Chaitanya Patel

Anybody who does a business has to have a business model. Whether it works or does not work is a completely different ball game, but people need to have a business model and make an attempt to make it work.

If you do not have a business model, you cannot create a company, employ people, employ resources, raise debt, capital, …well you just cannot grow it. This is true of any operation – whether it is expected to make money or just render community service like helping the accident victims or run an organisation for helping the needy, poor, children, senior citizens, etc.

Let us take the Financial services Industry and the Running Industry. In the financial services industry the big daddies who make a lot of money is of course the banking industry. Banks make money from you by accepting deposits (and lending it to a borrower at a higher rate), selling 3rd party products (Insurance, mutual funds, Reit, gold, etc.). Mutual funds take your money and manage it for a fee. Immaterial of whether you make money or not the fund house makes money. They love a bull market because they get more investors and their asset management money goes up even more. Good business model. If there are 50 in our country they believe that another 400 can come in and make money.

Life insurance also is a story similar to the mutual fund business.

Then there is distribution of financial products. Banks, national level distributors, brokers are the big players who have a lot of assets and make a lot of money and keep growing the business. There are 4-5 players in the digital aggregation space and they also seem to be doing a good job and will make tons of money going ahead. However there are huge risks in the fund management business and in the distribution business – so much so that the pure mutual fund sellers are a dying community. Will big people with a lot of technological investments be able to make money? Not so sure. This is because the people who sell are not necessarily the best people to give advice on what to buy. Conflict of interest is another issue – so the buyer may not want advice from the guys who sell (or so say the text books).

Then come the financial planners – these are the people who tell you where to invest and how much in each scheme..well these are the people who might ask you to use a model where you reduce the cost of investing by going direct. This is a good method for people who do not need any hand holding.

All models seem to be working. In a country with such pathetic mutual fund penetration, it is obvious that all models need to exist. Not everybody needs an adviser, not everybody needs to go online, not everybody can go direct. Most RMs in banks have a book which runs into crores…All business models work.

Then there are some disruptive people. They write what works for them. No vested interest for sure. No interest in you either. They are evangelists. Narcissism, if you may. Journalists, experts, bloggers, …they generally write based on their own experience. No. They have not met fund managers, operations people, customers, analysts, …nothing. However they can write, so they write.

Some bloggers do not understand what they write. Some write for money. Some write for fun. Some take money and write like they are independent. Some are biased. Some can be bribed. Some are foolhardy. Some can see all the options. Some cannot understand, some will not. Many can be bribed. Some cannot be bribed. Or it has not been attempted bribing him…

Like I said…Many people, many models.

I like the paid model better than the risky ‘free’ model….

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We all know that there was a major demerger in Adani Enterprises yesterday. This involved shareholders getting shares of other companies, and the price of Adani Enterprises settled at Rs. 120 after yesterday’s Rs. 637.

But guess what, a few investors had no clue.

The markets opened at 9:15 am. For the first half hour, there was tiny volumes, but the price of the share kept dropping steadily, until it hit the 120 mark at which point it stabilized. People were apparently buying – in quantities like 5000 shares a minute or so, and the price went from Rs. 500 down, not instantly but gradually. The guy who bought at Rs. 500 would be super-unhappy.

This is very strange and obviously the first set of buyers had no idea this was happening. And it’s not really apparent why there wasn’t any heavy selling either. The first set definitely got gypped – but it really was their fault, since it was well known that the stock would say it.… (Read On...)

The Delhi transporation ministry has rejected the license of Uber and Ola citing legal violation issues and the transportation minister stated that they are working on a special plan to take action against banned taxi services in the capital.

Several teams will be formed to seize the taxis of such companies, said the minister.

The special plan is very simple.

Use the Uber app. Call the cab and seize it!

In the last 24 hours, the cops have caught 158 Uber cabs!

Smart way to implement ban on Uber in Delhi. Traffic Cops call Uber cab using APP, whn it comes, thy impound it. 158 caught in lst 24 hrs

— Anurag Dhanda (@anuragdhanda) June 3, 2015

Who says cops aren’t tech savvy !

And by the way, will this make Uber launch autonomous self-driving cars in India (before US)? #justkidding!

Uber Automonous Vehicle : Bring It ON!

The post This Is How Delhi Cops Are Implementing Ban On Uber [158 Cabs Seized In 24 Hours] appeared first on NextBigWhat.

In a very smart piece, Value Research shows us how crazy our debt levels have gone. Here’s a good list:  (Thanks @b50)

Lanco, for instance, is run by a politician, and has debt levels of 36,000 cr. If you sold all the shares of the company in the market today, you’ll get less than Rs. 1,200 cr. In fact, make that 1,100 cr. because the stock fell another 7% today. Probably someone tried.

