The day I stopped a tram in its track....

And before you guys start thinking I did something our Indian film heroes regularly do with their little finger on the left leg with ease and say so what, let me explain.....

I went on a student exchange to Belgium. I was with Solvay Business School, University of Brussels. I loved my stay there ( and the Belgians, I think they were wonderful!). My hostel was about a km from the university campus and was an awesome place. More of a living community, with people protesting against war, sun bathing( when the damn thing came out), coffee with music and music performances... sigh those were awesome days. Anyways, back from the detour.

The Belgians are probably the most courteous people I met on my trip to Europe ( I saw, trekked, traveled to some 7 countries!!). On the main signals, there are anyways pedestrian requests, where you request for the traffic to stop, which then turns red to let you pass. On most other roads, all you need to do was to step near the Zebra crossing and the vehicles would stop to let you go. You acknowledge their courtesy and off you go..... it took me a while to get used to cars stopping completely to let me pass.... I would usually be dumbstruck as to why the heck are they stopping :) problem of upbringing...

And one fine day, I was listening to Bob Marley on the discman, having hot waffles and out I step on the street from the pavement and realise a huge gush of air around me ..... and then I realise, the tram which was on the street stopped to let me go.... jackass that I was :) I apologised to the driver, acknowledged and moved. And surprise he didn't swear at me nor did the others who were waiting to cross....

Now lets play that scene in Indian frames... Deepak steps on the street, driver says "B#@$%^, iski to aaj main le loonga" and pushes the throttle, wham, passengers say " sahi hua saale ki dimaag thikaane aagaye" and then me, with a few handicaps (not the golf types mind you) would be seeking treatment and sympathy!!!


I think about this and try to attribute why we Indians will not let people cross even when the signal is red.... vehicles do a 'creeping acquisition' of the Zebra crossing, swear, spit,scream and honk... I tell myself maybe we are an aggressive race, maybe we are trying to catch up on lost time under the sun, maybe people have urgent work, maybe population trouble leading to too much competition leading to high levels of aggro behaviour but its plain lack of culture I decide, lack of courtesy and respecting someone on the road.... I might be guilty of the same conduct, but trying to change...

All about managing money...

Am down with a bad cold and fever.... so some random tidbits/ observations :

1. You make money by taking concentrated bets - if you are convinced about a stock and can lose all the money you are investing in it, then bet a substantial portion of the portfolio in it. Remember - a 100% return on a 10% part of your portfolio is not much if the others are averaging 25% - A study says, most people in the Forbes richest 400 made it there because of the one big idea that worked for them. So spend sometime, research and come up with a few bets u think will work
2. Once money reaches a critical mass - passive income keeps you going if you harness the power of compounding. So while the attraction of being frugal might not seem great, frugality when you still can ( read : no wife, no kids, no huge medical bills, lifestyle diseases) pays well when you want to party later - so make that large sum of money and build capital
   
3. Use Leverage - Debt is a bad thing. I plays on your mind and creates chaos in times when you want to splurge. But then when investing using debt prudently will allow you to add that zing to your effort to build a passive income stream. Set a level , say you will use 20% of your current income to service debt, that should allow you to get 10X of that money to invest, club it with your capital, which is usually 25% margin and voila you have an asset of 12.5X. Remember - don't use this for stock market investing or debt or commodity. Use this for real assets where the return is higher than the cost of debt
   
4. Protect your capital through diversification - Before you think I am joker who has lost it due to fever, ( Pt 1 says - take concentrated bets, and here I say otherwise) - The same study also says that on an average over 3 centuries ( or was it some lower number of years?) only 20% of people remained in the next Forbes 400 richest list. The ones who did diversified. This is simple, once you have capital built, diversify and protect it from cyclicality.
   
5. Don't self medicate - Since you will not operate on your loved one and will seek a doctor, why do you think you can invest on your own? ( Yeah we know you made 100% on the stock market last week, my pet fish can do better in this market bozo!!) - so set aside a part of your portfolio to be managed by the ( so called !!) experts - Mutual fund ( for aam junta like you and me) , Portfolio managers ( for creatures of higher living) and maybe own fund manager ( Read : Azim Premji , Narayan Murthy , Anil ambani etc who can setup a private equity fund from their dividends)
   
6. Don't forget leakages - Shoddy government working, death, taxation and transaction charges are the only certainties in life - cant avoid the first two, don't let the latter two kill the return % ( and you thought love was also a certainty?)
7. Don't forget to have fun - All the bloody money in the world is to let you have the choice to say "No I don't want to do that crap, maybe something else" - so work towards freedom of choice.
   

Vodafone - a irresponsible corporate citizen

If you move around in Bangalore these days, you will notice the advertising blitzkrieg that has been unleashed. I have no problem with advertising, but when some enthusiastic Area sales manager/ marketing manager thinks he has to be innovative and goes overboard I get pained. So what is the issue?

