Sebi has been making a lot of changes in the mutual fund business – there is a good chance that the size of the industry will shrink. Same thing about RBI and IRDA.

Just hold on! Is the industry shrinking in size? No. Not at all.

Some re-arranging will happen. If you have been wondering why there were 44 players in the mutual fund industry, but only 4 were profitable, well now there will be more.

Fidelity is planning to sell its stake (according to ET, but then ET has said this many times in the past, and frankly I have no clue whether they will or whether they are planning to).

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/fidelity-set-t

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How long have I been running Half Marathons (HM)? Well from 2008. When did I start measuring? Perhaps 2011 – it is the first one which I remember. However in 2011 when I ran the HM, I did not know the words like form of running, how to handle a hill, the average pace at which one should run, starting slow and finishing strong, carbo loading, hydration, need to eat or drink during the race, what clothes to wear, whether to wear a cap or glares, ……….or anything else connected to running.

In 2011 February I ran another Half Marathon called the ‘Thane Half Marathon’. At this race I took off 2 minutes – and now my PB (personal best) was 2hr:48 minutes.

I decided that my next target would have to be a sub 2:30. This was now a goal – when it is so simple it need not even be written down.

Suddenly many things started happening – I am going to call some of them “Acts of  God”(luck) and some of them my own acts (effort). Funnily you realise that in most cases, you have to cause the Act of God, by doing some Acts of your Own. My definition of serendipity is being smart enough to recognise the lucky opportunity.

At the Thane Half Marathon (THM) i met a bunch of fantastic runners who were part of a group called ‘Navi Mumbai Runners’ (who have a Face Book group by that name) and were brought together on a running platform called ‘Runners for Life’.

Suddenly I was hearing of words like ‘hill work out’, ‘Tempo Runs’, ‘Sunday Long Run’ – and there seemed to be a pattern to the training. It did not take IQ above 68 to realise that running at 75kg was easier than running at a weight of 83kg (my Scmm weight, 2011). It did not take too much time to realise that cycling and swimming were fantastic – but to improve running, you had to run more! Dammit cross training was for those who were training a lot, not for people running twice or at best thrice a week for 6 months in a year – at best!!

There were many websites, books, hydration belt, cap, and an autographed copy of ‘Chi Running’ by Danny Dreyer) being thrown at me (thank you S. Swaminathan), lots of disciplined runners to emulate (thank you Srivatsan, Pravin Gaikwad, Surya), people who said keep it simple, just keep running (thank you Mani, Mumtaz Qureshi), lots of research on techniques and its application (thank you Venkat krishnan). Sheer enthu for running (Kripa) and a nice session on running techniques (fresh from a Chi running session – Deepta Rangarajan). One day prior to the race, one of the racing gurus of Mumbai (Daniel Vaz, alias Zico) made a short presentation – picked up some race day tips!

All these I would put it as Act of God. However the fact that these people were around even before too, seems unbelievable. Even friends changed! Earlier I had friends who said ‘Vow! you actually finished the HM? Amazing’ – now I had a friend who said :”2.50 for a HM? did you walk?’ (I hope Vikram Narula is reading this post!!, Grrr..).

Goal setting creates a frame of mind for you to accept the Acts of God. Exactly how it took Issac Newton to understand gravity because of a falling apple!

Got myself a Garmin 310xt – which told me the pace at which I was running (the soft new Heart Rate Strap is inaccurate, so not really using it much).

About 12 weeks before the race, another Act of God happened – Venkatraman Pichumani another great runner created a Face book group – for ‘weight loosers’ – and I came down from 82kg to 76kg – and that would surely have helped.

On the race day – it is you vs. the elements, is it not?

What did I get right?

Well I hydrated on Friday, and Saturday – and my urine colour was almost white. I may have over hydrated, but surely not under.

I decided  – not to take a pee break (not tough in a 150 minute race).

- no stoppage for food (race guru Venkatraman said there is no physiological need for mid race eating)

- no stoppage to look for known faces (one classmate, one maths teacher,…etc. could have been in the crowds, just did not turn)

- walked up the hill and ran the down part at a neck break speed (thank you Chi running and Swaminathan for reminding me on the day before the race)

- my Garmin which was telling me that I was running at 8.6km/hr (i needed to run at 8.4 to do 2H:30min HM)

-my Asics shoe (no complaints about the Adidas shoe I used in 2011 either)

- the silence and sleep during the journey from home to the race ground (and people thought I was meditating?)