This is not a good story but its what repeats in every single of the stocks above. Big debt, promoter pledging, and boom, we have a massive fall in the stock. Bhushan Steel (all you want to know about it) is in such a deep hole no one really knows what to do – they now have over Rs. 38,000 cr. in debt, and are valuing the coal blocks, where allocations to them have been cancelled, at cost because they believe they will be paid back.… (Read On...)

“We trained hard, but it seemed that every time we were beginning to form into teams we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing, and what a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization.” — Roman satirist Petronius Arbiter

I was flipping back through one of my favorite books, Seeking Wisdom, when I came across this quote in the section where Bevelin talks about ‘Do Something Syndrome.’

There is something almost poetic in the way that Petronius so succinctly captures a phenomenon that most of us have been through.

There are numerous reasons why someone may choose action over the more logical course of inaction — some conscious and others subconscious. We may, for instance, act on bad advice when we haven’t done the work to understand a problem, we may succumb to peer pressure, the idea that ‘everyone is doing it,’ we may follow our hearts (and buy that fancy car we really want instead of keeping the reliable one we have), blindly follow the lead of an expert, or, perhaps most dangerously, we may simply want to appear like we are doing something.

Maybe we just can’t sit still. This idea isn’t new.

“I have often said that the sole cause of man’s unhappiness is that he does not know how to sit quietly in his room.” — Blaise Pascal

We all have moments where we fall victim to the curse of Do Something Syndrome. In fact the modern organization is full of do something syndrome. The key is to try and realize when we are doing it and back away.

So next time you feel the urge to do something for the sake of doing something remember these words of wisdom from Bevelin:

The 19th Century American writer Henry David Thoreau said: ‘It is not enough to be busy; so are the ants. The question is: What are we busy about?’ Don’t confuse activity with results. There is no reason to do a good job with something you shouldn’t do in the first place.”

Charles Munger says, ‘We’ve got great flexibility and certain discipline in terms of not doing some foolish thing just to be active – discipline in avoiding just doing any damn thing just because you can’t stand inactivity.’

What do you want to accomplish? As Warren Buffett says, ‘There’s no use running if you’re on the wrong road.’

Still curious? Most of what you’re going to do today is not essential.

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Sponsored By: Greenhaven Road Capital: You think differently - now invest differently.

Most of us want to be DIY but have almost no comprehension of what it takes to be a Do It Yourself Investor. An adviser quickly sizes up the investor and decides how much to interfere with a client or whether there is any need to disturb the client’s learning process.

However all investors need to answer these questions. If they have an adviser he/she should help them through this trauma:

1. If you do not know how much return you are getting in each of your investment (your return not the scheme CAGR. Go and check it out. See if there is a difference.

2. 99% of the people reading this blog will be better off with low cost investing – and in India that need not be the Index.

3. A good fund manager with a good track record will not come free. A good adviser who knows his job will more than justify his fee.

4. It is very difficult beating the market on a consistent basis. Hey, it is not impossible either. Do give it a swing….and I do not know why you keep chasing every trip.

5. Do you really understand conflict of interest?

6. Are you really an aggressive investor ? If the sensex tanks 25% will you buy aggressively?

7. I know you like jargon, but just because you are a contrarian it does not mean you will drive when the signal says stop.

8. I know you invested because of your gut feel, but sir, your gut sucks. My elementary Investment valuation 101 would have warned you against this.

9. Of course I do not like RMs, but your 3 Ulip plans are amazingly stupid investment decisions, but I can live with that.

10. Buying from your RM just because he calls you 1222 times a day is as bad as sexual harassment that your boss did to your young married friend. Just change your bank branch or RM.

11. Your younger age mistakes were much better…your latest Unit linked plan with a committment of Rs. 200,000 per month for 3 years is SUPER AMAZINGLY STUPID. Now go live with that.

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The post Latticework of Mental Models: Redundancy appeared first on Safal Niveshak.

    

There are many financial advisers in the world and many are wondering whether they will be replaced by an algorithm! Sure people can create software that can replace financial advisers, but certain things will keep the client with you, if you do it well:

1. Establish a great relationship: If you are the ‘Go To’ person for your client – whether it is a change of job, or career guidance for their kids, or changing home…if you establish a good relationship, chances are the client will stay with you and not go dating a computer!!

2. Have the guts to be blunt: If you have enough confidence to predict the future, do you have the guts to tell the client what can happen and what cannot? The ability to make the client understand the risk-return relationship, the fact that the next 5 years may see a sub par equity and debt funds run. Do you have the guts to say that the client has to increase his contribution?

