Thought for the day
"I love deadlines. I like the
whooshing sound they make as they fly by."
-
Douglas Adam (English, 1952-2001)
Word for the day
Brume (n)
Mist; fog.
(Source: Dictionary.com)
Malice towards none
Dr. Abhishek Singhavi vs. Suuny Leone.
Interesting!
Dhanvantri vs. Aphrodite
Empirically, it has been my observation that the magnitude and
design of advertisements accurately reflects the pockets of distress and euphoria
in the economy. As an investor I therefore like to keep a close watch on the
trends in advertising.
In recent time I have observed some prominent trends in
advertising that I think could be of interest to investors in general. To
corroborate my observations, I ran a quick survey of my acquaintances and
friends. The survey added a rather interesting facet to my findings.
The key economic trends observed from the current advertising
pattern could be listed as follows:
(a) Real estate
is in serious distress. The size of print media advertisement is mindless and
preposterous. Especially in NCR region, the developers whose name figure right
at the top of multiple defaulters lists, are issuing full 2-3page
advertisements of old unsold or partially sold projects.
On many business channels, property shows have become most
prominent features during non-market hours.
Most people I spoke are exasperated by the excessive publicity
material thrust upon them and repeated calls from their real estate agents.
About 80% completely ignore the property advertisements, refuse to take agent's
calls and intend to sell some property if the market improves.
The distress here therefore is real and likely to last for some
time. Any talk of an imminent overall revival might be an exaggeration driven
mostly by hope and slightly by mischief. Some pocket may however do well.
The bankers, I believe, have fully assimilated the distress and
do not see any immediate opportunity in the sector. The reluctance to reduce
rates meaningfully, despite RBI and government's insistence and failure in
meeting annual priority sector targets adequately reflects the trend.
A drive through areas like NOIDA, Greater NOIDA, NOIDA Extn.,
Gurgoan, Indirapuram etc. shows humongous inventory of partially built
buildings. The cost of construction is rising with each passing day, making
the delivery of these projects even more difficult and loss
making proposition for developers.
(b) The delayed
summer in north India seems to have created some distress in air-conditioning
and refrigerator market.
The media campaigns for these white goods are huge; which is
normal considering the peak demand season and entry of newer players. But the
design of print advertisement is prominently focused on pricing, discounts and free
offerings.
More importantly, unusual amount of advertisement is being done
directly by the manufacturers themselves. Historically, manufactures publicity
campaigns have focused on product features and the pricing and discounting part
has been dealt with in the distributor or dealer's advertisements.
This shows, to me, excessive competition, inventory buildup,
diminishing dealer margin, impact of online sales, at a time when nature is not
supportive.
I guess we might see sizable impact on the 1QFY16 numbers.
However, any market correction could be an opportunity to stock up as 70% persons I spoke to corroborated my
observations and 90% of them are planning to replace their old air conditioners
with new energy efficient inverter units to save on electricity bills.
(c) Smart phones
is the segment that remains euphoric. The market is transforming into a FMCG
market from earlier durable market. Despite new launches almost every week, the
demand remains insatiate.
The advertisement campaign in print media and television almost
matches that of real estate on one hand and chocolates on the other hand.
50% people I spoke with admitted to have changed their smart
phone in past one year, but 90% expressed intention to change in next 12
months. All people below 40yrs said they like to replace their smart phone
every year. Older people say they would love to change their phone if someone
helps them with data transfer and feature of the new phone.
(d) On line
retailing is also in euphoria phase. The bigger players are audacious in
the size and design of their advertising. They occupy most of the air time in
electronic media (TV and radio) and print space in print media.
Prominent advertisement by e-tailers which are not financially
viable by any stretch of imagination are distinct reminders of the dotcom
euphoria of late 1990s.
100% of the people I spoke to have used only top 5 e-tailing
sites for purchasing goods. None trusts the security and quality of smaller
e-tailers.
(e) The last one is
most interesting. 70% of the people I spoke to have observed this and brought
this up on their own. Admittedly, I have also keenly observed this trend but
could not muster the courage to bring this up on my own volition
The sexual health of the people in India appears to be in
serious distress. The most persistent and prominent advertisements in print
media are of aphrodisiacs. Besides, Ayurvedic oil and capsules, almost all
deodorants, most bathing soaps, skin creams and under garments are being
promoted as potential aphrodisiacs.
