Many people ask me this question.

Subra why should we invest in equities and equity funds only?

My logic is simple. You save in post office instruments, bank fixed deposits, etc.

You invest in asset classes which fluctuate in annual returns. So when you put money in equities, gold or Real Estate you are investing. Along with investing comes risk. Now if you have invested in a HOUSE, you get rental yields regularly and hopefully the house will appreciate. If you invest in gold, chances are you will get some appreciation at the end of an ‘n’ period.

It is only in equities that you can handle Rs. 1000 crores – buying or selling in less than one minute. Imagine doing a transaction of that size in a information scarce market like Real Estate. It is impossible without letting half the world know that you need to do a transaction!

It is only in equities that you can get partial liquidity. If you have a house with a market value of say Rs. 3 crores – it is not possible to sell Rs. 40 lakhs out of that house. Either you sell in full or nothing. Of course you can borrow against the property – but to me that feels like paying interest on money that you have in another form! Very high and usurious rates make such a transaction difficult / expensive.

You can start small – as small as Rs. 500 per month as a SIP in a mutual fund. There is no such product available in Real Estate.

Real Estate calls for a huge LOAN COMMITMENT – upfront if you want to do a transaction. One should be worried about not having the cash flow to be able to pay the EMI. In case of a SIP if you do not have money you just stop the SIP with no penalties!

these articles are good to read too:

 http://www.sandipsabharwal.com/?p=1047

http://firstbiz.firstpost.com/economy/realty-prices-can-fall-25-nocs-fell-objection-objection-certificates-97875.html

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this is a very old article….but still worth reading …nothing really changes, does it? this was written FIVE YEARS AGO…in 2009….

 

The cheer leaders are screaming once again – welcoming the 10,000 index.

Whether it is television, print, or the internet – all of them have headlined the great reclaiming of the 10k index. The typical middle class guy is happy, but of course skeptical.

The questions he is asking are the following:

Will this market rally last?

Does it have the strength to last?

Will it come down again?

Is it a dead cat bounce?

What do the chartists say?

The most honest answer is nobody has an accurate answer to any of these questions.

And when I say markets it is generic – US markets, Indian markets, all behave more or less similarly. However, one theory that investors / traders are willing to buy is ‘the worst is over’. Having been in the markets on the journey up to 21k, many believe that 7500 will be re-tested. People are skeptical (In US and in India) about the economy.

Are they right? Sure they are right. Lots of pain is left in the economy.

Let us look at the US economy first: ·

Jobs are still being lost ·

People find it difficult to believe that some banks can be profitable so quickly ·

Banking is in a mess – ask Warren Buffet! ·    Real estate is falling ‘less fast’ ·

Nobody is sure about what Maddox has done!

What about the Indian economy?

1.    Banking is slowing but is not in a mess

2.    Jobs are still being lost

3.    Some new jobs are being created

4.    Real estate is down by a mile in some places and up by a couple of miles in some places.

5.    Salaries, rent, interest rates are all headed south, but recruitment is happening at the bottom of  the pyramid.

How much of an IQ do you need to say things can get worse in the real economy? Not much I guess. It took me quite a long time to realize that there is no direct relation between the equity markets and the direction of the economy in the short run!

So, a family hobby of buying high and selling low has been now converted to a more serious calling – teaching and writing! The equity market goes up when all the pundits say it will tank and vice-versa! That is the reason why historians like us have learnt the greatest lesson from history – ‘you cannot learn from history’. Why did the equity market in India suddenly add a couple of ‘000 points to the Sensex?

That is about 23% jump! Or the Dow Jones spurt 20% in 18 days? Well here is a confession – I do not know!

However, if you agree that the market came down from 21k to 8k, surely there was some reason why it could also go up from 8k to 10k in a short term.

Is it a bear rally? Is it a dead cat bounce?

Remember when markets are down investors, traders, analysts, all of them look for reasons why it cannot go up – exactly reverse of how they behave in a boom. A couple of friends who give a classic signal – when they leave the market it is a great time to buy – have left the market. To me that is a fine signal. And all uncles and aunts say they will be out of the market for 2 years – in cash if need be – to me it is a great BUY signal. If I knew that the market will be lower – which means I am still expecting a capital loss – I would be in cash. The problem is I do not know.

The Equity market delivers! I have not asked my friends who shifted to cash recently – how it feels to see their next 4 years from debt markets already delivered by the market in the last fortnight! Sorry guys, I know it hurts. Some other friends are saying “I will want stronger signals – I will wait for the markets to stabilize”. I find that sad. Wait till when? 10,342? 11,673? 12,500?

I do not think they have an answer. And I keep asking myself – is that the smart thing to do? This is like waiting to buy AFTER the market has gone up. Why? And in a market with statistics to show that the best return is the steepest one? Do they forget investment guru John Templeton saying “I do not know anyone who knows anyone who can time the market?”

Other investors have been pushed to the limit. They say they’ve had it. They’re done with the stock market for good. This funny dialogue reminds me of a graveyard / a crematorium – where everybody says “what is life – it could have been you or me….” And then going home and continue doing what they have been doing. Less cruel examples is a hangover or the promises we make ourselves at the weighing scale. Aw come on, do not kid yourself. You will be here before long. Maybe when the sensex is at 16k – and perhaps on the way down again! Bluntly what is your choice?

If you are an investor who is investing towards some goals, do you have too much of a choice? ·    Will real estate give you inflation adjusted, post EMI return in double digits? You got to be kidding! ·    What about RBI bonds with real returns in the negative territory? ·    Or will you be tempted by Income funds – guaranteed to give you sub-RBI bond yields in the longer run also? ·    Or in gold – which has returned pathetic returns in the past 29 years – but has ridden the current metal boom?

Like it or lump it, but if you have long term goals – children’s education, own retirement, etc. you have to be in equities – directly if you know how to or through good fund managers. Cut all this. Your question is simple. “Should I buy?” The answer is simple. Yes. You should buy – stick to good fund houses, do good asset allocation. If you do a SIP remember you are putting only a small portion of your money on a monthly basis. http://www.subramoney.com

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When you have been sold a bad financial product, what should you do?

Complain, right? NO. People do not. They treat it as ‘bad luck’ or justify saying ‘Oh Subra it is only Rs. 55,000 per month premium’ ..I mean anything except ACCEPT THE FACT that they have been had. Many of them do not like me for finding out that they have been sold a lemon. Imagine Subra telling their wife / colleagues about him being such a duh…that he has bought a lemon. It insults them and hurts their ego. So in many cases they will not even talk about it Loudly. They will just stop taking my calls.

Unfortunately in India most customers crib, then when they get a pat on the back from a high ranking official, they withdraw their complaint. I am yet to see a court order a full repayment for mis-sold policy and heavy damages suits. One friend who was sold a lemon was convinced by the CEO of the selling company that the product is not so bad after all – damn Subra – he is a cynic. Worst thing is it worked.

There is no fear of God in ANY company. If you do bring up the issue of mis-selling to ANY  CxO in the industry he comes up with “Oh ‘A’ is doing more than us or ‘L’ is doing more than ‘M’.

So will mis selling stop on its own? No. People behave in a way that they have been rewarded in the past (or at least not punished). So in a country where :

– the customer is so damn indifferent that he does not even know he has been sold a lemon

– the courts take forever to award penalties for such ‘minor’ offences

– the regulator has made the process of getting justice difficult

WHY oh why will a guy NOT mis-sell?

Into this scenario a financial services company has come out with an incentive system which will pay a bonus to a sales guy if :

– he can get 5 leads from existing clients

– more bonus if he can SELL more to the same client (normally companies insist on no. of  new clients brought ..)

– get clients for a meeting with product heads / risk heads  once in a while to explain their portfolio.

Sounds utopian? They also have a good system for internal counsel meetings for reducing mis-selling by an informal whistling system.

Why do all this?

Parent country where they are located is cracking the whip on bad behavior.

Will it work?

Too early to say, but short term profitability could suffer. Fantastic opportunity for trainers. Hey trainers are you listening?

Trainers polish your English, give international examples, speak slowly….look east!!