Well this is a first draft…may make some changes going forward…but WHY this note on a personal finance blog?

Simply because this is too close to Financial Planning.

- you need to set goals

- acquire knowledge, KNOW WHOM TO ASK

- Trust, but, Verify

- Remember there are many sources – BUT choose your advisor carefully.

-Media loves activity, Advisers love activity – You make money only if there is growth in your portfolio. Likewise there are food suppliers, shoe suppliers, etc. – you need practice, practice and more practice.

-there is no magic wand – wear this adidas shoes and you will run like Bolt or eat this food bar and you will do a full marathon – so you need to be careful.

Summary: Surrounded myself with good (great) runners who gave free advise (no bias, there were doctors, venture capitalists, technical analysts, chemical engineers, …but nobody was selling shoes, apparel or running supplements). I read, heard, …still did what suited me…

so long, farewell…

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I did a time of 2:29:28…..for my HM

this is of course the nth time I am doing it..and presumably my best timing….remember 5 years ago there were no chips to use….

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He had Rs. 400,000 and he had to invest in bank fixed deposits. To avoid IT (and reduce risk, his language, not mine) he had kept it as 8 FDs of Rs. 50k each – a few pay quarterly and one or 2 pay interest annually. So far so good, no hassles.

All the deposits were in a single name and he had made his son the nominee – he is a widower – so this was also fair and logical. Also some of the post office deposits (senior citizen scheme) he could not make his son the joint owner, so the son is a nominee and not a joint holder.

He is now going into a old age home in a different city – so the son wanted to operate the account – and the mess came to light.

3 FD forms are not traceable. One bank had not ISSUED the FDR even though the FD was made about 2 months ago. 2 banks had made him open a savings bank account just to credit the Quarterly interest.

He now had 5 savings bank account, 12 banks to deal with, multiple FDs where the interest had to be collected (obviously it would go back from the ‘address on account’) – and the son was staying in a different city.

Out of the 12 banks he had to deal with, 5 were banks where I would not leave a rupee! Co-operative banks based in Mumbai and its suburbs – and nobody had a clue about the quality of balance sheets.

The son was exasperated – he had to type/ print so many letters, explain what had happened, apply for PIN numbers, ATM cards, give a few dozens of photographs, PAN card photocopies, …..the clerical work was just astounding.

The most important thing was he told me “THERE IS NO RISK IN KEEPING MONEY IN ANY BANK – I have always been protected”.

This comes from the fact that whenever he has kept money in an organisation with the name ‘bank’ he has been protected. This man had kept money in GTB – Global Trust Bank. Even in this bank the shareholders lost ALL their money, but the deposit holders were protected.

If you see the RBI stance – they have protected your FD immaterial of which bank your money was lying in. Bank of Rajasthan – became part of ICICI.

So the general feeling is ‘bank FDs are risk free’ – and the risks are not priced. So if a SBI pays 8%p.a. interest BUT a Suku Bank pays 11%p.a. RBI DOES NOT SEE THE PRICING DIFFERENCE AS RISK….

If we do not let banks fail – thus hurting people, they will continue to chase rainbows of ‘risk adjusted returns’ – simply because risk is zero in debt!!

Who was asking why Indians do not invest in equities? Simple debt returns are superb – esp with risk at zero

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1. City bias: I have lived my life in the comfort of a city with good infra. The infra has been deteriorating over a long period of time, but I have actually seen the Municipal trucks WASH the roads of Mumbai with water. Today there is a drinking water shortage.

2. Equity bias: I eat, live, breathe and sleep equity. No, I do not claim I understand equity markets, but there is surely an equity bias. I have seen the down turns, have lived through 2 scams (it is difficult to hold on to your Rs. 100 share all the way up to Rs. 12000 in 14 months, right? or your Rs. 10 share all the way up to Rs. 1650, right?). Been there done that.

