holdyourthoughts

This book reads more like a novel than a piece of historical work. It captures the turn of the century and the political intricacies during the period of 1988 to 2008. During this period there were wars, changes in US presidency and great turmoil in the world. Bennet does a competent job of capturing them. The book would have beeb much better had the author tried to go behind the reasons of historical events rather than just being a chronicler of it. So, in effect the books reads more like a collection of newspaper articles pieced together in a very nice fashion.

Last week during our lunch break at work, we got into a discussion on why company executives are so hung up about short term performances instead of focusing on the long term improvement of the company. We see this everyday. Companies lay off people during bad times and then hire back with a gusto when business is booming, often at multiple times the compensation that was paid to the person who occupied the position before. This is so true in the IT industry in India. My friend, Amit, concluded that all this 'evil' was due to the "short-termism" created by being intently focused on the short-term stock value - the proverbial quarter end numbers. Amit attributes all that is wrong in the corporate system to this short=term view of life and the force that the stock markets exert on individuals as the incentive to outperform earnings is extraordinary. I thought about this theory while driving back from work. I have a couple of objections to this line of thought (that the ...

Last few weeks, two important pieces of legislation were taken up by the Indian Parliament. The first was the reservation of one-third of the electoral seats for women and the second was the passage of the bill to guarantee education to children. I am skeptical of both these. Let me tell you why. A lot has been said and written about the women's reservation bill. Any form of reservation is, to my mid, a step backwards. Instead of empowering people to excel it creates a coterie of "entitlers" (if I may be permitted to call them that). We have seen this so many time is the past through the SC/ST and other similar reservations. It does very little to impact and uplift the poorest of the poor and is mostly cornered by the people who are at the top of such groups (the so-called "creamy layer"). Since, it is a difficult political setup, no one has the courage to challenge the status quo. It will be no different for the women's reservation. The seats will be corner...

The IT sector stocks have been on a sweet spot for some time now. The US markets were improving (or rather showing signs of not going into a depression) and some semblance of business sense were returning. This was getting reflected in the valuations of the IT stocks. I think the party may be over for the time being. The currency printing frenzy in the US is more than likely to produce high inflation in the US and a weakening of the dollar. This is likely to impact the dollar arbitrage business fairly negatively for these companies. I have no idea where the dollar-rupee exchange rate will go, but even a 10% weakening of the dollar (around Rs. 40 for a greenback) would mar the prospects of remarkably. Now, let us think what what these companies can do to fend off the currency challenge. It can hedge it's currency position (net zero hedge position) Reduce it's onshore employee strength Look to increase geographic diversification (spread off into countries like Vietnam, Philippine...

I strongly believe that moat as a concept is somewhat illusory. All businesses tend to become commodity after a point, when more and more competition sets in. Look at the business history over a 100 year period and you will find it very difficult to find companies which have sustainable business advantage. A case in point is newspapers. Even the great and venerable Warren Buffet used to think that his holding in Washington Post to be a bullet proof investment because in his own words "You can't beat a good newspaper business franchise". However, 50 years down the line Washington Post is struggling to make money. Times change, consumers change, preferences change. As in life, there is nothing permanent about business, other the promise of change.

I saw a great post from Michael Hyatt today. It was about why we cannot complete our work. It's has some great tips. In fact, I can vouch for nearly all the 10 points as I practice them personally and have been greatly benefited. Read the post here .

I just finished reading Liar's Poker by Lewis, an account of the early career of a Saloman brothers bond salesman. The book captures the culture and work ethos of a famous Wall Street investment bank and exposes the motives of people who run the business. The fact that the whole business was managed with only short term goals in mind and the customer's interest came last (after personal, followed by Saloman's) is etched into the reader's mind. Also, the hypocrisy perpetuated regularly by the management exposes the emotions of how fear and greed works in the market. Liar's Poker raises fundamental questions in the mind of the discerning reader. Are the interests of the customer ever foremost in the mind of the the broker or is the broker out to make a killing for himself and his firm? Are the tie-dangling MBAs hired by these brokers who walk and talk like financial wizards have any knowledge of the markets or are they just parroting what they have picked up second-h...