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Mario Draghi surprised markets last week with a further cut in interest rates and a QE plan to start purchases of assets to expand the ECB balance sheet. These two actions were welcome as well as the change in the content and tone of his comments that are finally make it clear the need for strong policy actions in Europe.

Unfortunately, the fear is that this is coming too late and might not be enough. While the ECB plan to buy assets could expand its balance sheet over the coming months, the reality is that this move might just take its size to where it was several months ago. It is true that purchases of certain assets could have a stronger impact than the previous rounds of bank lending, but this might not be enough.

And when it comes to interest rates, while the ECB has finally reached zero, it took so long that in the last months the Euro area has seen a dangerous move towards very low inflation. And as inflation went down, real interest rates went up. Below is a chart that compares real interest rates in the Euro area and the US (real interest rates are calculated as the central bank interest rate minus the one-year inflation over the previous year).

First thing we noticed is that since the the summer of 2012 real interest rates have increased in Europe while they have remained broadly stable in the US. In the last two years, while real interest rates have increased by more than 1% in Europe, they have gone down by about 1% in the US. And this is all the result of the difference in behavior in inflation, which is possibly the result of the differences in policies we see during 2011 with much higher interest rates in the Euro area than in the US.

If the recent ECB actions are not enough, what else is to be done? Maybe European governments start listening to Mario Draghi and we see a reversal of fiscal policy, possibly in a coordinated fashion across Euro members. In the absence of this, the ECB has very few tools left at its disposal. It could try to increase inflation expectations, hoping that this would translate into increases in wages and prices. But raising inflation expectations would require very strong communications possibly making explicit that a temporary deviation of inflation above 2% would be welcome. Or even better, an explicit increase in the inflation target of the ECB (which could be temporary, for X years).

The only other alternative is "helicopter money", which implies a permanent increase in the monetary base/supply via either permanent purchases of assets or direct transfers to the governments or households (read Simon Wren-Lewis explain the difference between QE and helicopter money or Willem Buiter discuss why helicopter money always works).  There has been some recent talk among central bankers about this idea but it has always been ruled out because of legal or practical constraints, which are likely to be more binding in the case of the ECB.

The discussion around helicopter money in the US led to the expression "helicopter Ben" to refer to the former chairman of the federal reserve, Ben Bernanke. Maybe it is time to see "helicopter Mario" do whatever it takes to save the Euro area. And finding a picture to illustrate what this would look like is so much easy with Mario Draghi...


Antonio Fatás

I have not been a blog very famous for its humility.  Let me also say that I try to concentrate on wealth creation and do not really write too much about live frugally, spend less, etc.

One of the kids I know (too lazy to search through the archives I guess) wanted some tips on get me rich quick kinda stuff. So here is an attempt at a post like this. The sad part is that many of these things are EASY to say. However not every one of you out there will be able to implement it. So here are a few tips…

1. Spend less than what you earn: Sounds easy? so very difficult to implement. Many people do not even know when things are going beyond control. The plastic card is addicting and most people do not know when they are going beyond the current month’s income. Add to this the stupidly bought big house, unnecessarily bigger car, etc. just keep piling on the misery.

2. START investing NOW: postponing of investments / savings is one the MEGA crimes of all generations. Procrastination is a disease. Over come it. Go download a form and start a SIP in a good fund. However if you are serious, stop reading this. NOW. Go and fill up a form for the same..

3. Earn More: You have no choice but to earn more. If you want to do a big SIP you need to make a lot of money. You cannot get rich by spending less. It just does not work. Oops, sorry.

4. Stop spending money to impress people: I know many kids in the 22-28 age group, they laugh at some of their colleagues if they try to impress them with their spending habits. Remember your friends know what you earn, what is your family, etc etc., so what are you trying to impress if you yourself..

5. Take a basic health and term insurance: Your health cover should include all those people whose medical bill you will pay. If you are supporting your dad’s sister, she too should be covered by a medical cover.

6. Track your expenses, and your investments: It is nice to watch where you are spending and what you are investing. Making a statement showing your earnings grow is amazingly satisfying. It keeps you focused on your goals.

7. Improve by 1% every week: on your ability to save, on your health, on your investments – strive for being the best. The process of trying to improve by a targeted number is a great picnic kind of an experience.

8. Write down what you have and make a semblance of a WILL: You never know when things could go wrong. Be careful.

9. Work towards your true passions: If you are a Musician at heart and are working as a clerk in a lawyer’s office, do not forget your passion. Describe yourself as a musician – and the bills are being paid by the clerk till the musician starts earning well.

10. Live life for YOURSELF, and your spouse: Stop worrying about what the world thinks about you. Seriously, it is none of your business….

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I’ve written about this before, but if the FSOC wants to prove that they don’t know what they are doing, they should define a large life insurer to be a systemic threat.

It is rich, really rich, to look at the rantings of a bunch of bureaucrats and banking regulators who could not properly regulate banks for solvency from 2003-2008, and have them suggest solvency regulation for a class of businesses that they understand even less.

And, this is regarding an industry that posed little systemic threat during the financial crisis.  Yes, there were the life subsidiaries of AIG that were rescued by the Fed, and a few medium-large life insurers like Hartford and Lincoln National that took TARP money that they didn’t need.  Even if all of these companies failed, it would have had little impact on the industry as a whole, much less the financial sector of the US.

Life insurance companies have much longer liability structures than banks.  They don’t have to refresh their financing frequently to stay solvent.  It is difficult to have a “run on the company” during a time of financial weakness.  Existing solvency regulation done by actuaries and filed with the state regulators considers risks that the banks often do not do in their asset-liability analyses.

Systemic risk comes from short-dated financing of long-dated assets, which is often done by banks, but rarely by life insurers.  I’ve written about this many times, and here are two of the better ones:

• Systemic Risk Stems from Asset-Liability Mismatches
• On the Designation of Systemically Important Financial Institutions

MetLife and other insurers should not have to live with the folly of “Big == Systemic Risk.”  Rather, let the FSOC focus on all lending financials that borrow short and lend long, particularly those that use the repurchase markets, or fund their asset inventories via short-term lending agreements.  That is the threat — let them regulate banks and pseudo-banks right before they dare to regulate something they clearly do not understand.

This is the third time I have written this article during this bull market.  Here are the other two times, with dates:

• Goes Down Double-Speed 2/17/2011
• Goes Down Double-Speed (Updated) 5/22/2013

The first time, we had doubled since the bottom.  Second time, up 2.5x.  Now it is a triple since the bottom.  That doesn’t happen often, and this rally is getting increasingly unusual by historic standards.  That said, remember that every time a record gets broken, it shows that the prior maximum was not a limit.  If you think about that, after a bit you know that idea is obvious, but that isn’t the way that many people practically think about extreme statistics.

Let’s look at my table, which is the same as the last two times I published, except for the last line:

Since the second piece, the gains have come slowly and steadily, though faster than between the first and second pieces.  As I said last time,

“In long recoveries, gains first come quickly, then slowly, then near the end they often come quickly again.  Things are coming quickly again now, but who can tell how long it might persist.”

Indeed, and after the first piece, the market did nothing for about 16 months, after which the market started climbing again at a rate of about 1.5% per month for the last 27 months.  Though not as intense as the rally in the mid-’80s, this is now the third longest rally since 1950, and the third largest.  It is also the third most intense for rallies lasting 1000 calendar days or more.  This is a special rally.

 

And now look at the cumulative gain:

 

Does this special rally give us any clues to the future?  Sadly, no.  Or maybe, too much.  Let me spill my thoughts, and you can take them for what they are worth, because I encouraged caution the last two times, and that hasn’t been the winning idea so far.