3. I do not think I have a gender bias, but have grown up among Tam Brahms and Gujjus. In my professional life have interacted with Marwaris, Sindhis, and of course Maharashtrians. Difficult to say I do not have a bias – not sure if it comes out in my writings. Have found good and bad people in all these communities. I have a few Muslim and Christian friends (studied in a Christian school too) and I would like to believe that I have no religious bias too. In the Mumbai that I grew up, frankly I never knew which friend was what caste. So there should not be a caste bias too.

4. Geography bias: My portfolio is predominantly Mumbai, and Chennai biased. I do not as a rule invest in companies from Hyderabad (long long ago much before Global Trust Bank and Satyam happened!). Though I do have companies from Bengaluru, and a couple of companies from Delhi, but clearly there is a geographic bias.

5. Understanding limitations:  My limitations of understanding equity markets and being biased towards the past cannot be done away with easily. For example it is easy for me to take the last 30 years data (1980 to 2011) and say “If you do a SIP for 8 years you CANNOT lose money”. What I actually mean is “If you had done a SIP ANY TIME in these 30 years and done a SIP you could not have lost money. FRANKLY I understand that the past is not an indicator of the future, but all of us will be biased with our own experience. I heard Jeremy Siegel say (I think it was on Bloomberg International) ‘market is at a p/e of 11 and historically the Dow has a p/e of 16. Again this is a HISTORY bias.

6. Recency bias: the fact that the latest information is better than old information is also a version of recency bias (oops!!). Also the bias that what has happened in the immediate past will continue is the recency bias – I hope I do not have that.

7. I am more biased towards Ayn Rand than towards Karl Marx. However capitalism as understood by AR is no longer in existence. So AR’s theories may not hold correct in today’s circumstances.

…will write about this later…

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- a friend was offered a 30% discount on a retail purchase of a flat in one of Mumbai suburbs

- a lovely property belonging to Hindustan Unilever Ltd. did not find any buyer in an auction – at Worli

- one girl was killed in Delhi by a bus. She was walking with an Ipod – and did not hear the bus.How do you tell the kids in the office such a morbid story to drive home the point? Hey kids take care of your lives!

- Welcome FDI in retail. Is this the end of the Kirana stores? Not so, says my kirana store friend. Who will give your mom 50gms of kismis, kaju, elaichi? My mom refuses to buy more – she prefers buying fresh whenever she needs instead of stuffing all this in a fridge. Well the Kirana stores have a few more years to go.

FDI in 53 cities says UPA. Well Jayalalitha, Mamta, Maya have screamed murder already. BJP is confused. UPA states like Maharashtra will follow….not very useful UPA!

When FinMin announced a limit of US $ 10 Billion for FII investments in Indian mutual fund (a few months ago) a TV channel wanted a byte. I said ‘it will not attract any money’ ..she was shocked and decide to use somebody else’s quote. Now the figure is NIL. Still waiting. Given our cost structures – and commission structure I think it will be NIL for some more time. Only fund that is likely to get some money is the banking etf. Clearly when you cannot buy shares of SBI directly, you need to invest in the bankex – through a Bank ETF….:-)

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Why do I find so many attractive targets to write about?

Just found an article on Rediff.com saying ‘Six reasons why property prices WILL NOT FALL in your city’.

Let us look at it reason by reason?

“Property prices across the country are unlikely to see significant price corrections of more than 10 per cent in the coming few years.”

YOU NEED GUTS TO MAKE SUCH A COMMENT…RAW GUTS.(my comment!)

Reasons given in the article:

1. Because it is a cash haven for BLACK MONEY: come on Indians know that now you pay 30% Income tax and 10% short term capital gains tax. Long Term cap gains is 0% – much easier to convert and invest wherever you wish. Even in cities like Mumbai, only some locations can you do a 70:30 (Cheque: Cash) transaction. Much, much easier to do small transactions in gold.

2. Investors are willing to pay the high interest rates: Complete nonsense. Seen a deal where a builder borrowed Rs. 200 million @ 28% p.a. for 2 years. This builder would have happily given a 35% discount on his rack rate – but needed a big committment from the buyer. As it was not forthcoming, it got converted to a secured loan at 28%.

