What makes the world go? Money? where does it come from?

Well let’s come to the real world….”Golden Rule of Investing” – the man who has the Gold makes the rules.

So around 1990 a regulator named Sebi was set up. Great. The regulator and a few people in Delhi felt that they could make money ONLY if the closed club of BSE was broken. So NSE was born. Big companies were listed in NSE..almost automatically. Foreign banks were thrilled. Venture capitalists were thrilled.

Corporate Memberships followed. Happiness all around.

Congrats, BSE was maimed. Not dead, but some of us who were going into the ‘ring’ were told we were not necessary, so a new system was born.

Of course some of us became members of the NSE. 1993.

In 1999 I met Citibank and Morgan Stanley. Citibank showed us an ATM – from where you could buy a Fridge. MS told me they will be setting up 8000 offices. We realized that 8000 offices would mean 8000 guys like me would be sacrificed.

Enter big money in Brokerage business. People who could invest 10000 times our net worth (shareholder money) would be entering. So Kotak, Icici, Hdfc….came with the big bucks. Each one wrote off a few crores in mistakes – one such mistake would have wiped us out.

We wondered how would they do badla. They could not. So the banned it. In came FnO. Faceless managers sucked faceless clients off Rs. ‘000 crores in brokerage and losses. God bless.

1993 came in Mutual funds and the story “you cannot manage direct equity please go to a mutual fund” good story. Well sold, by many people including yours truly. I full believe that story for 99% of the country’s population…

Mutual funds ..the private sector wanted to get an entry…UTI had a strong hold, others did not matter. They could not kill UTI…so they introduced an EXAM…that hurt UTI which lost its agency force overnight. UTI started slipping. Now they are not at no. 1. You might be shocked who was appointed to see what went wrong in UTI. Or you would be amused. Money talks, and talks a strange language.

So now let us summarize. The man who had the GOLD got rid of Indian brokers, Indian badla system, Indians going into the ring. Regulator, Media, Baboo(n)s played the game very well. East India Company was playing the music.

Now the big players game was changed. UTI was marginalised. PSU bank mutual funds were made to look like jokers. End of phase one. New players were all foreign owned. Face it now all the mutual funds are mostly (if not all) are foreign owned and the industry is foreign controlled.

Now comes the funny part. Year 2001. All the parents of mutual funds promoted Life Insurance and Pension plans. Far better margins for the OWNERS and much higher salaries for the employees. Sticky money. So all the mutual funds were marginalized. Media started singing about how ULIPs are the greatest products. Again they wanted to kill the Indian behemoth. So they tried the old trick. Regulator. Regulator said “exam”. LiC was much, much stronger than UTI….so LIC agents were allowed to continue.

2016. Icici Prudential has come out with a brilliant IPO. I am sure the shareholders will make money in the long run. I will be dead, SO I did not apply.

Now what is the sexy thing an IPO? Retail reach. How will you get it? Agents. Simple.

But Agents are not selling enough life insurance. So I should do an IPO of my Asset management company…right?

Well not so fast. An AMC will list at a market cap of say Rs. 2500 crores…and a life insurance company at Rs. 25000 crores.

Obvious right? hurt the mutual fund sellers so that they sell life insurance products. Good market cap. Who will buy the Insurance company shares? Mutual funds. Mutual funds means? YOU AND ME.

So how to do this? Again Regulator.

I rest my case. Go figure.

Purely my imagination with nothing to do on a Sunday afternoon.

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  1. Brilliant insight based on tons of experience. Thinking on same lines, similar events might be happening in banking sector also (sbi).

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