1. To top the rally of the ’90s for total size, we would have to see 2700 on the S&P 500.
2. It is highly unlikely that this rally will top the intensity of that of the ’50s or ’80s.  Gains from here, if any, are likely to be below the 1.7%/month average so far.
3. For this rally to set a length record, it would have to last until 12/14/16 (what a date).
4. Record high profit margins should constrain further growth in the S&P 500, but that hasn’t worked so far.  As it is, there are very good reasons for profit margins to be high, because unskilled and semi-skilled labor in the capitalist world is not scarce.
5. Rallies tend to persist longer when they go at gradual clips of between 1-2%/month.  Still, all of them eventually die.
6. At present the market is priced to give 5.5%/year returns over the next 10 years.  That figure is roughly the 85th percentile of valuations.  Things are high now, but they have been higher, as in the dot-com bubble.  We are presently higher than the peak in 2007.
7. On the negative side, it doesn’t look like the market is pricing in any war risk.
8. On the positive side, I’m having a hard time finding too many industries that have over-borrowed.  Governments and US students show moderate credit risk, as do some industries in the finance and energy sectors.
9. Finally, the most unusual aspect of this era is how little competition bonds are giving to stocks.  In my opinion, that idea is getting relied on too heavily for a relative value trade.  Instead, what we may find is that if bond yields rise, stocks, particularly dividend paying stocks, will get hit.  By relying on a relative yield judgment for stocks, it places them both subject to the same risks.

I still think that we are on borrowed time, but maybe you need to regard me as a stopped digital clock with a date field, which isn’t even right twice per day.  Historically, if the rally persists, stock prices should only appreciate at a 8-9% annual rate with the bull this old.

That’s all for now.  I’m not hedging my equity portfolio yet, but maybe my mind changes near 2300 on the S&P 500, should we get there.

PS — the title comes from the fact that markets move down twice as fast as they go up, so be ready for when the cycle turns.  The first article in the series focused on that.

It took Shakespeare to say you can flatter a man by saying ‘You are so simple, you cannot be flattered’.

I am not so humble…and hence this post. I know, I know, I should not be putting it here, but hey not even a learned man like Ravana could conquer his ego. I am a mere mortal, am I not?

To Subra

06 SEPTEMBER 2014 on gratitude, opinion Dear Sir,

I read your post yesterday, and for the first time, in the really long time I have been reading your blog, you genuinely shocked me a little bit.

The post seemed a little out of sorts & and a little down to me. As if, you were really doubting your worth as a teacher

For a little bit, I was back in school, to when my teacher’s “Teacher” mask would slip a bit & I would get a glimpse of the person beneath.

You say, all learning is caught, but what drops of water will I catch, or run around under, if a fountain does not rain down on me?

I am a prime example of the student you speak of. I am a smart alec, autodidact. The teacher does not matter, since I can find everything online and I can teach my self vitually anything, I put my mind to.

Or can I?

And to me, Sir, the answer is No.
And that’s because I have been fortunate enough to have people in my life who have taught me so well, that I cannot imagine life without what they taught me.

• Maria Barrot, taught me English & persistence.
• Sunil Varma, taught me Digital Electronics & the importance of always being learning.
• The two priciples, I do my consulting with, for making me worldly wise
• Manish Chauhan, ostensibly taught me how to get out of debt, but was actually teaching me how to help people and how to be a more giving person.
  Goddammit Manish, put an ‘about us’ on your site. I hate linking to Linkedin!
• My parents!

And finally an old guy called P V Subramanyam who says he makes smart people richer.

I found you because Manish kept linking to your articles.
I stayed because you tease, insult, joke, criticize, poke, but hey you also teach.
If it sounds like you said that, you did
But to me, the most important fact is that you stay real. You are yourself – honest, true, transparent with no agendas, save self improvement
You taught me money is not the end all and be all of life, but that improvement is holistic.
And most importantly, you goad me into thinking for myself and you taught me how to reflect.

So while, some might copy a few words here and there, they can never be you.
And while while I might learn something specific from somewhere, nothing can ever replace the love and attention and the wealth of knowledge, a good teacher can shower on you.

You are a teacher, not because you “teach”, but because it is just who you are.
You are not just my Dronacharya, you are also my quirky Mr. Chips

Stay the same, Sir! And thank you so much, for all that you do.

With the best of regards,

I remain,
your humble student.

 

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The easiest thing to do was to predict – in the 1980s and even in the 1990s. However now with the electronic media keeping tabs on your writings predicting has become difficult, if not downright risky.

Still I am willing to stick my neck out and say the following:

1. The US interest rates are now at 2.3% p.a. – and is surely headed NORTH. Now we could have said that at the beginning of the year too – when the interest rates were about 2.98%…but we were all wrong. What is happening? Foreign inflows are ensuring that interest rates in the US and in Germany are kept low. Amazing stuff…but but..when interest rates go up, who will buy the bonds? I know only the sellers. That is going to be fun.

2. US markets are up (equity) ..hey buy the locals are selling equity and buying a lot of debt. So when the bond holders are unable to sell their bonds, what impact will it have on their equity markets? Keep guessing. I do not have an answer either.

3. US equity and bond markets will see far more volatility in 2015 than it saw in 2013 and 2014

4. Emerging markets (including India) will see lots of cash flow – IN and OUT. So the Indian markets (Equity and Debt) may see more cash inflows, markets may go up, there will be many big IPOs, …and volatility will be high. Very good time for brainy investors – a blind random pick market may be dead….

5. Geopolitical risks may be up, but India is likely to attract some more money.

6. Namo has done well, but the jury is still out on his luck, track record, etc…..

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I am not sure whether I should have said

– do I really teach? or Can I really teach?

If I stand in front of a class and expect to ‘teach’ something, am I cheating myself. Why are cheating and teaching acronyms?

Seriously, I do not know whether I can teach anything to anybody. Or whether anybody can teach anything to anybody. Almost all the learning is ‘caught’ not sure what can be taught. Try telling your kid ‘do not tell lies’ and then in the next breath say ‘If somebody calls, say I have gone out’. No point in then wondering ‘why is my kid telling me a lie’ .

In my class (in a college) what are the kids learning? They are busy skimming the ppt (reading the books is a wrong term to use dude) and finding short cuts to ‘crack’ the exam. Google gives them enough ‘knowledge’ to do a presentation, and perhaps even crack a tough interview.

Once the MBA degree is in hand, a Rs. 10L job in a big 4 firm is in place, do kids want to go back to their basic MBA books and REALLY learn the subjects? Do enough of them go to www.coursera.com to learn? Do they visit Investopedia?

Tragically the answer is NO. They do visit these sites if they need to make a presentation. Do they take 1 hour off every day to ‘grow’ their learning? In most cases NO. When you are 26 you have lots of other things to do also.

So beyond class 3 does the teacher really teach? What can I teach about equity markets? What is there in my ppt which is not already available on Google? Or if you want to see how it is done on You Tube? Or if I want to plagiarize on Investopedia? Really, nothing.

Life has become tough for teachers at all levels. Children have access to the same resources as the teachers have. So if a teacher cannot take the content and understand it BEFORE he/she stands up in the class, the teacher is not really adding value.

When people ask for my ppt that I use – I happily give it away to them. It is like asking for my cue cards. Take it, I am far beyond my ppt.

God bless people who want to call themselves teachers. I only facilitate learning.

If you see me parked on the way or obstructing your road to learning, please call the towing van. I have no business being an impediment to your learning. Happy Teacher’s day…..

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It’s Teacher’s Day today – what better day to talk about studies and courses.

The education industry is changing and MOOCs are driving that change. Today, we have compiled a list of all the MOOCs that are available internationally. These websites have a variety of subjects to choose from and have very flexible learning schedules.

A massive open online course (MOOC) is an online course aimed at unlimited participation and open access via the web. In addition to traditional course materials such as videos, readings, and problem sets, MOOCs provide interactive user forums that help build a community for students, professors, and teaching assistants.

Take a look at list of MOOC courses available globally:

Openlearning.com
www.openlearning.com/courses/

OpenLearning was founded in Australia by computer science professor Richard Buckland and software engineer Adam Brimo from the University of New South Wales. OpenLearning has worked with the University of New South Wales and Taylor’s University to deliver the first MOOCs in Australia and Malaysia respectively. The website has a list of Public and private online courses from educators and individuals worldwide. The private educational portals on its platform are created on a cloud based software product launched in December 2013 by OpenLearning.