To create what in marketing parlance " a new marketing asset" vodafone has splashed the trees in Bangalore with metal ad boards which have a metal angle which needs to be nailed to the tree and the ad juts out. While vodafone did nothing to help these trees grow or maintain them, it makes full use of this. This damages the tree ( to whatever little extent - I don't care) , and encourages other businesses to do the same. In no time I am sure, the trees in Bangalore will have this all over and we can bid goodbye to the trees. When you pay for getting your message across, its advertising, when someone else writes to give you exposure its publicity, but when you make use of public property , its Vandalism - and Vodafone is no less than our irresponsible political parties....

Get a mentor now....

One of the things one should surely do is get a mentor. Remember, you need not have one mentor, but multiple mentor. The critical thing why you need a mentor is to show you the 'bigger picture'. Sometimes you get so engrossed in what you are doing, you lose focus of what it is that you set out in the first place for. So where all should you get yourself a mentor -

1. Life mentor - A person who will straddle your personal life and career and helps you articulate what you see yourself to be when you are maybe 45 and have hopefully higher callings in life and not just that big house, corner office, faster car, smaller phone and snazzier gadget

2. Career mentor - One who will help you move towards a long term goal in your career. The assumption here is that your current job is a step towards it and not the one which will lead you there. This applies more to the MBA friends I have who are chasing larger goals and are using the current job to get a skill set - E.g. - I come from a family with no business background, so I might join a startup to understand how they work if I want to startup on my own. But my mentor needs to be one who has done similar things and has started up

3. Job mentor - This person serves the need of the hour and helps you acquire the skills in the current job and helps you move through the organizational clutter. This person need not necessarily be from the same company, but from the same field

So where do you look for a mentor? - in the networks that you have built over a period of time. If you are the type who does not network, ask friends to refer you. Don't expect a high level of involvement from the mentor straight away. Most probably the person will evaluate you before he decides to spend his time where all you offer in return is the feeling of reminding him/her of what he/she was in a younger time.

Remember to do your home work when you approach a mentor, a mentor is not for cribbing but to act as a sounding board. Define your objectives, look at the problem, generate options, do an analysis of the pros and cons and then approach your mentor for advice. Trust me this is important in your own development. Acknowledge the impact mentors have had on you when you succeed, that's the best you can give them.

Make sure your mentor understands your life situation, goals and ambitions ( this is for the first class of mentor i specified) and job, career respectively. Don't hide what you think are the mistake you made, your weakness and strengths. After all they need to help you climb mountains. Respect their time, the effort they are putting in. You maybe a hotshot and the next Bill Gates but this person is fulfilling a purpose.

Some mentor/ mentee relationships quickly move to a co-learning level. Offer what your best, that is what will change the perspective you have about life/ career/ job from what your peers will have.

I have had some fantastic mentors, I can just pick the phone, tell them the mess I am in and they are there to offer me support. I can share my achievements and see the happiness and be thrilled. I have very little to offer to some of them, but hope some day I can pass this along...

The 4% inflation myth!!!

( unrelated : I do a lot of offline writing , so will post more regularly. Hopefully the quality will improve )

One of the myths you hear when you plan your finances is to take into account the inflation. If you are financially educated , you would have heard the difference in real and nominal rates et al. But have you ever bothered what is the inflation rate applicable to you?

If you live in India like I do, then the mai baap government doles out a figure called WPI - wholesale price index which is what the whole business press creates a ruckus about, but when the heck did you and me buy in wholesale? There is a CPI - consumer price index and rightfully its different for different set of people, but then that comes with a lag. This is not a discussion about the pros and cons of various inflation indices. I will reserve that for a boring chat with some of you who are both statistically and economically inclined.

My limited point is - when you planning for the kind of money you want, think of a factor called "lifestyle inflation" - If the hierarchy of needs were just needs, comfort and luxury - remember they will keep getting redefined. Yesterdays comforts are today's needs and today's luxury will be tomorrows comfort. I come from a class and generation of kids who learnt cycling using rented bicycles.... I don't see those shops these days. So bottomline use your imagination and budget for higher expense on essentials

The other factor to factor ( !!) is remember that your life goals will also change - A few days ago i rediscovered how much I love to travel, that I want to see more countries. My current count is 9, and I want to atleast increase it 45. So my plans better take that into account. So what is your life goal - space travel?

As a generation - am not sure we will stick to an organisation for 3+ decades ( that ~11000 working day!!! - subtract sick leave and earned leave ) - since you will change jobs, career - plan for expenses for upskilling/ reskilling yourself. Those will be significant expenses. Also I think since the stress is higher, crutches of a joint family are missing, other social support systems missing - we will burnout sooner - so get the period right

Am sure there are others - all these are stuff which are like inflation, so don't factor a bland 5% inflation the government wants you to believe....

What my MBA gave me and what it did not...