3. These days I am seeing IFAs trying to fit too many things because they are afraid that the client will leave. This is funny. If you are an IFA clear the air and tell the client what he can get and WHAT HE CANNOT. Just because he is paying you a fee it does not mean he owns you. BE CLEAR IN YOUR communication.

4. Communicating to each client as per his emotional, psychological understanding is a very important professional requirement. Some clients do not mind discussing their personal life in public, most professionals can handle….

5. When a client visits too many websites, he might get a lot of impossible ideas. Be close to the client, to reality, and tell him what to read, what to believe and tell him like porn, do not build wrong expectations. It does not help in the long run.

and many more!!

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Adani Enterprises seems to have fallen big time. Looking at the stock price, you wonder if Modi’s magic has completely collapsed!

But it’s not like that.

Adani Enterprises has been “demerged”, in a weird sort of way.

Adani Enterprises owned some stuff that were related to ports, power, and transmission. These, they decided, belong in specific companies. Adani ports and Adani Power are already listed entities, so the power plants and port operations move to those companies.

Adani Enterprises had investments in the Belekeri port in Karnataka, and also owned a big stake in Adani ports. This goes back into the ports business. In exchange, Adani Enterprises shareholders get shares of Adani ports (14,123 shares of Adani Ports for 10,000 shares of Adani Enterprises).

Adani Enterprises also had power assets and ownership they will pass on to Adani Power. Shareholders of Adani Enterprises will get 18,596 shares of Adani Power for every 10,000 shares in Adani Enterprises.… (Read On...)

“Work-life balance is a concept that has us simply lashing ourselves on the back and working too hard in each of the three commitments. In the ensuing exhaustion we ultimately give up on one or more of them to gain an easier life.”

Few books I’ve read contain more marked passages and pages than David Whyte’s passionate and thought-provoking book, The Three Marriages: Reimagining Work, Self and Relationship, which argues we should stop thinking in terms of work-life balance.

The current understanding of work-life balance is too simplistic. People find it hard to balance work with family, family with self, because it might not be a question of balance. Some other dynamic is in play, something to do with a very human attempt at happiness that does not quantify different parts of life and then set them against one another. We are collectively exhausted because of our inability to hold competing parts of ourselves together in a more integrated way.

Whyte argues that we come to a sense of meaning and belonging “only through long periods of exile and loneliness.”

Interestingly, we belong to life as much through our sense that it is all impossible, as we do through the sense that we will accomplish everything we have set out to do. This sense of belonging and not belonging is lived out by most people through three principal dynamics: first, through relationship to other people and other living things (particularly and very personally, to one other living, breathing person in relationship or marriage); second, through work; and third, through an understanding of what it means to be themselves, discrete individuals alive and seemingly separate from everyone and everything else.

These are the three marriages, of Work, Self and Other.

These three lifelong pursuits, Whyte believes, “involve vows made either consciously or unconsciously.” Neglecting any one of these “impoverishes them all” because they are not mutually distinct but rather “different expressions of the way each individual belongs to the world.” Our flirtation with each differs and yet we are left to inter-weave the vows into a cohesive person, consciously or unconsciously.

Whyte’s premise is also his conclusion:

We should stop thinking in terms of work-life balance. Work-life balance is a concept that has us simply lashing ourselves on the back and working too hard in each of the three commitments. In the ensuing exhaustion we ultimately give up on one or more of them to gain an easier life.

… [E]ach of these marriages is, at its heart, nonnegotiable; that we should give up the attempt to balance one marriage against another, of, for instance, taking away from work to give more time to a partner, or vice versa, and start thinking of each marriage conversing with, questioning or emboldening the other two. … (once we understand they are not negotiable) we can start to realign our understanding and our efforts away from trading and bartering parts of ourselves as if they were salable commodities and more toward finding a central conversation that can hold all of these three marriages together.

Perhaps this resonates with me more than most because I’ve always found the argument that we should live a balanced life lacking. At its heart this implies we should trade one aspect for another, compromising as we go. To me this trimming of excess in one area to prop up another serves to remove, not create, meaning.

The other argument that Whyte surfaces penetrates the fabric of our human needs: the constant tug of war between our social desires and our need for space. This is another area where we naturally try to find balance and in so doing compromise part of ourselves.

The Three Marriages: Reimagining Work, Self and Relationship “dispels the myth that we are predominately thinking creatures, who can, if we put our feet in all the right places, develop strategies that will make us the paragons of perfection we want to be, and instead, looks to a deeper, almost poetic perspective.”

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Sponsored By: Greenhaven Road Capital: You think differently - now invest differently.

Why do people lose money in the equity market? Well there are many and I have written a lot about this…so a few more:

1. I have seen people take contrarian positions while doing a trade: for e.g. going long on Tata Motors and going short on Tata Steel. The reason? hoping that one of them will be right. This is funny because unless there is some very specific reason for taking such a view such pair trades normally hurt. So this guy who is a TRADER, calls himself an Investor and gets the community a poor name.