Apnacourse.com
https://www.apnacourse.com/allcourses

Apnacourse launched by SpearheadEduOnline.com is India’s ‘first of its kind’ e-tutoring platform for professional courses and certificate programs. Domains for Training include Financial Management Certifications like CFA, FRM, CFP et al., Project and Quality Management Certifications like PMI-ACP, PMP etc., IT Services and Security Management Certifications like ISTQB, CISA, CISM etc., and certifications like Business Analysis and more.

edX
https://www.edx.org/course-list

edX hosts more than 240 online university-level courses in a wide range of disciplines to a worldwide audience at no charge. It also conducts research into learning based on how people use its platform. EdX differs from other MOOC platforms as it is nonprofit and runs on an open-source software platform. Major contributors to the development of Open edX include Stanford University, Google, UC Berkeley, MIT, Harvard, University of Queensland etc.

Udacity
https://www.udacity.com/courses#!/all

Although the website started off with Computer Science courses, it now focuses more on vocational courses for professionals. The website also hosts many CS courses as part of collaboration with Google, Nvidia, Microsoft, Autodesk, Cadence Design Systems, and Wolfram Research. Programming classes use the Python language; programming assignments are graded by automated grading programs on the Udacity servers.

Coursera
https://www.coursera.org/courses

Coursera was founded by computer science professors Andrew Ng and Daphne Koller from Stanford University. Coursera is an education platform that partners with top universities and organizations worldwide, to offer courses in a variety of areas, including Humanities, Medicine, Biology, Social Sciences, Mathematics, Business, and Computer Science for free. Learners can watch short video lectures, take interactive quizzes, complete peer graded assessments and connect with teachers and classmates.

Udemy
https://www.udemy.com/

Udemy.com is a platform for online learning for experts of any kind to create courses which can be offered to the public, either at no charge or for a tuition fee. Udemy provides tools which enable users to create a course, promote it and earn money from student tuition charges. The website has more than 18000 courses available online and is compatible with any device for learners to learn at their own pace.

COL – Commonwealth of Learning
http://www.col.org/progServ/services/Pages/default.aspx

The Commonwealth of Learning (COL) is an intergovernmental organisation created by Commonwealth Heads of Government to encourage the development and sharing of open learning/distance education knowledge, resources and technologies. COL’s activities are grouped under two sectors: Education and Livelihoods & Health. COL provides fee-for-service distance education and open learning course delivery and training for international agencies, such as the United Nations High Commissioner for Refugees (UNHCR) and the World Health Organization (WHO).

OpenUpEd
http://www.openuped.eu/courses

OpenupEd is a supranational platform, founded with support of the European Union (EU). Around 40 courses that range from mathematics to economics, e-skills to e-commerce, climate change to cultural heritage, corporate social responsibility to the modern Middle East, and language learning to writing fiction, are available free of charge and in 12 different languages.

Course Hero
https://www.coursehero.com/

CourseHero’s educator portal is a micropublishing platform for educators to distribute their educational resources. Course Hero collects and organizes study materials like practice exams, problem sets, syllabi, flashcards, class notes and study guides from users who upload. Users either buy a subscription or upload documents in order to receive membership and access website material.

Saylor.org Academy
http://www.saylor.org/courses/

The Saylor Foundation is known for its emphasis on finding, vetting, and assembling openly available texts and resources into courses resembling those of a traditional brick and mortar institution which are then peer-reviewed before being published. The foundation offers 317 free, college-level courses, which are selected as typical courses in high enrollment majors at traditional U.S. colleges.

The Open University
http://www.open.ac.uk/courses

The Open University (OU) is a distance learning and research university founded by Royal Charter in the United Kingdom. The OU provides courses on a wide variety of subjects like Arts & Humanities, Business & Management, Computing & IT, Design, Education, Childhood & Youth, Engineering, Environment & Development, Health & Social Care, Health & Wellbeing, Languages, Law, Mathematics & Statistics, Medical Sciences, Nursing & Healthcare Practice, Psychology & Counselling, Science, Social Sciences and Technology.

Iversity
https://iversity.org/courses

iversity.org is based in Bernau bei Berlin, Germany. iversity specializes in providing online courses and lectures in higher education, specifically MOOCs (Massive Open Online Courses). Courses are free and open for anyone to enroll and participate. Courses consist of chapters, units and assessments. A MOOC is typically made up of 8 chapters. One chapter is released per week. Each chapter contains 6-10 units. These units provide video lectures, 3–8 minutes long, interspersed with interactive quizzes and homework. Should the instructor wish, there may be peer-to-peer reviews and group projects. There is normally an exam at the end of each course.

ALISON
http://alison.com/subjects/25/Diploma-Courses

ALISON (Advance Learning Interactive Systems Online) is an e-learning provider founded in Galway, Ireland in 2007. Its stated objective is to enable people to gain basic education and workplace skills. Contrary to other MOOC providers with close links to American third level institutions such as MIT and Stanford University, the majority of ALISON’s learners are located in the developing world with the fastest growing number of users in India. ALISON offers over 600 courses across certificate and diploma level in ten languages.

Edukart
http://www.edukart.com/

EduKart is an Indian distance learning cum online education company that provides Indian and international degrees such as MBA, Executive MBA, MCA, MSc IT, BBA, BCA and BSc IT through both distance learning and online mode of education. It also offers industry relevant certificate courses in areas of retail, finance, telecom, digital marketing, programming languages and project management.

Futurelearn
https://www.futurelearn.com/courses/upcoming

FutureLearn is a learning platform founded in December 2012 as a company wholly owned by the UK’s Open University in Milton Keynes, England. It is the first UK-led massive open online course learning platform, and as of June 2014 had 36 UK and international University partners  and – unlike similar platforms – includes four non-university partners: the British Museum, the British Council, the British Library and the National Film and Television School.  The first courses to be made available included “Web science: how the web is changing the world”, “Introduction to ecosystems”, “Improving your image: dental photography in practice”, “Causes of war”, “The discovery of the Higgs boson”, “Discover dentistry”, “Muslims in Britain: changes and challenges”, “Begin programming: build your first mobile game” and “England in the time of King Richard III”. The first course to launch was “The secret power of brands”, conducted by professor Robert Jones of the University of East Anglia.

Marginal Revolution University (MRUniversity)
http://mruniversity.com/economics-video-library

The website includes free-to-watch videos, interactive comments, and the option of actively enrolling and participating in courses. The videos and course materials are also accessible for those who do not enroll in a course or register on the site. The videos are structured as simple PowerPoint slide presentations with voice-overs by the speakers. The audio can also be downloaded separately. Those who formally register for a course and take the final examination can get a certificate of completion.

openSAP
https://open.sap.com/courses

openSAP is developed and provided by SAP in cooperation with the Hasso Plattner Institute. openSAP courses are conducted entirely online. All the material provided can be accessed from any device that is connected to the Internet. openSAP courses have a defined duration (usually between five and seven weeks) to which course participants need to adhere. openSAP courses are based on video units, supporting material (slide decks, handouts), and self-tests.  Course participants need to work on weekly assignments and keep to deadlines. The weekly assignment is graded and contributes to the points required to receive a record of achievement.  Course participants can discuss the course content in a discussion forum.  openSAP courses end with a final exam.  Upon successful completion of the weekly assignments and the final exam, participants receive a record of achievement.  openSAP courses are conducted in English.

NovoEd
https://novoed.com/courses

NovoEd is a for-profit educational technology company, founded by Stanford University professor Amin Saberi and PhD student Farnaz Ronaghi. Students view lecture videos online as individuals, but NovoEd’s unique selling point is that students converse in defined teams of 4-10 for group assignments. NovoEd covers subjects like Entrepreneurship, Finance, Business Strategy, Education, Design & Creativity, Math & Science, Humanities and more.