In my recent trip to the interiors of central India, I had the
opportunity to read some local vernacular newspapers. Almost all of them were
full of prominent aphrodisiac advertisements.
Even in bigger towns like Ranchi and Bilaspur, the ancient
science of medicine - Ayurveda - is sold not as the scientific research of
Dhanvantri (the physician of Hindu gods) but as the art of aphrodite (the Greek
goddess of love and beauty born from the blood of Ouranos - the sky).
One self proclaimed right wing TV channel (Sudarshan TV) runs
one hour advertisement show (every day on prime time) of one Sanyasi Vaidya
(saint healer) who dressed up as a magician claims to provide magical sexual
health medicine for Rs525/month.
The people who highlighted this trend were agitated over two
things:
1. No regulator,
politician, civil society member, human/women rights activist has ever
highlighted this trend and decided to examine it as one potential cause of rising
crime against women.
2. Traditionally,
these products were publicized in inside classified pages along with the small
insertion of quacks, tantriks, magic healers and sanyasi babas.
All newspapers
now carry these advertisements prominently. Where lies the accountability.
My curiosity has raised another question: "What is the
Japanese connection to the aphrodisiacs?"
Two prominent product lines, and perhaps most famous, are
Japanese massage oil & capsule with aphrodisiac property (marketed as
Ayurvedic products needing no regulatory approval) and Japanese enlargement
machine(?).
As an investor, I guess we shall soon see a major round of
funding for the manufacturers of these products and listing of some companies
in next 2-5yrs.
As a social activist I would like to throw this on the face of
hypocrites who like us to believe that India is a land of only chaste and
celibates.
(f) The
advertisements of mutual fund industry also reflect the trend in financial
markets. More on this in next post.
By Bob
McTeer
When Buddy Holly
was little, he insisted on getting on the stage with his uncle’s band and
playing along with his fiddle. The unpleasant screeching caused the uncle to
wax Buddy’s bow. Buddy could still play, but it didn’t bother anybody.
Alan Greenspan
used to wax my bow and the bows of the other Reserve Bank presidents on the
speaking circuit. I got more than one telephone call from his senior staff
purporting to be passing along his admonitions. I always suspected that they
were speaking more for themselves than for the Chairman since they often
objected to what I considered innocuous comments. The most frustrating involved
my characterizing some recent economic statistic as good news or bad news. They
seemed to think that gave away my inclinations regarding monetary policy. Oh,
how the world has changed!
Yesterday, a
colleague of mine wondered in an email, “What is it about the Fed and raising
rates? They are addicted to it like a junkie is addicted to cocaine as the one
answer to every situation other than outright depression.” I found it odd that
he thought the Fed was addicted to raising rates since the last time it did so
was June 29, 2006, almost nine years ago. He must have meant they talked about
it too much.
This morning
brought evidence of that. The Wall Street Journal’s Real Time Economics
Newsletter posted five things to watch on the economic calendar. The first
listed was Minneapolis Fed’s Kocherlakota saying the Fed shouldn’t raise rates
in 2015.” He preferred the second half of 2016. The third listed was Richmond
Fed’s Lacker repeating that he sees strong case to lift rates in June.
I’m not sure this
public debate serves us well. Perhaps Janet Yellen should apply a little bit of
wax.
Trivia
The ban on diesel vehicles by NGT based on the age of the
vehicle is another case of misconceived and misdirected regulation. Each such
regulation increases the level of mistrust between the people and the
administration, beside opening a window of corruption.
In my view, the basis should be the level of emission of
pollutants coming out of a motor vehicle or any carbon consuming device.
If a 10yr old diesel vehicle is driven just 30000kms. It may be
much less polluting than the 4yr old vehicle that has logged 1,25,000kms.
Similarly, the rule for mandatory woman director may serve the
purpose of gender equality only to the extent Deepika Padukone's famous youtube
video "My Choice".
The sustainable and better way would be encourage, motivate and
enable women entrepreneurs to own large business enterprises. Do not confine
the women oriented schemes to cottage and household industries, self help
groups, and money for marriage.
Maulana Azad scholarship for higher studies to girl child from
minority communities is one such scheme that should be widened and applied to
all girls.
Some more interesting reads
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