2. You have very strong political views and you will be bullish because NDA is in power and you are a BJP supporter: this is bullshit, but true.

3. Your expenses increase 2x your increments. Then there is a leverage asset buying spree also !! So money does not stay with you

4. Your SIP amount assumed that equity will give 18% return, so far your return has been 12%….but you are hoping for a reversion to the mean

5. You are sure that the market will turn around so you are doing SIPs more aggressively. God bless you.

6. You knew of course nothing would happen to you because you are generally healthy. However in one of your trips to London, the walk from the station to the taxi stand had too much of snow and it took a toll of your leg…

many many more….

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A friend with pots of money wanted to invest in RE. So he went to a Mid sized mid Mumbai builder (for So Bo people Worli is not So Bo)…and asked for the price of a flat..he was told Rs. 18 for a flat. He saw a few flats and did not revert to the builder’s manager.

The manager called a few times and when this person said ‘yes i wanted to buy a few flats’ he got his boss the MD/owner to call him.

So they met…and this friend goes with a cheque book visible kept in the top pocket….and the conversation (as told to me) goes like this:

Builder: I heard you wanted to buy a few flats…

Friend: Yes, I have some money to invest for 5-6 years and was looking for an opportunity

Builder: How will you pay

Friend: Cheque, here is my cheque book…and puts it on the table and keeps his pen on top of the cheque book.

Builder: How much money do you wish to invest SIR?

F: I wish to buy 3-4-5 flats..tell me the price

Builder: Sir 4 flats will be Rs. 72

F: Chief that I know the math, please tell me the cheque amount for 4 flats

B: Sir 72 is the sticker price, will give it to you at Rs. 36..immediate cheque..NOW.

F: Here is a cheque for 36..i will leave it with my lawyer…he will whet the agreements…and make the payment across d table…

Moral: My friend got a 50% discount….this was not small.

Learning: My F told me he did not do any home work, but his brother tells me, they did fantastic background work. He found out that a builder in mid Mumbai had a payment to make to a housing finance company and was willing to borrow Rs. 100 for a period of 2 years. He was willing to pay up to 24% interest. This is a very good deal – considering that the was willing to give 10 houses costing Rs. 18 crs – which meant a 50% margin – almost. So this friend of mine knew that the builder was  a) short of cash b) interested in preserving his credit rating c) desperate to sell the flats.

After knowing this he carried out this operation.

Learning for u and me:

We may not be in a position to sign a big cheque, but we can use FB and create a group for buying a flat. Suppose you are able to collect 20 people wanting to buy in Ulwe (a happening place!!! if u believe the RE dominated press). Once you have 20 people YOU can take the initiative buy land and build a building on your own. Instead of that go to a builder (Goldilocks – not too big not too small and negotiate. I will eat my right arm if you do not get a huge, hefty discount – from the builder AND from the financing company – free search fee, waiver of admin charges, discounted rate…..

WE DO NOT KNOW HOW TO BUY REAL ESTATE….THAT IS THE PROBLEM….

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PTI reported today that industrialist Yash Birla, along with four other lesser known businessmen hold Swiss bank accounts as confirmed by the Switzerland authorities.

This news apparently delighted the finance minister who chalked this to successful diplomacy and cooperation between the Modi government and the Swiss government.

Almost all news articles I read talked about Yash Birla as if he were guilty already, and I was unsure as to what the charges were.

It seemed at first that holding a Swiss account that wasn’t disclosed to the Indian IT authorities is what these individuals did wrong, but if that were the case then I wasn’t sure why the Swiss decided to release these five names only. Surely, a lot more than five Indians hold Swiss accounts. Also interesting is the timing of the release because the Indian government does complete a year today, and this timing is rather perfect for them.

Deutsche Welle which is an international German newspaper also reported the story, and had a little more breadth to their reporting because of the international angle that the Indian papers lacked.

DW reports the following:

Switzerland has begun online publication of names of foreigners and foreign firms wanted in tax probes by their countries of origin, including Germany. American citizens are identified only by their initials.

So, from this piece of information you can gleam out that the reason why these names are published is that the Indian authorities have specifically asked for certain individual names from the Swiss stating that the Indian government is investigating these individuals for tax frauds.

The second big question is why the Indian government asked about some individuals specifically, and the article refers to names from the stolen list that became popular some time ago.

So, to that effect these names were present in a list of people who used to have Swiss accounts at one point in time, and now that the Swiss Authorities have confirmed that these people did in fact have Swiss Accounts at one point or the other — I imagine the Indian authorities will encourage these individuals to voluntary declare their incomes under the new Black Money Act and pay the fines per the new regulations.