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Recommended Read : The True Promise of Technology In (Indian) Higher Education [We Need To Think Beyond MOOC]

The post Meet Your New Teacher. MOOC : The New Age Way of Learning Online. appeared first on NextBigWhat.com

Well, what do you know! Amazing things are happening around the world. One of the more positive developments has been that of the Islamic State (formerly known as the ISIS) showing up and demonstrating to the world what “peace” means in the “Religion of Peace.(™)” They are the poster boys of Islam, arguing against the left-lib-tards (that’s the short form for “leftist liberal retards”) who keep on insisting that Islam is a religion of peace.

(I read this somewhere: If someone declares that they love you, ask for proof; if someone says that they wish to kill you, believe them and get away quickly.)

In every case of Islamic terrorism, the perpetrators loudly proclaim Allahu-akbar and declare that they are following Islam’s dictates. But their claim is met with the leftlibtards’ denial “No, these are misunderstanders of Islam.” Quote chapter and verse from the Qur’an (Koran, Quran) or the Hadiths (Hadis) showing that the Islamic State is being faithful to the commands of Allah (the Islamic god) as recorded in the Quran by Muslims — and still the leftlibtards will continue with their denial. Perhaps the Islamic State has to go beyond video-taped beheading of foreign journalists to catch the attention of the retards that run the Western countries.

I say that IS is a positive development because the sooner the bloodthirsty religion of Islam is seen to be the evil it is, the better it will be for all — non-Muslims and Muslims alike. Once in grad school, a friend of mine told me that he likes the house parties (we used to live in a student housing co-op in Berkeley) early in the term. Why, I asked. He said, “With all the booze, many people get drunk. How they behave when they are drunk gives you a fairly accurate idea of what kind of people they are. Once you have identified the obnoxious ones, it is easy to avoid them.”

The British are helping the world in a big way. They imported the spawn of the evil ideology by the boatloads — from such Islamic paradises as Pakistan. When they gained sufficient numerical strength, they let the British society have it. In one recently reported case, around 1400 children have been raped by gangs of Religion of Peacers from Pakistan. This happened over a span of over a decade — but the authorities just turned a blind eye.

London does deserve the new name “Londonistan.” But the idiot leaders will not wake up, until I suppose one of their beloved Pakistani ROP-follower plants a dirty bomb there. One does not hope for such things to happen, but if it is to happen, I say let it happen sooner rather than later, because the sooner the civilized world crushes that evil ideology, the better for the whole world.

One Western leader has been indefatigable in his opposition to Islam — the Dutch politician Geert Wilders. I have been following his career for a while and I have mentioned him on this blog several times for over five years. (See these four posts.)

Here is Geert Wilders again. This is the English transcript of a speech he made in a debate at the Netherlands’ parliament a few days ago.

BTW, Wilders was denied entry into Londonistan in Feb 2009, as I reported it on this blog. Here’s an excerpt:

“Dutch populist politician and controversial anti-Islam campaigner Geert Wilders has been refused entry to the United Kingdom despite being invited to visit by a member of the House of Lords, the British parliament’s upper chamber. . . Geert Wilders, perhaps best known outside the Netherlands for having made the video Fitna, in which the religion Islam and its holy book the Koran are attacked as providing a basis for terrorist attacks and for the undermining of western democracy and values, had been invited to London for a showing of this film to members of the British parliament.”

I mention the above because Wilders refers to his Fitna movie in his recent speech. Here it is, for the record.

Madam Speaker, actually I was expecting flowers from you. I am celebrating an anniversary these days. Exactly ten years and two days ago, I left a party whose name I cannot immediately remember. During these ten years and two days. I have been much criticized. Most importantly for always saying the same thing

My critics are right. Indeed, my message had been the same during all these years. And today, I will repeat the same message about Islam again. For the umpteenth time. As I have been doing for ten years and two days.

I have been vilified for my film Fitna. And not just vilified, but even prosecuted. Madam Speaker, while not so many years ago, everyone refused to broadcast my film Fitna, we can today watch Fitna 2, 3, 4 and 5 daily on our television screens. It is not a clash of civilizations that is going on, but a clash between barbarism and civilization.

The Netherlands has become the victim of Islam because the political elite looked away. Here, in these room, they are all present, here and also in the Cabinet, all these people who looked away. Every warning was ignored.

As a result, also in our country today, Christians are being told: “We want to murder you all.” Jews receive death threats. Swastika flags at demonstrations, stones go through windows, Molotov cocktails, Hitler salutes are being made, macabre black ISIS flags wave in the wind, we hear cries, such as “F-ck the Talmud,” on the central square in Amsterdam.

Indeed, Madam Speaker, this summer, Islam came to us.

In all naivety, Deputy Prime Minister Asscher states that there is an “urgent demand” from Muslims to “crack down” on this phenomenon. Last Friday, in its letter to Parliament, the Cabinet wrote that jihadists are hardly significant. They are called a “sect”, and a “small” group.

This is what those who look away wish, these deniers of the painful truth for ten years and two days, the ostrich brigade Rutte 2.

But the reality is different. According to a study, 73% of all Moroccans and Turks in the Netherlands are of the opinion that those who go to Syria to fight in the jihad are “heroes.” People whom they admire.

And this is not a new phenomenon. Thirteen years ago, 3,000 people died in the attacks of 9/11. We remember the images of burning people jumping from the twin towers. Then, also, three-quarters of the Muslims in the Netherlands condoned this atrocity. That is not a few Muslims, but hundreds of thousands of Muslims in the Netherlands condoning terrorism and saying jihadists are heroes. I do not make this up. It has been investigated. It is a ticking time bomb.

Madam Speaker, is it a coincidence that for centuries Muslims were involved in all these atrocities? No, it is not a coincidence. They simply act according to their ideology. According to Islam, Allah dictated the truth to Muhammad, “the perfect man.” Hence, whoever denies the Koran, denies Allah. And Allah leaves no ambiguity about what he wants. Here are a few quotes from the Quran:

Surah 8 verse 60: “Prepare to strike terror into the hearts of the enemies of Allah.”

Surah 47 verse 4: “Therefore, when ye meet the unbelievers, smite at their necks”. We see it every day in the news.

Another quote from Allah is Surah 4 verse 89: “So take not friends from the ranks of the unbelievers, seize them and kill them wherever ye find them.”

Madam Speaker, the Koran on the table before you is a handbook for terrorists. Blood drips from its pages. It calls for perpetual war against non-believers. That Koran before you is the hunting permit for millions of Muslims. A license to kill. That book is the Constitution of the Islamic State. What ISIS does is what Allah commands.

This bloodthirsty ideology was able to nestle in the Netherlands because our elites looked away. Neighborhoods such as Schilderswijk, Transvaal, Crooswijk, Slotervaart, Kanaleneiland, Huizen, you name it. There, the caliphate is under construction; there, the Islamic State is in preparation.

During the past ten years and two days , the ostrich Cabinets did nothing. It has nothing to do with Islam, they lied to the people. Imagine them having to tell the truth.

But the people have noticed. Two thirds of all Dutch say that the Islamic culture does not belong in the Netherlands. Including the majority of the electorate of the Labour Party, the majority of the voters of the VVD, the majority of the voters of the CDA, and all the voters of the PVV.

The voters demand that, after ten years and two days of slumber, measures are finally taken. The voters demand that something effective happen. No semi-soft palliatives. Allow me to make a few suggestions to the away-with-us mafia. Here are a few things which should happen starting today:

Recognize that Islam is the problem. Start the de-Islamization of the Netherlands. Less Islam.

Close our borders to immigrants from Islamic countries. Immediate border controls. Stop this “cultural enrichment”.

Close every Salafist mosque which receives even a penny from the Gulf countries. Deprive all jihadists of their passports, even if they only have a Dutch passport. Let them take an ISIS passport.

Do not prevent jihadists from leaving our country. Let them leave, with as many friends as possible. If it helps, I am even prepared to go to Schiphol [airport] to wave them goodbye. But let them never come back. That is the condition. Good riddance.

And, as far as I am concerned, anyone who expresses support for terror as a means to overthrow our constitutional democracy has to leave the country at once. If you are waving an ISIS flag you are waving an exit ticket. Leave! Get out of our country!

Madam Speaker, war has been declared against us. We have to strike back hard. Away with these people! Enough is enough!

