Inflation, Interest Expectation and Asset Prices

When Interest rates go down, bond prices go up. Almost all MBA students will tell you this. However many of them will be parrotting this without understanding what this means. Let us see what actually happens. When Interest rates go up, ASSET prices go down. This is the originally correct statement. Why and how does […]

Risk: Goes on leave once in a while…

In 2003 a young MBA joined a big bank…..and when he joined there was a big cabin which was kept vacant. When he asked he was told ‘Mr. Risk’ sits there, he has gone on leave. The whole of 2003 that cabin remained unoccupied. So our hero did not see Mr. Risk for the whole […]

My blunders continued….

Over the last few months, I think I have underperformed the market. No clue simply because I do not remember ALL the transactions that are worth comparing. Let me clarify. I do trade on the portfolio that I hold. So if say I have 5000 Cummins and I feel it is over priced at 535, […]

BFSI: Wake up! Clients are angry and screaming

Yesterday a cousin had to convert a pension plan to an annuity, and he had sought my advise. He had an accumulation of a small amount to be converted. They had sent him a form to his residence – he had filled it up and brought it. The form was complete in all respects…so he […]

Why people lose money while investing…

It hardly matters whether it is equities or real estate, the reasons why people lose money is so simple to enumerate: 1. Not knowing the difference between trading and investing: they buy some shares, hope it goes up when it does not they sell off. Since they do not know whether they should be averaging […]

Costing and Pricing Explained!

Whenever there is a group activity, and there are costs, pricing comes into play. The problem is NOT everybody understands costing. I would daresay that most people do not understand costing at all. Let me give you an example from a Running club. These are the costs incurred for conducting a run: Transport (Rs. 1200), […]

Advising friends is dangerous too!

  Sometime in 1994 a friend wanted to keep some money in a fixed interest bearing instrument. The amount was about Rs. 15000. He kept it in one company – let us call it Company A. Sometime in 1999 I was surprised to see that he still had his money there. I told him and […]