I assume that Indian authorities will do that because there is still a very long way to go for India to actually get any details of how much money is there in these Swiss accounts or in fact if there is any money at all present there.

Would the people named in the stolen list have done nothing during this time?

And if there is no balance there presently, will the Swiss be willing to share where that money went? I wouldn’t bet my money on that.

I would like to see how this progresses and in fact if the IT department is able to do anything with just this confirmation since it doesn’t actually tell you the amount of money in the account, and I can’t imagine much being done without that information.

Also, if you haven’t read about this at all yet, this is a good article that will catch you up with the parts I assumed you have read already.

Update: An official spokesperson of Yash Birla Group has said that Yash Birla has no individual bank account in his name or in his control.

I was going through a HDFC mutual fund presentation. It has listed some negative things which have happened during last twenty years. Going through that, I developed the idea to write this post.

In 1996, Congress lost the general elections. This resulted in communist supported and participating third front government coming to power. A hardcore communist, Indrajit Gupta, was India’s home minister from 1996 to 1998.

You would also remember that BJP first came to power in 1996 and could survive only for 13 days. So between 1996 and 1998, there was huge political uncertainty and we had three governments in 3 years.

In 1997, Asian financial crisis happened. Much of East Asia went through severe currency crisis raising fears of serious economic meltdown.

In 1998, BJP again formed government, which only lasted for 13 months and was in constant turmoil due to tantrums of coalition partners.

In 1998, Indian conducted nuclear tests. Western sanctions were imposed crippling the country’s financial situation.

In 1999, we had a fight with our neighbour Pakistan. Kargil war brought both the nations to brink of a major confrontation.

In 2000, tech bubble burst. Technology stocks world over crashed eroding investors’ wealth.

In 2001, 9/11 attacks happened, creating a huge geo-political crisis. Markets tanked.

In 2001, Ketan Parekh scam happened. UTI crisis happened. IT stocks in India lost value as much as 90%.

In 2001, Indian parliament was attacked by terrorists.

In 2004 general elections BJP lost. Congress government dependant on left support for survival came to power. There was common minimum program and weekly breakfast meetings. Government has to keep on yielding to the left tantrums to stay in power.

After 2004, the global commodities prices started rising. Oil prices also started rising sharply.

In 2008, global financial crisis, considered as worst financial crisis after great depression happened. World markets collapsed, Sensex dropping more than 50%.

In 2008, Mumbai terrorist attack happened.

From 2010-13, corruptions, scams and scandals started hitting the government. 2G, Common Wealth Games and Coal gate are some of the major scams. UPA-2 was most part immobilised and was fighting one corruption scandal after another.

In 2013, markets panicked due to QE tapering worry. GDP growth slowed down. Current Account Deficit (CAD) and Fiscal Deficit (FD) worsened threatening ratings downgrade. Inflation was very high and the currency weakened.

In 2014, rise of ISIS.

If somebody looked for a certainty or lack of problems, he would have never found an opportunity to invest. Every day newspapers and 24/7 media would have never given him courage to go ahead.

Despite all the above problems, companies have grown, their sales and profits have grown, earnings and hence Sensex has grown, mutual fund’s returns have grown… lot of every day growth which would not make into daily news have been continuing to happen.

As I’ve mentioned earlier, many mutual funds multiplied investor wealth by 40 to 100 times during the above period.

As per a CRISIL study last year, during the past 17.5 years, equity funds as a category has given a return of 22.6%.

Despite worrying events and scary headlines, if one has stayed invested, he would have multiplied his wealth many fold.

Investors who bet on Indian entrepreneurism and the future of this country have been amply rewarded. What set of problems and issues we would face in next 20 years is not known now. But we can be sure that there would continue to be global and domestic challenges, surprises and shocks, scams, bull and bear markets in next twenty years as well.

Despite that we would continue to grow and both quantum and quality of growth would be much superior to what we have seen in the past.

If you believe this and invest accordingly, you can very well be part of this India growth story and reap rewards.

All you need to do is to keep looking far ahead (the bigger picture), ignore every day news, have great degree of patience and give time for your investments to grow into fortune.

Uncertainty would continue. We cannot wish it away. Though it may sound paradoxical, accepting every day uncertainty would bring certainty of wealth in the long run.

Photo Credit: Nic Taylor

There is no getting something for nothing.  There is always a cost involved, even if it is feeling vaguely obligated to listen to the person giving you a gift.  We are social creatures, and we want to favor people who are kind to us.

I get a lot a pitches in the mail because I profile well to wealth managers and those like them.  The age, assets, income add up to a likely client, except that I am in a related business, and am not interested in making my assets less flexible, at least right now.