(I will file this post under Islamic Terroris, Jihad, etc. More to come.)

Many times you transfer assets to a relative like parent or wife or buy assets for a relative especially non-earning family members in their name with your money. This is done either for emotional purposes, providing financial stability to the relative or to save some tax liability. In certain cases, when this asset earns income, you are liable to pay tax on it. This income is clubbed with your other sources of income. (Income Tax Section 60 to 64) Similarly if the asset incurs loss, the loss is also clubbed with your income to calculate your income tax.

Let us look at the situations that are considered as clubbing of income as per the Income Tax Act -

1. You are allowed to transfer an asset to your spouse. If this asset earns income, it will be clubbed to your income while computing income tax and you are liable to pay it.
2. You can transfer an asset to your child (own legitimate child/ adopted child). You are liable to pay tax on income accrued on this asset. If the parents are divorced, then the income is clubbed with the income of the parent who has custody of the minor child.
3. If you transfer an asset to your son’s wife, and there is income earned, that amount is required to be clubbed with your income and you should pay tax on it.
4. You can invest in assets in your spouse’s name. For example, you can buy shares or invest in Mutual funds in your spouse’s name. The income earned from these assets needs to be clubbed with your income while filing Tax Returns.
5. If you transfer income to another person, this income will be included in your income and be computed for tax liability.
6. If you have property in your name and convert it to HUF (Hindu Undivided Family) property, then income earned from this property is to be clubbed with your income for tax computation.

Source: www.ClearTax.in

Still looking for ways to save tax?

There are some other ways in which you can reduce your tax liability -

• If you transfer an asset to your parents or siblings, the provision of clubbing income does not arise and you do not have tax liability on the income earned on this asset.
• If you invest in instruments like PPF, life insurance for your spouse and/ or children, your income is eligible for tax deduction under Section 80 C and 80 D of Income Tax Act.
• If you buy health insurance for your parents, you are eligible for tax deduction.
• You can also invest in PPF and Senior Citizens’ Savings Scheme in your parents’ name. You will not be eligible for tax deduction but your money will earn tax-free interest.
• You can gift money to your spouse, siblings or adult children who can invest in PPF. You will again not be eligible for tax deduction but your money will earn tax-free returns.
• Gifts given before marriage to would-be spouse is not considered in clubbing of income.
• Cross Gifts which means you give your brother’s children gifts and he gives your children gifts. Such transfer is also not included in the giver’s income. (this may be counted in tax evasion)

 If you would like to read this topic in detail – check this

Blunders people make: I have seen lot of people who invest in the name of spouse or kid but don’t show that in ITR – someday that may land them in tax scrutiny & penalties.

Have you considered clubbing your income provisions? Do ensure that you keep the above mentioned points in mind so that you do not break any laws of the Income Tax Act.

D0 you know what is the Wimbledon effect? Well it is the location – the Wimbledon is in UK, but no Englishman ever wins it !!

Similarly when the Indian stock markets go up, the participants are mostly White men in US or UK.

Why are Indians shy of investing in Equities? Well Sucheta Dalal and Ravi Narayan have their reasons about this..and I am giving mine…

1. The whole media right from the beginning keeps saying ‘Equities are Risky’ – of course most people in the media business do not understand the word risky. If media started saying ‘Adjusted to inflation and for volatility equities give real returns over long periods of time’ – in a way that the common man understood, it would make sense.

2. There is a conspiracy of the rich – if people have to be kept engaged from birth to death in acquiring a car, a house, education for children, a bigger house…the best way is to keep them away from wealth creating assets. The rich do this very well by controlling the banks (who make it cheaper to fund a new car), and make people chase vacations, etc…

3. People invest as per their greed and Risk-Return expectation. So people bought shares in Global Trust Bank (greed that it will become a big bank) and kept money in Fixed Deposits of GTB. When the bank failed the SHAREHOLDERS lost everything (price for greed) but the FD holders got THEIR FULL AMOUNT back (with those ridiculous rates of interest). So the message is – take risk on FDs, not on equity.

4. The government keeps coming out with a new regulation regularly – in the capital market.

5. If the bond markets, the national savings certificates, k v p, are dematerialised and opened to trade by the members of the stock exchange, brokers will penetrate the country much better…and increased market penetration will take equities also to the masses. This is unlikely to happen – the government will not want competition at the bottom of the pyramid – the cost of borrowings will shoot up dramatically. 

6. Share market movements look scary the way it is presented on tv. If a tv anchor can show the impact of inflation on savings, people would react better. You remember what you read earlier, right? The real rich control the media. 

7. As the government owns all the banks, banks do not fail. Regular bailing out of banks ensures that people do not worry about bank deposit failing. This means just all the money goes to banks…14 lakh crores….is not a small amount lying in banks..

8. Pathetic Corporate Governance – in the PSU and the private sector too. This dissuades the real long term investor.

9. People not bothering about who is going to feed them from age 55 to the rest of their lives. Longevity, Inflation, Old Age care, etc. do not seek to worry them when they are 22…

 

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In the economic policy debate in the Euro area it is common to hear a reference to the need for structural reforms in order to improve competitiveness, under the assumption that this is the recipe that Germany has followed so successfully over the  last years. To this logic it is common to add a recommendation for wage moderation. Low wage growth seems to be a necessity in Europe given the increased competition from emerging markets. While there can be some truth to this argument, let me show some evidence that questions some of the facts and then present some additional conceptual concerns with the way wage moderation and competitiveness are normally linked.

Below is a chart that summarizes data provided by the OECD on productivity, compensation and unit labor costs. I computed the accumulated change from 2000 to 2013 (except for the US where there was no data for 2013, so the period is 2000-2012).

The blue column (real GDP per hour) represents improvements in productivity. This is the ultimate source of sustainable improvements in living standards. What we see is a significant gap between the US and Europe (more so if we consider that the US is 'missing' one year). When we look inside Europe we see a big outlier: Italy, where GDP per hour has barely changed in the last 13 years. There are some interesting differences among the other countries with Spain seeing an 18% increase over the period compared to 15% in Germany and 12-13% in France and the UK. In this first column, there is no obvious German miracle during this 13 years.

The second number is labor compensation per hour. This is measured in nominal terms (i.e. current Euros or US dollars or UK pounds) as it should be when talking about competitiveness. One expects that increased productivity gets reflected in increased compensation (in real terms) and in addition we should see the effect of inflation. Here Germany stands out as the country with the lowest wage increase (per hour). To make sense out of this number we should compare it to the increase in productivity as measured by GDP per hour. This is what the third column, the unit labor cost (ULC) does, it is simply equal to the change in labor compensation per hour minus the change in output per hour.

When looking at ULC we see that Germany has seen the lowest increase in labor costs per unit of output but not because of the highest increase in productivity but because of wage moderation relative to productivity gains. Italy and the UK are the countries with the largest increase in ULC through a combination of zero (Italy) or average (UK) productivity gains combined with significant wage growth. This is the German "miracle", the ability to convince workers to get paid less (relative to productivity) than in other countries. This is good news for German firms.

To make the "German miracle" look even stronger we can replicate the same analysis for the pre-crisis period (2000-2007).
Here we can see how Germany was even more of an outlier in terms of ULC. Once again we see wage moderation combined with good productivity growth. We also see that during those years Spain looks much worse than once we add the post-crisis period with lower productivity growth and much higher increase in ULC. Comparing the two charts we can see that there has been a significant adjustment in Spain after the crisis both when it comes to GDP per hour and ULC relative to Germany.

So can low wages be the solution for some of the Euro problems? If the goal is to improve living standards, the focus must be on improving GDP per hour, that is the only way to ensure sustained progress. Having said that, for a given increase in GDP per hour, wage growth has to be consistent with these improvements in productivity so that unit labor costs do not grow too fast, otherwise a country will be pricing itself out of the market (and we will see that in a decline in the number of hours, unemployment)

Finally, the connection between wages and prices is also not as straightforward as some would argue. The numbers for labor compensation above are all in nominal terms, which is the right way to compare labor costs across countries and its relationship to competitiveness in global markets (more so when we compare two Euro countries so we do not need to worry about exchange rates). But the evolution of nominal wages can be very different from the evolution of real wages. Below I reproduce the first chart (excluding the UK) where I adjust wages and ULC for domestic inflation (using CPI).


