Do it yourself

 Historic performance of a banker In the summer of 2007, at the peak of sub-prime bubble, a top executive at a global bank presented to the Board that the bank has expanded its footprints to 11 new frontier markets and materially augmented the operations in the 13 emerging markets by enhancing the workforce by 19% in the past one year, a record in the 90year history of the bank. The board applauded the presentation and approved the 100% hike in the annual bonus for the top executive. In the spring of 2009, the same manager made another enthusiastic presentation to the management. He said, “the management has been able to cut the cost by a whopping 28% to meet the challenges of global financial crisis. We have optimized our operations by exiting the non-profitable operations in 17 frontier market and 2 merging markets, and materially curtailing the operations in 9 emerging markets, to achieve 20% cut in the total workforce in the past one year; a record in the 92years history of...

 If a geologist tells you, “the Himalayan Glaciers are melting fast and there will be no water in the Ganges in year 2050”; what would be your instant reaction? Will you— ·          Rush to store water in buckets? ·          Begin to explore places which are not dependent on the Himalayan Rivers for their water needs, for relocation in next few years? ·          Commit yourself to the environment conservation by adopting 3R (Reduce, Reuse and Recycle) as part of your life so that the green house emission is reduced, global warming is reversed and the geologists are proven wrong? ·          Dismiss the information provided by the Geologist as fait accompli and get on with your routine life? I may say with confidence that various people will react differently to this information, but none will rush to store water in...

Once there was a tyrant feudal lord. He would oppress his subjects using all the means within his power. He would often torture them; force them serve to his cause; plunder their assets; abuse their women and children; violate their traditions and culture and exploit their lands to his benefit. Once he learnt that one of the traders in his village posses large amount of gold and precious stones. He immediately summoned the trader to his palace and ordered him to surrender all his wealth to his Lordship. The trader refused to obey the orders arguing that the wealth is the reward of the hard work done by him and his ancestors, and only his children have the right to own it. The Lord got furious and ordered his muscleman to beat the trader black & blue and lock him in the basement. The musclemen would beat the trader everyday but he would not tell them where his treasure is hidden. To make sure that the trader does not die before disclosing the location of his treasure, the Lord's...

The benchmark equity indices in many global markets are presently positioned close to their all-time high levels. The equity shares of new age companies, with relatively untested business models, are commanding prices, which could be termed “obnoxious” from the view point of conventional valuation methods. The global debt yields are staying obdurately low, despite higher inflationary expectations and liquidity contraction talks. The market value of cryptocurrencies, one of the youngest asset classes, is also more than US$2trn. In these circumstances, “Risk” is naturally the most talked about, and understandably the most ignored, term in the financial markets. All market experts are highlighting the urgent need to manage “Risk” for investors. Investors’ survey on understanding of Risk A quick survey of household investors’ perception about the “Risk”, and their methods of managing “Risk”, however highlights that “Risk” may actually be one of the least understood, though most talke...

 As we celebrate the 74 th anniversary of our independence from the British rule, we appear to be even more resolute in our persistence to deny some of the unpleasant facts, that allowed Europeans to conquer and brutalize ancient and wealthy civilizations, such as ours. We refuse to accept the answers and explanations to the uncomfortable questions, that are relevant today, more than ever. For example, consider the following: 1.          How did Europeans, whom we believed to be primitive, become so powerful in the Middle Ages, especially 14 th and 15 th century, that they were able to conquer and enslave ancient civilization which had mastered art, science, mathematics, and philosophy? Most of us refuse to acknowledge, it was the Renaissance, total break from the past dogmas and acceptance of a new paradigm, that helped Europeans reinvent themselves as a great political, economic, and scientific power that shall rule the world for man...

In past couple of weeks, some news items, and market & economic trends have attracted my attention. All these news items & trends somehow reflect on the reflation trade that has dominated the global markets for past few months. The rise in commodity prices in past one year is seen mostly a function of a combination of demand and supply side factors. Post global financial crisis (GFC 2008) the investment in new capacities had slowed down considerably. The economic lockdown due to outbreak of pandemic further curtailed the supply of many industrial commodities. The logjam at Suez Canal further impacted the supply chain. The supply of commodities obviously could not match the recovery in economic activity as the economies began to open up. The trillions of dollars in pandemic related stimulus further boosted the demand, as all three activities, viz., consumption, capex and trading got boost from worldwide stimulus. The US government’s plan to invest US$1trn in building nation’...