Systematic Investment Plan with a Timely Twist

28 09 2008

 

Bharti-AXA, a new kid in the Mutual Fund block has come up with an innovation – Daily Systematic Investment Plan (SIP) as opposed to monthly SIPs offered by other MFs.

 

 Bharti-AXA allows the investor to invest as little as Rs. 300 per day in their equity fund. Investments of higher amounts in multiples of Rs. 100 too are allowed.

 

As the market is witnessing high volatility even within a single trading session, buying a small number of units everyday is a good idea. When the market is up, the number of units bought will be fewer and when the market is down, the number of units bought will be higher. This brings down the average cost of units. The main advantage of SIP is  that  Rupee Cost Averaging is being done on a daily basis instead of  monthly basis.

 

The macro-economic scenario is looking rather uncertain now. Even experts are not able to decide whether the market has bottomed out. Daily SIP looks like a smart idea to take gradual exposure in the equity markets.

 

As the Bharti-AXA is a newbie, their investment performance is unknown. It may be prudent to wait for the older schemes of top MFs to come up with daily SIPs.

 

– G. Mohan





Quiz on the American Financial Sector

21 09 2008

 

Q1:

 

Which investment bank was labeled as “Masters of the Universe” in the famous Tom Wolfe novel The Bonfire of the Vanities? 

 

Ans:

 

Lehman Brothers

 

Q2:

 

Before joining the Bush administration as the Treasury Secretary, which investment bank did Paulson work for?

 

Ans:

 

Goldman Sachs

 

Q3:

 

Fortune magazine wrote: He will probably go down in the annals of finance as the Nero of the credit crisis. Instead of fiddling while Bear Stearns burned, his detractors say he was golfing a little too regularly at the Hollywood Golf Club in Deal, N.J., and playing championship-level bridge in Nashville, San Francisco, and Detroit. Who are we talking about?

 

Ans:

 

Jimmy Cayne, the CEO of Bear Stearns

 

Q4:

 

In 1844, Henry Lehman, a German-Jew came to Montgomery Alabama. His brothers Ennamnuel and Meyer joined him in 1850. They together started a business under the name of Lehman Brothers. Which was their first business?

 

Ans:

 

General Store. Later they moved to cotton trading and that’s where they made their  intial fortune.

 

Q5:

 

Which famous English Premier League football team is sponsored by AIG?

 

Ans:

 

Manchester United

 

Q6:

 

By what names are Federal Home Loan Mortgage Corporation and Federal National Mortgage Association are popularly known as?

 

Ans:

 

Freddie Mac and Fannie Mae respectively

 

Q7:

 

Lehman Brothers’ trading office was located in the World Trade centre. Immediately, after the 9/11 incident the firm resumed its trading operations in a unique way. Describe it.

 

Ans:

 

The firm booked al the rooms of Sheraton Hotel, New York. Beds were converted into desks and trading resumed immediately.

 

Q8 :

 

In 1990, one leading Wall Street investment banks, fifth in size at that time, went bankrupt courtesy its illegal activity in junk bonds, led by the rogue trader Michael Milken. Name the firm.

 

Ans:

 

Drexel Burnham Lambert

 

Q9:

 

American International Group (AIG) started in 1919 as an insurance agency in Shanghai. Its founder, Cornelius Vander Starr was the first westerner to sell insurance to the Chinese. After a successful business in Asia, it went to America only in 1962. Under its legendary CEO, Hank Greenberg, it became the largest insurance company in USA and third in the world. It owns the largest aircraft leasing company in the world having a fleet of over 600 Boeings and Airbuses. AIG’s current Vice- Chairman served as the  US ambassador to India in the past. Name him.

 

Ans:

 

Frank G. Wisner

 

Q10:

 

Merrill Lynch was started by two friends in New York in 1914. It started operations as a brokerage firm and went on to become the world’s largest securities firm on the strength of its brokerage network. It recently got acquired by Bank of America. One lesser known fact is that the owners of this firm took up a small grocery store and built it into the third largest grocery chain. Name the chain.

 

Ans:

 

Safeway

 

– G. Mohan.