My advice to you is that you do not respond to free gifts, whether it is good food, baubles, etc.  It’s not worth it, and if you have a need, it would be far better to draw up your own story, and send it to five wealth managers, putting them in competition with one another, so that you can compare and contrast what they do and charge.

Even in my own limited experience, going to free conferences I find that I am the product being sold, and for months thereafter I have to tell marketers that I am not interested — and to the pesky ones point out some flaw in what they do.

Your time is valuable.  So is your money.  Thus remember what I always say:

“Don’t buy what someone else wants to sell you.  Buy what you have researched that you want to buy.”

Thus, make them play your game.  Don’t play their game.  Send out your proposal for competitive bid, and choose the one that is best for you.

Pattabhiraman Murari of www.freefincal.com has asked me to speak for 3 hours on retirement planning. It is difficult to speak for 3 hours on retirement planning, because it is a simple topic and does not take so much time. Please understand being simple means – simple to understand. Not saying it is easy to do.

Like my friend Shammi Gupta. She is a brilliant Yoga teacher. It is very easy and nice to watch her do. Doing it? OMG that is the problem!!

So Retirement Planning 101, let us say consists of the following things:

1. Knowing when you will retire.

2. Knowing how long you and your spouse will live.

3. Knowing how much you will spend in this period

4. Knowing how much your medical expenses will be.

5. Starting to save/ invest as soon as possible  (understanding, and so tapping Compounding)

6. Investing as much as possible, as quickly as possible, and not interrupting the compounding.

7. Understanding asset classes – equity, debt, cash and real estate

8. Understanding asset class returns, standard deviation, mean, and reversion to the mean.

9. Understanding Asset Allocation.

10. Knowing that Cost really matters, and one way of mitigating costs is through higher saving.

That is all. And I am going to speak about just the following items…and nothing new.

You will hear about all this on Friday, 29th May, 2015 at Chennai. Nothing great.

I hope that you realise that 1-4 is a joke – nobody can estimate these 4..so what you have to do is from 5 to 10 !!

Start of with a prayer on your lips, a white board, Pattu’s calculators, and an adviser. Chances are in about 5 years you would have learnt why you do not need an adviser. If the adviser is good he would have delivered good results by now and you would do away with the doubt of whether you need an adviser….

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Productivity is one of the most important metrics when it comes to building a great business and it pays to know when best to rally the troops or retreat and live to fight another day.

According to a survey conducted by JobBuzz, the first two hours of work are the most productive period for most Indian employees. The period managers should expect the least amount of interest from their troops? The two hours after lunch.

Over 65% of the respondents said that they were most productive in the first two hours after reaching office, while the two hours post-lunch was seen as the least productive period by 70% of the respondents.

Hours Spent At Work

Of all the people surveyed, 63% worked between 8-10 hours while the rest reported they worked 6-8 hours. Regardless of the time spent at work, most respondents voted for the first two hours of work being the most productive.

Nearly 70% of those who work 8-10 hours a day and 64% of those who work between 6-8 hours a day voted for the first two hours of work to be the most productive. This clearly shows that spending more time at the office doesn’t really assure that more quality work gets done.

Experience

In terms of experience, the more an employee has of it, the more probable it is that the first two hours at work are their most productive. Over 80% of senior and experienced professionals said they were most productive in the first two hours.

Entry and mid-level employees too voted for the first two hours being their most productive, but they also felt the last two hours were quite productive.

Male v/s Female

Of the respondents that took part in the survey, 56% were comprised of male and 44% female. While 88% of the male respondents said the first two hours of work were the most productive, only 37% females shared the opinion.

A further 32% of the female respondents found that the two hours before lunch was the most productive period in their work day. This shows that more female than male employees are productive post lunch.

The Monday Culture

The survey found that 45% of the respondents said Monday was the most productive day of the week, while 19% voted for Wednesday. The least productive day of the week turned out to be Thursday.

The percentage of employees who felt Monday was the most productive went up to 50% in the case of startups. 40% of the respondents working for large corporations said Monday was the most productive day, while 30% voted for Wednesday.In terms of experience, 80% of employees with over 5 years experience voted for Monday being the most productive day. When it came to entry and mid-level employees however there was a 50-50 split between Monday and Wednesday being the most productive day.

In terms of experience, 80% of employees with over 5 years experience voted for Monday being the most productive day. When it came to entry and mid-level employees, however, there was a 50-50 split between Monday and Wednesday being the most productive day.

The post India.Inc Employees Are Most Productive In The First Two Hours At Office appeared first on NextBigWhat.

