In the pre Sebi and pre NSE days, the BSE (actually it used to be called The Stock Exchange, Mumbai) used to do its settlement once in 15 days. Then it came down to once a week…
This meant a lot of weak players would do transactions for a much longer period than what they could have done now. Also it was difficult for the small guy to become a member of the stock exchange, so he/she would become a sub-broker. The sub-broker would introduce the client to the broker and then the sub-broker would get a portion of the brokerage. The problem was that the risk of recovery of the money (or bad delivery of the shares) was on the sub-broker (whose networth was a secret) or on the broker. So brokers losing money with sub-brokers was quite a norm…and if the sub-broker lost money he could go to the authorities. It was a double whammy for the broker who was subject to regulation, and it was fun for the sub-broker who wanted to cheat.
One amazing conversation between a broker and a sub-broker to which I was witness ended like this:
Broker: you….blah blah ….are incompetent, an idiot …and a cheat…because of you I am losing money.
Sub-broker: If you are so smart, and a good guy and have 70 years experience in the business…why the hell did you do business with me?
This led us all in the room to laugh so loudly…that the broker still remembers it!!
So at some stage if you are a lender you ask yourself ….’why did I choose this borrower’. For example today my clients are all big mutual funds, life insurance companies, brokerage houses, banks – there is no risk of bad debts.
Why am I saying all this?
Well I choose to stay away from Adag group but some of my friends chose to deal with them. Well so far I have been lucky have I not?
More importantly the US of A is busy printing notes…and we are buying. I heard an American say ‘Fiat money is no good…afterall government fiats are useless’. I heard Mark Mobious say ‘All emerging economies trust that US will repay…but post inflation adjustment and post exchange rate adjustment…US will pay back with a poor value dollar.’
Most of us are worried about what to do if the greenback slips…but frankly do not know what to do. I have big portion of my money in equities and some portion in debt, but my holding of gold is perhaps only 5% of networth – and it is my wife’s jewelery! I am not alone worrying about the US stopping the printing machine…what happens then? well I do not know. What happens if the SnP downgrades US?
If Ben Bernanke turns to us and says:
“ok i am an idiot. I wanted money, so I printed notes. Why the…..did you buy the bonds?
Oh ye geniuses of the emerging markets is it a case of TINA….that you keep buying this piece of green shit? Why not buy property, farmlands, colonies, American equities,….instead of the stupid dollar? or gold? I do not know
here is a fund genius who is talking something like this…read on
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