Tata Nano vs. Tata Indica Vista : Free Publicity vs. Paid Advertising

14 09 2008

 

Courtesy the Singur land acquisition dispute, Tata Motors has been occupying the headlines for the last few weeks. Every report on Singur invariably features the brand name – Tata Nano.Notwithstanding the fact that not a single car bearing that name has been rolled out yet, Tata Nano is already a humongous brand. 

 

When Ratan Tata, unveiled Nano during the Auto expo in January this year, the who’s who of the world media covered it. Except for one-full page newspaper advertisement, Tata Motors hardly spend anything on advertising for Nano. Yet, Nano is a household name today, thanks to the extensive coverage for all the reasons, right and wrong. Analysts estimate that the buzz created by the free publicity for Nano is worth over Rs. 5000 million

 

Right in the middle of this raging Singur controversy, Tata Motors has launched a new model – Tata Indica Vista which by many accounts is a major upgrade of Indica. Auto analysts have rated the car highly. Tata Motors has launched a high octane advertising campaign. Unfortunately, the response to the campaign can at best be termed as tepid.  

 

Tata Motors now have a piquant problem on their hand. Thanks to the brouhaha over Nano, for which the production facility is not yet ready, once the booking starts, the waiting list is going to be too long, even if they meet the October 2008 launch deadline.

 

On the other hand, Indica Vista, despite its large advertising budget, is unlikely to keep the Tata Motors’ factory busy.

 

On both counts, Tata Motors seems to have some disappointment in store, unless, of course, true to the Indica Vista tagline, they manage to “Change everything”.

 

– G. Mohan     





How do You Know When to Quit

7 09 2008

Last month, I came across a fascinating case analysis by Achal Bhagat in Business World, The analysis provides us with a framework which with proper reflection on the contexts can be applied to understanding organization culture, career planning and even conflict management.

 

Here is the nub of  what Achal Bhagat says :

 

All of us travel our life’s journey on four dimensions in parallel :

   

·        Abuse to dignity

·        Helplessness to control

·        Alienation to togetherness

·        Suffering to purposefulness

 

We spend our lives charting course in these dimensions in various domains of life like work, relationships, leisure, communities etc. We like celebrating events that allow us to feel a movement forward, and feel sad and angry when we stagnate or move backwards. Each time we move away from dignity, control, togetherness and purpose, we panic and feel that we may lose all and forever.

 

All of us are caught in this “one step forward three steps backward trap”. Our movement on purposefulness by achieving the sales target makes us feel more alienated. As we feel more isolated, we need to control our environment more and more. The more we do that the more we suffer, because we are going against what we think ourselves to be. We are in a spiral trying very hard to shoot our way out of it. Obviously, the harder we try, the more difficult it becomes.

 

I found this simple framework very powerful as it is devoid of any simplistic hierarchy of needs. It helps us to integrate the emotional impact on four different dimensions which co-exist at deferent levels at all times. Also, working on one dimension, has impact on the other dimensions. This explains why even high-achievers often do not necessarily feel happy about themselves most of the times.

 

 More than the paychecks and designations, it is what each individual employee is feeling in each of the four dimensions within the confines of the organization that decide their level of emotional engagement with the job.

 

Using the above framework, I could reflect on my own decision to stay on with one employer for over 13 years and also why I decided to move on when the score on two dimensions moved backward. This framework helped me to understand that choosing to stay with an organization goes much beyond the conventional employee satisfaction metrics that HR departments often mindlessly administer.

 

The framework also explained to me why it is often said that employees join organizations but leave the boss. As you can see that in this model, the role of the boss (immediate supervisor) is crucial in determining your condition in  three of the four dimensions mentioned in this framework.  

 

 

I rate the last dimension as the most important. If one is moving forward on the purpose dimension, trade-offs in the other three dimensions are easier to accept. One can still get a sense of fulfillment. Organizations which lend an over-arching, inclusive sense of purpose to their employees, are often able to attract and retain  talents without offering much on other dimensions

 

Given the complex interplay of each of these dimensions, it is clear that one cannot have it all. Also, trying harder is not going to help. The challenge is to identify one’s own comfort zone on each of these dimensions at a given point of time in life and then build or find an organization and career that can help us gravitate to your point of natural equilibrium.

 

– G. Mohan








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