“You can reduce the number of mistakes you make by thinking about problems more clearly.“

In his book Think Twice: Harnessing the Power of Counterintuition, Michael Mauboussin discusses how we can “fall victim to simplified mental routines that prevent us from coping with the complex realities inherent in important judgment calls.” One of those routines is the inside view, which we’re going to talk about in this article but first let’s get a bit of context.

No one wakes up thinking, “I am going to make bad decisions today.” Yet we all make them. What is particularly surprising is some of the biggest mistakes are made by people who are, by objective standards, very intelligent. Smart people make big, dumb, and consequential mistakes.

[…]

Mental flexibility, introspection, and the ability to properly calibrate evidence are at the core of rational thinking and are largely absent on IQ tests. Smart people make poor decisions because they have the same factory settings on their mental software as the rest of us, and that software isn’t designed to cope with many of today’s problems.

We don’t spend enough time thinking and learning from the process. Generally we’re pretty ambivalent about the process by which we make decisions.

… typical decision makers allocate only 25 percent of their time to thinking about the problem properly and learning from experience. Most spend their time gathering information, which feels like progress and appears diligent to superiors. But information without context is falsely empowering.

That reminds me of what Daniel Kahneman wrote in Thinking, Fast and Slow:

A remarkable aspect of your mental life is that you are rarely stumped … The normal state of your mind is that you have intuitive feelings and opinions about almost everything that comes your way. You like or dislike people long before you know much about them; you trust or distrust strangers without knowing why; you feel that an enterprise is bound to succeed without analyzing it.

So we’re not really gathering information as much as trying to satisfice our existing intuition. The very thing a good decision process should help root out.

***
Ego Induced Blindness

One prevalent error we make is that we tend to favour the inside view over the outside view.

An inside view considers a problem by focusing on the specific task and by using information that is close at hand, and makes predictions based on that narrow and unique set of inputs. These inputs may include anecdotal evidence and fallacious perceptions. This is the approach that most people use in building models of the future and is indeed common for all forms of planning.

[…]

The outside view asks if there are similar situations that can provide a statistical basis for making a decision. Rather than seeing a problem as unique, the outside view wants to know if others have faced comparable problems and, if so, what happened. The outside view is an unnatural way to think, precisely because it forces people to set aside all the cherished information they have gathered.

When the inside view is more positive than the outside view you effectively have a base rate argument. You’re saying (knowingly or, more likely, unknowingly) that this time is different. Our brains are all too happy to help us construct this argument.

Mauboussin argues that we embrace the inside view for a few primary reasons. First, we’re optimistic by nature. Second, is the “illusion of optimism” (we see our future as brighter than that of others). Finally, is the illusion of control (we think that chance events are subject to our control).

One interesting point is that while we’re bad at looking at the outside view when it comes to ourselves, we’re better at it when it comes to other people.

In fact, the planning fallacy embodies a broader principle. When people are forced to look at similar situations and see the frequency of success, they tend to predict more accurately. If you want to know how something is going to turn out for you, look at how it turned out for others in the same situation. Daniel Gilbert, a psychologist at Harvard University, ponders why people don’t rely more on the outside view, “Given the impressive power of this simple technique, we should expect people to go out of their way to use it. But they don’t.” The reason is most people think of themselves as different, and better, than those around them.

So it’s mostly ego. I’m better than the people tackling this problem before me. We see the differences between situations and use those as rationalizations as to why things are different this time.

Consider this:

We incorrectly think that differences are more valuable than similarities.

After all, anyone can see what’s the same but it takes true insight to see what’s different, right? We’re all so busy trying to find differences that we forget to pay attention to what is the same.

***
How to Incorporate the Outside View into your Decisions

In Think Twice, Mauboussin distills the work of Kahneman and Tversky into four steps and adds some commentary.

1. Select a Reference Class

Find a group of situations, or a reference class, that is broad enough to be statistically significant but narrow enough to be useful in analyzing the decision that you face. The task is generally as much art as science, and is certainly trickier for problems that few people have dealt with before. But for decisions that are common—even if they are not common for you— identifying a reference class is straightforward. Mind the details. Take the example of mergers and acquisitions. We know that the shareholders of acquiring companies lose money in most mergers and acquisitions. But a closer look at the data reveals that the market responds more favorably to cash deals and those done at small premiums than to deals financed with stock at large premiums. So companies can improve their chances of making money from an acquisition by knowing what deals tend to succeed.

2. Assess the distribution of outcomes.

Once you have a reference class, take a close look at the rate of success and failure. … Study the distribution and note the average outcome, the most common outcome, and extreme successes or failures.

[…]

Two other issues are worth mentioning. The statistical rate of success and failure must be reasonably stable over time for a reference class to be valid. If the properties of the system change, drawing inference from past data can be misleading. This is an important issue in personal finance, where advisers make asset allocation recommendations for their clients based on historical statistics. Because the statistical properties of markets shift over time, an investor can end up with the wrong mix of assets.