4 years after my MBA , when I was as usual giving gyan to a wannabe MBA , I thought it was time for introspection – what did my MBA give me, what did it not and what was on offer and I could not take out –

What MBA gave me –

Confidence & perseverance – I always did well in my studies, it was in B-school that I got stretched and boy was it a stretch !!! nightouts, deadlines, competition prepare you well for a corporate job where you are expected to hit the ground running. So although I am sure I will not know most things, I know I can learn and get upto speed to reach where I want.

Respect for different working styles – I was brought up in the work hard and the Indian middle class work ethic. But then you reach school and meet extra ordinarily intelligent people, people with smart working aspects, some with questionable work ethics and you see all of them doing well. Learning to work in teams with diverse styles and learning certain skill sets helps immensely. Also you realize the value of ethics and make choices

Network – My MBA plugged me into a network of extremely smart people. Friends who can open doors for you and push your limits in understanding stuff. Living on campus, having discussions about hundreds of unrelated things helped create a perspective which is very different

Audience – I talk to CEOs and promoters on a regular basis. Advise them about business decisions and get treated as an intellectual equivalent. Although I might serve them a limited purpose and I have miles before I reach the levels of some the fantastic CEOs/ entrepreneurs I have worked with, the learning has been awesome – this wouldn’t have been possible without my MBA

International exposure – I went to Solvay business school in Brussels on an exchange programme and it was an eye opener on both hard and soft aspects. I worked in teams which had people from Vietnamese, Chinese, Italian, Moroccan, Spanish and African origin. And boy was it a lesson in communication and respecting cultures. I will post a different post on how it helped me appreciate India better.

What my MBA did not give me –

Assistance in career decision – Most European and US business schools have career counseling setups. The placement setup in Indian schools is most job process focused. If you need counseling the seniors and alumni need to be accessed. With the week alumni network that we had, this was a definite drawback. Would it have helped maybe, maybe not – but am sure would have liked to have access

Industry interaction – Indian B-schools and Industry I think share a love-hate relationship. Students try to get the industry to sponsor, come to interact, setup chairs but then industry rarely responds. Some of the best classes I had, was when we got an industry person to add to what was being discussed in a case. Maybe the growth in the Indian industry leaves very little time for such things and maybe alumnus don’t really appreciate what the school did for them

Breaking the stereotypes –India is about stereotypes. Science is better than commerce, an engineer is better at quant, an accountant is not creative. MBA made me realize and acknowledge when I was getting influenced by a stereotype. But did the school do enough for all of us to break these, am not too sure.

What my MBA offered but I did not utilize well:

Access to a large library / resource: Most times I think running around took away time to explore the library. Increasingly I am believer in reading what has been written about a subject and chiseling my own views. I didn’t have time

Engaging the profs : Each one them with the eccentricities is a person who could have developed/ destroyed ones interest in a subject. Could I have been a marketer? Could I have been a quant trader? Do I love market research I will never know, didn’t spend enough time trying to find out.

Understanding a subject vs. cracking a system: when you are in a hyper competitive environment and the top 1% percentile is greater than the population of many European countries, one is forced to look at the end but not enjoy the means. I could have learnt a lot (I did learn a little!!) but then the focus got shifted to cracking the system and getting those marks.

This list will grow. Maybe 6 years from now I will have a different view. Do let me know what falls in these three buckets when you look back at your own MBA. If you are an aspiring MBA applicant, watch out for these. Am sure learning by watching others helps you avoid what that famous saying says “ Those who do not remember the past are condemned to repeat it”

So you want to start investing.....

go right ahead, you should, after all there have been tomes and tomes written about how inflation eats into your savings and how you should invest in equity blah blah blah. So here is a checklist of what I think you should be doing -

1. Do you have a clue about what your expenses are? - this is because most of us have a good idea of the income - so get a hang of the disposable income - then how much you dispose every month and see what you have left to invest ( * Note - I am not going to talk about a plan that you need to have before you invest in - thats for a different post)
2. Setup an emergency fund - the funds in this should cover anywhere between 3-6 months of your expenses. I suggest you send this money into a fixed deposit or a liquid fund. Ask your bank to setup a overdraft on this money - so that if ever required you draw down immediately while earning interest
3. Get insured - medical and life - this ensures your lifestyle remains the same ( how much insurance to buy - another post - or will link to some good reading)
4. Whatever is left - split the money into 3
   

• Money you surely want in a year or two - send this into debt products - a bank FD, a Fixed maturity plan, a debt fund - depending on what you are comfortable with
  
• Money you dont want for the next 3-5 years - invest in a mutual fund - select base funds which will form the core of your portfolio - start a systematic investment plan on this and forget about using it - review this monthly and a thorough review quarterly/ half yearly
  
• Money you can afford to lose and will not lose sleep if you lost it - take it and invest directly in shares - but come to this step only if all the above are done

Now how to select a fund , a stock etc - I shall post sometime soon..