3. Inflation: I did not understand this as a reason, pardon me.

4. Wages have gone up, thanks to NREGA – so labor is not available….

I think the author means that because of inflation and non availability of labor prices cannot come down. Funny, prices of existing housing stock will fall – because the builder may be going out of business!!

5. Contrary to popular belief only a few builders are leveraged: Do not have enough audited figures to dispute this, but take a look at the balance sheets of listed companies – there is surely some leverage, and further loans are JUST NOT AVAILABLE for builders…

6. You are likely to get about 18% p.a. return: Did this working over the last 25, 30, 35 years…did not find any location where property prices doubled in 4 years…feedback welcome. And I am not even talking about interest cost, borrowing costs, term insurance, maintenance, ….etc.

the bold print is in the article – the normal print is my view. Sorry rediff, find it difficult to agree…

Now I know a bunch of people who have LOST money in real estate transactions – bad builder, bad timing, …many reasons and in many locations too! Pune, Chennai, Bengaluru, Mumbai, Navi Mumbai…..will do specific stories…not sure when!!

here is the link

http://www.rediff.com/getahead/slide-show/slide-show-1-money-six-reasons-why-property-prices-will-not-fall-in-your-city/20111121.htm

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Same is true for equity markets, but that is a different story.

Those of you who are sick of my real estate, gold and other sob stories should read the link provided below.

CAVEAT: do not even think of doing this exercise with Mumbai or Delhi prices unless you have a cardiologist somewhere near you….

http://www.fool.com/investing/general/2011/08/29/where-to-rent-where-to-buy.aspx

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It may also be some kind of a protection for people investing only in India. You can look at condos at US $ 50,000 – at such prices the real estate agent in Mumbai and Delhi will not even look at you. Given Indian prices and terrible rental yields, it may be worthwhile to invest in US and UK.

Most of us are today sure that it is India and China are the only growth stories and all US and Europe is doomed. Please understand it takes a couple of world wars to dethrone those in power. US and Europe will not give up the domination very easily – this means the real estate investment cannot be too bad.

I am neither saying ‘buy’ or ‘sell’ – just read this article by Deepa Venkatraghvan – in Economic Times – and take your own decision..Please remember US is an extremely ‘agent’ oriented country – so while taking a buying decision remember Estate management fee, taxes, currency risk, brokerage and commissions while taking a decision…and as usual have at least ONE BUSINESS CYCLE – 7 years view…shorter views could kill you or maim you at the least.

http://economictimes.indiatimes.com/news/nri/nri-investments/us-real-estate-smart-diversification-option-for-hnis/articleshow/10728864.cms?curpg=2

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Let us call him M.D.

He bought a house in Navi Mumbai for about Rs. 80 Lakhs, – of this about Rs. 55 lakhs was funded by a loan from the State Bank of India. Over the last 4 years he had paid a lot of interest, but the principal outstanding was still Rs. 52 lakhs.

He was also doing some SIPs which had seen an amount of Rs. 33 lakhs, but now in this market was worth Rs. 30 lakhs – not too bad, but the IRR was not too great. He does not have any debt investments except his LIC endowment policies – and all the policies are together worth Rs. 30 lakhs.

So far fine. He just lost his job with effect from December, 2011 or Jan 2012…..

He will have to find a new job, NOW and immediately.

What is at stake?

Household expenses (including children’s school fees) …….Rs. 100,000

EMI                                                         Rs. 52,000

His needs are as follows:

Rs. 1.5L x 12 = Rs. 18L – assuming he gets a job in 6 months, he will need Rs. 9 L.

He is about 53 years of age – he needs to have his retirement corpus in place. He knows that jobs paying Rs. 25 lakhs and above are almost non existent especially in Sales and Marketing unless you are willing to take aggressive targets. In the bfsi space perhaps it is only a bank that will take him. How does a 53 year old join an aggressive and young bank? Not so easy….

He can always sell his house (he thinks it has appreciated, my take is the appreciation is LESS than the interest paid on the loan..but yes that is a choice. Options are few and far between in the jobs. Most people expect a 53 year old to be holding a technical qualification or an address book of potential clients…he has neither…

What does one do? Looking for answers…

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