpower you when your fitness level goes down, just as is happening to the US now”. The economist in me tried to pacify “the law of Diminishing marginal Utility will make sure that India will be shown its right place on the economic ladder soon, unless it learns to move up the value chain fast”.

Is what we are doing as a nation right or wrong? Are we justified in (metaphorically speaking) snatching some else’s job and prospering at the expense of their well-being? What will happen to those families who had built their lives around dreams of a more prosperous future, only to see them crumble like the Twin Towers, right in the front their eyes? Is this righteous, or is this plain Adharma? Why does one nation have to prosper at the expense of the other? Isn’t the world big enough to offer opportunities to all, so that one does not have to step on another’s toes? I have been struggling to find an answer for this, ever since my return, a month ago.

Somewhere, back in my mind, the echo of my mother’s feeble recitation of a Sanskrit prayer mildly reverberates,

“Kayena vacha manasendriyairva
Buddhyatmana va prakrite swabhavath
Karoomi yadyad sakalam parasmai
Narayanayeti samarpayami” , which broadly translates to

“Whatever I do with my mind, body, speech or with other senses of my body,
Or with my intellect or with my innate natural tendencies”
I offer everything to Narayana (God).

©Dilip Subramanian