If we compare Germany to Italy or Spain now we see that real wages did not grow significantly faster in Italy or Spain than in Germany, and this is of their higher inflation. When compared with GDP per hour we could still argue that real wage is high in the case of Italy but it looks as low in Spain as it does in Germany. Notice that when real wages grow slower than GDP per hour it must be that we are seeing a decline in the labor share, so an increase in the capital share. In other words, prices are not only related to labor compensation but also to profits.

In summary, no doubt that wage growth can in occassions be excessive and generate increases in labor costs with negative consequences on labor market outcomes. But insisting on moderation in wage growth regardless of the circumstances as a recipe for growth is not right. First, sustained growth in living standards can only be the result of increases in productivity (otherwise, why don't we just make wages equal to zero to maximize our competitiveness?). Second, what matters for competitiveness is prices and those depend not only on labor costs but also on the pricing power and decisions of firms. Excessive wage growth might be a drag on competitiveness but so can an excessive increase in profits or other forms of rents.

Antonio Fatás

Governments in the US and Europe have set their faces against bailouts of failed banks following the crisis of 2007- the Dodd FranK Act in the US prohibits such bailouts hereafter. Yet, as an article in the FT asks: what alternatives do we have?

A time tested-alternative, the author points out, was to merge a failed bank with a strong bank. Banks are now finding out that this can be costly for one reason or another. The huge fine that BofA has had to cough up has to do with the problems at Merrill Lynch and Country which it acquired in 2008 and these problems happened before the merger. This is going to deter future acquisitions and mergers because the amount of due diligence will take too long and will be too costly.

The other alternative, getting banks to prepare living wills  that will document an orderly winding up of a bank when it fails, is proving unworkable so far- in the US, the regulators have rejected living wills prepared by US and European banks. It's no use asking for banks to have contingent capital- this will be very costly and it may not suffice.

So, governments will have no recourse against bank failure other than bailouts. The only answer, which I have urged repeatedly, is to ensure that the problem is manageable when it happens and that is to limit bank size as a proportion of GDP. No policy maker or regulator is willing to touch this political hot potato.

When a new kid is born, your entire life changes. You are excited to enjoy the new phase of your life. Today we are going to touch upon some basic things you should watch out for and focus on after your new kid is born. These are few things which you will eventually complete, but if you are too late, you might end up waste your time and energy. So...

The post 10 smart actions every Indian Parents should take, once their baby is Born ? appeared first on Jagoinvestor - Personal Finance Blog.

 

Till Taleb came along and said ‘Do not discount the role of luck in your life’ all of us considered ourselves smart. Very smart.  Warren Buffett, Bill Gates, etc. also have to consider themselves lucky with regard to their date (and place) of birth. If they were born as women in a backward district, at age 11 they would have been busy warding off the men, or looking after their younger siblings.

In my case too I consider it my luck that I was in Ghatkopar (Mumbai suburb) and not in Matunga (where my dad grew up). THAT is what brought me to the stock market. I now respect the stock market unlike many of my cousins who think of the stock market as a gambling den. So have been in the market since I was in class 12 and now can say that I have been in the markets since the 1970s! (how funny it was in 1979 that I did my first ‘sauda’ (trade)).

I must consider my self very, very lucky. During the Harshad Mehta Boom, I bought an office space for personal usage. When the index reached 21000 I had no reason to sell. However just luckily I decided to get out of some very high price earning stocks like Tata Power, L&T, Hdfc, and invest in lower p/e stocks.

Then Tata Motors, Cholamandalam, Hindustan Oil exploration, Tata Investment corporation, Hindalco, announced their rights issues. Just to be liquid for these right issues, I sold again. When the issue actually came, I was sitting on cash, but had no desire to fill the rights form. So again was sitting on cash. I think God protects people who do not know what they are doing.

Other than God I should also thank Ken Fisher for his book – “Only 3 things that Count”.

This book MADE me learn 2 things –

1) it is all right to be in equities during slow downs, but in fmcg and pharma rather than infrastructure and banking

2) Even if you do not believe in ‘timing’ if a portion of your portfolio can be save from the blood bath, your overall returns over long periods of time can be better than blind ‘time in the market game’.

However for all the readers I have a few lessons from 2008:

1. Like me, if you get lucky, do not argue against luck, protect your money.

2. Know the difference between skill and luck. I had luck so I sold enough shares to pay for the rights (and additional shares too!). If I had skill I would have sold much more, sold Kotak Bank, bought puts on Icici bank, sold Tata Steel and Hindalco.

3. Stock picking is tough – Bear Sterns, Lehman, Citibank, Morgan Stanley. Closer home Satyam, Cholamandalam, Dlf, etc.  have all shown us that

4. Diversification did not help! – Debt in Nagarjuna group was wiped out. If you put money in a real estate pms, you lost. In 2008 there was just no place to hide. Only a ‘put only’ portfolio would have been in the green.

5. Liquidity: when you need your money, if you do not get it, it is not there!

6. Leveraging which made you look smart in a bull run, can wipe you out in a bear phase.

7. Indexing works, indexing works, indexing works. Especially for people who do not think of investing as something scientific. It works best for long term investing by indifferent investors who are disciplined in investing.

Believing in ULIPs for wealth creation or Mutual fund investing based on Advisor’s skills and hoping to out performing the index is a nice fantasy like Santa Claus.

8. If your Advisor or fund manager has no transparency or you do not understand equity trading – you are better off in ppf.

9. Past performance is as useful as last year’s weather pattern on a particular day to carry an umbrella. If you get wet, do not blame the forecast. –

See more at: http://www.subramoney.com

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This is a fantastic headline to catch people’s attention, that is all.

I have no clue whether the market will go up, go down, remain sideways,….NO CLUE at all. I mean it, really.

I was in a bank class when the index had reached 10,000 (year 2008 I think?).

One of the kids asked me ‘How long will it take for the market to touch 21000 again?’ Interesting question, I said. It took about 10 years for the equity market to regain Harshad Mehta’s peak – i.e. 1992 to 2002 for the market to decisively break the previous high.

I think after that they stopped troubling me – they had to learn a lot if the client stumped them with such accurate information! But, lekin, kintu, parantu, Alas!

As is fashionable and necessary there is a discussion on a leading channel about how the market will behave. Of course to quote Taleb “Sensible sound bytes is an oxymoron”.

So please listen to all the noise and come to your own conclusion. There is S who is predicting that the market might see 10,500 (when he says market can fall 50% from its previous top, I guess this is what he means), says we are in a bear market.

He says the bear market can last 2-3 years.

Then there is B who says market the market is in a correction mode – part of a bull market and this phase can last 12-18 months. Frankly all these experts are guessing – and they are looking into a teleprompter or a tv camera not a crystal ball.

Getting the market right means –

1.getting the direction right (from 26k, the market will GO DOWN), or that the market will go up (say 50k)

2.say by how much (say specifically, it will go to 14,000, or 50,000 – as your stand is),

3. how long it will be there (time that it will spend at say 14k or at 50k), and by implication

4. when will it start going up from 14k or down from 50k.

 

AND HAVE THE CONVICTION TO STAND BY IT.

Like John Templeton, I also do not know anybody who knows anybody who can get all the factors correct, all the time, every time.

So stop listening to sure fire timing success stories – it requires too much discipline to be successful with Technical skills.

FAR, FAR, FAR, more importantly you need not know what the market will do going forward on a  day to day basis. That is useless information, with which you can do nothing.

Do not underestimate the power of reading balance sheets, understanding asset allocation and investing regularly. It is damn powerful.

 

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This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Starting today, I would like to remind my clients or those investors, who have the habit of depositing their hard earned money in their respective Public Provident Fund (PPF) accounts in the first week of April every year, that now onwards they can use the opportunity of topping up their PPF investments by an additional Rs. 50,000.

