Mutual Funds; hmmmmm

We work really hard to earn money, and then invest it with hopes of better returns. People who do not actively track stock markets prefer to invest in mutual funds. These are considered safer than equity.

The key to succeed in the stock market is to buy low and sell high. Easier said than done.
More than 70% of mutual funds do not out perform their benchmark indices. Fund managers are highly educated, intelligent and trained people. Yet most do not need beat the index. The above graph is an indication of how badly the fund managers timed the market in 2009. They had the highest cash holding in their portfolio when the market was at the lowest point.

This leads to me ponder if its worth my while to bother investing in mutual funds when I can easily invest in an Index ETF (exchange traded fund).
 

Not Healed

The wounds are still not covered, the tears have not yet dried. One year to the aftermath of the Mumbai attacks, the people are still hurting. I will refrain on harping the rhetoric (the media is doing that with great fervour). The fact is, that it still hurts.

As the months passed by, the degree of conversation related to the attacks quietened down. Why did we stop talking? I am not referring to questioning the system, accusing the politicians, shouting for accountability on T.V channels and blaming security lapses. Why did we stop talking about our individual pain? (This question is for me too, I waited a full year to write this and don't know what stopped me).
You cannot heal until you talk.

A recent newspaper report mentioned that Mumbai bounced back faster from its trauma as compared to New York and London. It just made me wonder, what choice did we have? There was limited options of venting our anger. Apart from the protest march, most of the anger and pain was internalized and made us more cynical.

I dont have any solutions, but talking might help.

I Want

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Where the market goes..

Liquidity, you crazy crazy drug that fueled the mother of rallies since March, when does thou disappear?

Since Mar09 most benchmark indices have doubled across all geographies. The main reasons attributed to this sudden rally has been liquidity. Central banks in their quest to encourage growth have made money cheaper and more accessible. Some of this has paid of and signs of growth are visible. The dilemma that Central banks now face, is how to structure the withdrawal of this liquidity without hampering growth.

In my mind, the market just realized that you cant fall of the floor. Sometime in march the market felt we were at rock bottom and going lower wasn't an option. But the impact of this realization has been rather startling, a one way rise to current levels.

Now the next question that comes up, is if this rally is sustainable. The global growth story is still hazy, the U.S. and Europe continue to grapple with issues they haven't fully understood. This leads me to believe that maybe being patient with your cash would be a good option.
The critical issue is whether the market will sustain without liquidity and higher interest rates.
Only the central banks know when they will reduce the morphine dose..

A Little Bridge

Each year a fresh batch of business graduates step into the corporate world. New ideas, high zeal and a sense of purpose not witnessed since Jawaharlal Nehru's 'tryst with destiny' speech. The fundamental quality of over confidence rides high over any sense of rationality.

The situation changes drastically once work begins. All the illusions of acquiring companies, rolling out businesses and expanding capacities are shattered into pieces. Realization sets in, that to do all these activities one needs to spend time on the ground. The planes of reality are significantly different and challenging. The discomfort in the grind consumes a few, who move to cooler climes like migratory birds.

This a big dilemma, as you cannot stop people from dreaming, at the same time work on the ground level is important. So the best solution is to connect these two little islands of reality and idealism. And here is when the little bridge of phased induction makes life comfortable.

Attaining Happiness

There lived a young boy named Gopi  in a small quaint village in central India. He was an inquisitive young teenager with a philosophical bent of mind. He was passionate about things around him. He kept probing into matters far deeper than people his age normally do.

Close to his village was a great monastery. The monk who resided there, was highly revered. People came from distant lands to seek his advice and blessings. Gopi often visited the monastery, sitting there and meditating. The monk observed Gopi but they never exchanged more than a smile.

One day Gopi approached the monk and asked him, "How can I always be happy?"
The monk reflected on the question and responded, "What makes you happy?"
Gopi replied, "Chasing my pet hen in the garden" , to which the monk said, "pursue it".

Gopi thought the response was fairly mundane, but did not want to question the monks wisdom. After all, this monk had followers across the country. He did as the monk said, and he had to admit; there was a strange sense of joy. Over time the joy subsided. After six months he visited the monk again.

Gopi asked the monk, "How can I always be happy?"
The monk again replied, "What makes you happy?"
Gopi replied, "Tilling my farm land", to which the monk said, "pursue it".
Gopi had hoped the response would change on this occasion. Again he controlled his urge of questioning the monks response. As time went by, Gopi was intensely focused on his farm land and crops. He did feel a divine satisfaction when he was on the farm. The same level of joy was absent once he got home. His pets did provide him with moments of joy. He felt he needed something else, he was a bit distracted lately. He decided to visit the monk again. He resolved that he will question the monk further this time.

He gathered courage from his past visits and asked the monk, "How can I always be happy?"
The monk again replied, "What makes you happy?"
Gopi replied, "Marriage to the baker's beautiful daughter", to which the monk said, "pursue her".
Gopi hesitated for a second, then said, "Every time I came to you with my question, you respond by saying pursue the matter. How are these related to my happiness?"

The monk smiled and said,"Every time I asked you your source of happiness, you told me a part of your dream, hence I asked you to pursue them. As you accomplished each target, your mind moved towards a new one. Happiness is a moving target of achieving your dreams. As time goes by, your goals and objectives change, you need to pursue them with vigour."

Gopi silently stared in awe. It was now clear to him why so many people approached the monk The monk did not give him the answer in the first visit, he helped him discover it before explaining it to him.
Gopi married the bakers daughter............

In Reality - There is no Versus

This century is proclaimed to belong to the Asian nations of China and India. It will be remembered in history as the arrival of these two giants on the world stage. Facts and data on various parameters involving these countries have been dissected and analyzed by all and sundry. Each 'expert' has painted a new portrait and given a new dimension to the economic successes of the two nations.Constant comparisons, vivid analogies, dramatic graphs and diagrams, have all romanticized the great 'China vs India' focus.  

I will try and replicate some views to highlight  some observations I made while reading economist views and media reports about these nations.

Reports in China

• China's economy grew by x% to reach of a figure of $y billion
• China constructing a bridge to connect mainland to Hongkong
  

Reports in India

• India's economy grew by a% to reach a figure of $b billion, but China's economy grew by x% to reach of a figure of $y billion, what does this mean?
• Bandra worli sealink completed, but China constructing a bigger bridge. 

These are not isolated comparisons. If you Google 'India vs China', you will find mostly Indian or American websites discussing the two countries in tandem. Read the interview of Chinese economists (click here) and then you will realize that China is not concerned about India. There is not a single mention of India in the entire article. Its we who are obsessed with them with our constant comparisons. Our media has created the drama, our economist are constantly comparing, our kids are writing essay and preparing for group discussions on this topic.

China is working on a export driven economy and India is building a strong domestic driven economy. It makes more sense to focus on our own path and channel energy towards our own goals. Probably the reason for their success lies in the fact that they are not paying attention to us. Maybe the two 'engines' of global growth need to discover their own destinies.