Also keep an eye out for systems where small perturbations can lead to large-scale change. Since cause and effect are difficult to pin down in these systems, drawing on past experiences is more difficult. Businesses driven by hit products, like movies or books, are good examples. Producers and publishers have a notoriously difficult time anticipating results, because success and failure is based largely on social influence, an inherently unpredictable phenomenon.

3. Make a prediction.

With the data from your reference class in hand, including an awareness of the distribution of outcomes, you are in a position to make a forecast. The idea is to estimate your chances of success and failure. For all the reasons that I’ve discussed, the chances are good that your prediction will be too optimistic.

Sometimes when you find the right reference class, you see the success rate is not very high. So to improve your chance of success, you have to do something different than everyone else.

4. Assess the reliability of your prediction and fine-tune.

How good we are at making decisions depends a great deal on what we are trying to predict. Weather forecasters, for instance, do a pretty good job of predicting what the temperature will be tomorrow. Book publishers, on the other hand, are poor at picking winners, with the exception of those books from a handful of best-selling authors. The worse the record of successful prediction is, the more you should adjust your prediction toward the mean (or other relevant statistical measure). When cause and effect is clear, you can have more confidence in your forecast.

***

The main lesson we can take from this is that we tend to focus on what’s different whereas the best decisions often focus on just the opposite: what’s the same. While this situation seems a little different, it’s almost always the same.

As Charlie Munger has said: “if you notice, the plots are very similar. The same plot comes back time after time.”

Particulars may vary but, unless those particulars are the variables that govern the outcome of the situation, the pattern remains. If we’re going to focus on what’s different rather than what’s the same, you’d best be sure the variables you’re clinging to matter.

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Sponsored By: Greenhaven Road Capital: You think differently - now invest differently.

Scrabble just added 6,5000 new words to the official word list. For those of you who play, that can mean more opportunities to use that Q on a triple word square. Good news all around! But, does this mean that a word that is allowable in Scrabble should automatically make it into the office?

Of course not. Just because Scrabble says something is a word doesn’t mean using it in a business setting is an appropriate thing to do. Sure, if you’re discussing Inuits at the office, go ahead and throw out “quinzhee,” a newly approved word which means a snow shelter (which would undoubtedly be a game winner in an actual Scrabble game), but don’t be shocked if your coworkers look at you blankly. But, the following Scrabble approved words? Save them for the weekend competition.

1. Bezzy, as in your best friend. “Jane is my Bezzy,” should never come up. Come to think of it, leave out “Jane is my BFF” as well. We are not in 7th grade anymore.

To keep reading, click here: No Matter What Scrabble Says, Don’t Ever Use These 10 Words at Work

In the past few days whenever I’ve thought of PM Modi’s first year – the thought of President Obama’s two terms have also come to mind.

The strong parallels between the two are inheriting a really bad economy, and coming to power with a lot of fan fare, hope and optimism.

The other parallel is that both made campaign promises that could never be delivered for such is the nature of campaign promises.

I think it is a reality of politics that things said during campaigns are akin to stretch goals that can hardly ever be met. For instance, I don’t think anyone seriously thought Congress could spend a trillion dollars on infrastructure which is something they promised during their campaign. However, the nature of the two campaigns made people expect that a lot will be delivered.

Things have gradually improved in the US under President Obama, and US has probably had the best recovery of any nation after the Great Recession. This didn’t always seem to be the case, and in fact a lot of people will still disagree with the statement that the US has in fact benefitted from his presidency even now.

I believe that things have gradually improved under PM Modi as well and while they have taken some bad steps like pushing a Land Bill which is unfair to the landowner , not doing enough to allay investor fears on retrospective taxation, or playing with the idea of making people disclose foreign travel on their income tax forms, they have taken some good steps as well, and perhaps the most significant among them are delivering a scam free year, and moving legislation on various issues which are all work in progress.

They are obviously aided by external factors (fall in commodity prices) like they have been hampered by external factors (bad monsoons) but on the whole – the government is functioning, and that unfortunately is the only bar they had to cross since the last government screwed up things so badly.

I believe that under the current administration, aided and hindered by external factors as well as the federal government structure, and a vociferous opposition — the country will continue to do much better than it did in the ten years of the previous government’s rule. This will always be less than what Modi promised during this campaign but unless things change dramatically, it will always be more than what Congress can deliver under Rahul Gandhi, and therefore I feel Modi will get a second term much like Obama, and at the end of the decade, when you look back you will see that things are better than they were at the beginning of the decade even if they aren’t as good as you expected them to be.