Announced in Budget 2014 by the Finance Minister Arun Jaitley, increase in the investment limit of PPF from Rs. 1 lakh to Rs. 1.50 lakh got notified by the Government of India on August 13 and the Reserve Bank of India (RBI) on August 22. Here are the links to their respective notifications:

Ministry of Finance Notification

RBI Notification

The same has now been brought to the notice of all the post offices as well as some of the nationalised/commercial banks which are authorised by the Government and the RBI to open PPF accounts and accept deposits in these accounts.

Nationalised or commercial banks, which have been notified and have started accepting the increased limit of deposits, include State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), ICICI Bank, Axis Bank, Canara Bank, Andhra Bank, Allahabad Bank, Bank of India (BoI), Oriental Bank of Commerce (OBC), Bank of Maharashtra (BoM), Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Syndicate Bank, UCO Bank, Punjab & Sind Bank (PSB), Union Bank of India, United Bank of India, Vijaya Bank, IDBI Bank, State Bank of Patiala, State Bank of Bikaner & Jaipur (SBBJ), State Bank of Travancore (SBT), State Bank of Hyderabad and State Bank of Mysore.

Make PPF deposit between 1st & 5th of a month to earn maximum out of it

As most of the investors know, interest on our PPF deposits gets calculated on the minimum balance lying in the account between 5th day and the last day of a month, it is advisable for an investor to deposit cash in the account between 1st and 5th day of that month or if a cheque is deposited, then it gets cleared on or before 5th day of that month.

Features of Public Provident Fund (PPF)

For those investors, who are yet to open a PPF account, I would like to quickly highlight some important features of this most loved investment:

* A PPF account can be opened by a resident individual in his/her own name or on behalf of a minor of whom he/she is the guardian.

* A PPF account can be opened at a post office or some of the nationalised or commercial banks mentioned above.

* The minimum tenure of a PPF account is 15 years which can be further extended in blocks of 5 years each.

* Though the tenure is 15 years, investors are allowed to have premature withdrawals or avail the loan facility subject to certain terms and conditions.

* Interest Rate on PPF deposits is notified by the Government of India every year and the rate remains fixed for the whole of that financial year. For FY 2014-15, the rate stands at 8.70% per annum compounded annually.

* Investments made in a PPF account qualify for deduction under section 80C of the Income Tax Act, 1961.

* It is one of the only three investment schemes in India which still qualify as Exempt-Exempt-Exempt (EEE) from taxation point of view. The other two being the Employees’ Provident Fund (EPF) and Equity-Linked Savings Schemes (ELSS).

* Non-Resident Indians (NRIs) are not allowed to open a PPF account. Even Hindu Undivided Families (HUFs) are no longer allowed to open it.

With economic growth finally gaining some strength to touch 5.7% in the first quarter of the current financial year, inflation showing early signs of slowing down, global economies consolidating on their recovery path, the Modi government showing some early signs of taking action on its strategies laid down in the first 100 days and the Indian stock markets gaining strength steadily, would you still be investing in PPF or rather invest in ELSS this year to take part in the growth of Indian economy? Please share your views.

Not sure whether I will be lynched for this article, but as usual I am not giving an answer. Let me put both the sides of the argument, and you can pull your hair over what you should do. Let me start with a caveat, if you are not allocating about 80% of your overall investible surplus to equities, your PORTFOLIO return will not be very much influenced by your asset allocation. If you have all the time in the world, the requisite skills, the data tools required, the brain to do it…you may not be able to spot funds/ schemes which will CONSISTENTLY beat the index.

CAVEAT: Personally I have no investment – or a put option in an index fund.

Also  the importance of investing regularly, not interrupting compounding, being clear that equity does not have a clear time frame, but can sometimes test your patience for very long periods of time – is a given.

Let us look at the  arguments AGAINST investing in an index fund:

1. Even internationally it is difficult for fund managers to beat a Russell kind of an index – because it is a broad based index. So beating a Sensex may be easier, but beating a BSE 100 maybe more difficult.

2. In India the Indices are poorly constructed (I do believe this) – this means many fund managers are able to beat the sensex. Let me rephrase it – many fund managers have been able to beat the index over the past 35 years that the index has been around.

3. I have been extremely lucky that I chose Franklin India Bluechip, Hdfc Top 200, Hdfc Equity, Prudence, I Pru Discovery, – and these funds have all beaten the indices over long periods of time. Attribute it to my luck.

4. Index manufacturers are like rating agencies, they react too late. Historically there can be an argument that the companies that they remove from the index TOO do well – in fact many a times they do better…

The Arguments in favor of Indexing:

1. Easy to understand – just pick the fund with the least tracking error. Tracking error takes cost, churn, waiting time – and is one good figure to judge the fund performance.

2. Too much attention is not required on a day to day basis about where to invest, when to switch, etc. As long as you want to be in equities you can be in one fund, and be done.

3. Today inexpensive index funds are available, and going forward the number of  funds that beat the index will only go down.

4. Fund managers which do well many a times are closet index funds which do just a little better – to nullify the asset mgt charges.

5. As bigger indices keep getting better managed and representative, the fund managers may find it difficult to keep pace with the index….

 

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It's a big bang reform alright but not quite what the reforms brigade has been clamouring for. The government's Jan Dhan Yojana, an ambitious plan for financial inclusion, has the potential to be a game-changer for the banking sector and the economy. It calls to mind Indira Gandhi's much-maligned bank nationalisation move which helped transform India's economic prospects over the decade of the seventies.

Bank nationalisation helped sweep small savings into the financial system and push up the savings rate from 10 per cent at the end of the seventies to over 20 per cent by the beginning of the eighties. That, in turn, caused the investment rate to double and helped lift India's trend rate of economic growth from 3.5 per cent to 5.5 per cent in the eighties. Bank nationalisation had its problems. The achievement on the lending side has not been as impressive as that on the liabilities side: small and marginal farmers and also small firms do not get the credit they need. The expansion of branches and balance sheets undermined viability in the banking system. But these problems could be dealt with over time as the basis for economic growth had been laid.

Jan Dhan Yojana holds out the promise of carrying forward the unfinished agenda of bank nationalisation. Sceptics again say it will add to the existing stresses in the banking system. The banking system will have crores of accounts that are inoperative.The overdraft of Rs5000 per accoun promised, if extended to the 10 crore accounts targeted, will create NPAs of Rs 50,000 crore.Banks may garner deposits but lending will remain an issue.And so on.

Yes, in the short run, there will be issues. Over the long run, however, the potential for transformation is enormous. The new accounts will not be idle for long. Large amounts of cash will flow in through the Direct Benefits Transfer. These could lead to large amounts of floats in the public sector (which is bearing the brunt of the initiative). Overdrafts will not be given overnight to all. Banks will watch the accounts for six months before doing so. Even if we assume that half the accounts get the overdraft and half of the overdrafts turn into NPAs, we are talking of  losses of Rs 12,500 crore over two or three years. That is bearable.

Once large numbers of people are brought into the financial system, banks will find opportunities and ways to lend. What has been the province of micro-finance institutions and Regional Rural Banks will move in a large way into the commercial banks. Banks already have made some headway with banking correspondents. Alliances with mobile operators should enable to them to leverage mobile banking as well. It is conceivable that Jan Dhan Yojana could just the shot in the arm that the public sector banks needed. Let me qualify this by saying that much depends on whether the moves under way in the finance ministry to strengthen both boards and management in the public sector bear fruit.

The goverrnment's initiative does undercut the RBI's attempts to pursue inclusion through new players such as payments banks and small banks. The RBI had taken the view that not much could be expected of the public sector and that private entrepreneurs were needed to infuse life into inclusion.The Modi government clearly has a different view. In a way, the entire locus of financial inclusion as well as bank governance has shifted from the RBI to the finance ministry. That could well be a comment on the present state of relations between the ministry and the RBI.

Above all, by unveiling an initiative that is quite different from what economists have pressed for urgently, Modi has shown his capacity for out-of-the box thinking- and his willingness to be guided by his grassroots understanding of what is required rather than the wisdom of experts.

"Experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves