Let me explain. Rakesh Jhunjhuwala and Vallabh Bhansali are the more famous names so I am naming them. Both are Chartered Accountants – Vallabh a rank holder at that. Both put in hours of hard work on company balance sheets at the start of their career. It is not just the hard work, but also the talent to understand numbers. Their success was not attained by sudden flight, but they while their competitors slept, where poring over the numbers. You could add Ramdeo Agarwal to that list. Of course there are many others.

Sure they have their own methods. One may only go long. One may not leverage. One may trade and do a disciplined leveraging. The METHODS do not matter UNLESS you can FULLY understand this (i have been screaming about UNDERSTANDING BUFFET, NOT just reading Buffet).

However people who only see the success of these people (or even a Sachin Tendulkar, Rahul Dravid, Aamir Khan or Vishwanathan Anand for that matter) should realise that reading a little bit about ‘Technical Analysis’, or ‘Fundamental Analysis’ , subscribing to a few websites (even the brilliant ones like www.motleyfool.com, www.wsj.com, www.investopedia.com is JUST A BEGINNING. Or the more relevant Indian ones like www.myiris.com, www.valueresearchonline.com, www.moneycontrol.com, www.moneylife.in,….you still need to be at a particular level to understand what they are saying.

Websites are here to inform, lead you to better sources, get you in touch with sensible people, BUT CANNOT BE A SUBSTITUTE for research. When we did equity research (2 reports were for one of the Gods mentioned above!) – the detailing was great. The discipline and detailing that we did for a Singapore based VC would put the CBI and FBI to shame. To me this was all learning – and humbling experience. The CA degree helped in learning things faster that is all.

So just because you have stumbled on a website whose owner knows 179 words about Fundamental Analysis (or Technical analysis, Asset allocation, retirement withdrawal techniques, or what have you) do not think you have reached the destination. You have perhaps started on your journey. And there are miles to go.

Getting rich is easy (a booming economy with a 9% growth where every donkey gets a horse’s job ensures that). Making that step to getting Wealthy is the challenge. Surely you know the difference between being Rich and Wealthy

I like to say Amuse, Excite, Entertain, Horrify,  - and perhaps Educate is what this blog can do. If I think that there are blogs which can do more than this, sorry I have not found them.

Even though there are books (Saraswati), we need teachers (Guru – Hanuman) who will ensure that we DO what we know (Wisdom does not come from libraries, you need the blessings of Uma the Goddess of Wisdom).

So do not confuse a map with the destination!

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Myth No. 1: I am too young to plan for retirement: This is a very very wrong statement. The earlier you start the sooner you reach the goal. What happens if you are not able to earn from the age of 54? You thought you will save very well in those 7 years did you not?

Myth No. 2: I can never be as good as Vallabh Bhansali or Rakesh Jhunjhunwala so why try? So stupid. Of course I cannot write as well a zillions of good to great writers, but I have been blogging, published a book…and till date nobody has called my blog lousy. So what if I cannot be as good as Vallabh in investing or Swaminathan Anklesharia Iyer in writing? Come on I can manage my own portfolio (lot of value copying from Warren and Vallabh, but my money does not know I have copied, does it?).

Myth No. 3: It is too late for me to start planning for retirement: same as point no. 1. Start today, of course yesterday would have been better. However today is still better than tomorrow.

Myth No. 4: Planning for retirement is very difficult. Not at all. Invest some time first – the rest of the pieces fall into place. Sorry to use this post as a plug – ‘Retire Rich Invest Rs. 40 a day’ is my book and a good place to start.

http://www.subramoney.com/book-written-by-me/

PS: there are only 3 myths – the 3rd one is just like point no. 1 and the 4th is a plug.

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The answer is very simple. Merchant bankers are a nice small clique who also run PMS schemes. So when the ‘Investment Bank’ goes to get a mandate they flaunt their strength in:

a. The retail brokerage network that they have built

b. The HNI clients that they cater to and

c. The PMS services that they run.

Now all these activities actually become some kind of a backward integration for their brokerage business. Thus these clients are told – here is L&T a great company and at an attractive rate of 8.5%. Gilt is not far away at 8% – and for senior citizens there is the senior citizen yojana at 9%. Of course their own executives were busy filling up forms of Mahindra Finance which was at 9% not very long ago.

So if your PMS provider runs a full fledged business in other finance areas, you are likely to buy some of those lemons or violently churn your portfolio. If you must go to a portfolio management service what you should be looking for is:

a non broking PMS provider – whose only income is PMS fees. There are 3-4 such providers in Mumbai and you would be better off with them. One name which immediately comes to mind is Chetan Parekh of Jeetay Investments. However like all sensible people he does not offer ‘PMS’ at Rs 5 lakhs. Parag Parikh is also a PMS provider – but he perhaps runs some brokerage business as well.

In fact the financial planning business does not conflict with thePMS business. However as a planner it makes sense to stick to Index etf as a recommendation instead of pretending tobe able to find the next WIPRO or the next INFOSYS.

Let us leave that job to Vallabh Bhansali of Enam or Rakesh Jhunjhunwala of RARE to do it. Amen.

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There are also some lectures planned by fund managers of life insurance companies (remember they are now the largest equity investors – AHEAD of FIIs – who will also be speaking at the venue)

It is a fantastic intellectual event happening for the 5th time, and the best part is it is free to the retail investor.

The title sponsor is Icici Direct.

for registration www.myiris.com

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Many people know that Hanuman is the Guru according to Hindu mythology (for the very philosophically minded, Hanuman caused the Atma (Sita) to join the Parmatma (Ram) – and that is the essence of Ramayana. So you need a Guru to teach you from the learnings of all the great people mentioned above. However is that enough?

Many people know – and many others may not know – that Parvati (Uma) is the Hindu Goddess of Wisdom. Wisdom is about doing what you know. This is the crucial link. Training, Learning is all fine – but for it to translate into action, you need wisdom. That is the crux.

So knowing that compounding creates wealth, living a simple life gives peace, tobacco free, alcohol free, stress free living gives peace is not enough.

Seeking a simple life, doing a simple sip (and sitting tight during turbulent times), having a term insurance, one credit card, IS ABOUT DOING all that you know. That will give you nirvana. So as Nike says, Just Do it.

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The Optimistic view: the world loves a bull market. The world loves a winner. The world loves to see the “good” man win – that is why we pay millions of rupees / dollars to see movies. So speaking optimistically:

1. India is growing at 7% if you believe the pessimists and 9% if you believe the optimists. Anyway it is way above the world average, so investments will flow in.

2. Oil will hover around 90$ to the barrell and that is good news.

3. Our working population is huge, and has a fantastic capacity to earn, save and spend.

4. Our domestic investors have put a small amount of money in equity markets, as they invest more, markets can only go up.

5. Rakesh Jhunjhunwala says markets will go up. He cant be wrong, can he?

Now, sadly for the other side:

1. We are nowhere near the beginning of the American problem. Credit cards, Home loan defaults, Pay day loans, – we have not begun to touch the tip of the iceberg in the American problem.

2. Indian IT companies will have a huge drop in earnings – thanks to the American problems.

3. The turmoil in the banking/ investment banking / financial services industry world wide will ensure that less money comes into the markets.

4. Down turns could be for short term – say 18 to 24 months, but secular bear markets can keep the index same for long periods. Remember the Dow remained at the same level from 1970 to 1982.

5. Shankar Sharma says the sensex will not reach 100,000 in his life time. Assuming he lives for another 35 years, it means the Indian markets will grow at a rate LESS THAN 5.8%. Now if you provide for inflation at 7%, you will get a negative return. Shankar Sharma cannot be wrong, can he?

So, which view would you want to take? Optimistic or Pessimistic? Make your choice. All yours!!

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There are many myths in investment management …let us break some of them:

Buy low and sell high: Such a simple statement to make, and impossible to do in real life. Buy cheap and sell dear. People would like to think this is easy to do, but remember whether a share is high or low is something you know only in retrospect. For e.g. if you buy Hdfc ltd. today at say Rs. 2400. Six months later if the price is, say Rs. 3000 and you sell it, you would be right. However if you buy it today at Rs. 2400 and 6 months later it is at 2100, you would be wrong. So it is a nice maxim which is easy to espouse, but difficult to do.

Have greed when others have fear, and have fear when others have greed: A very good, brilliant saying again difficult to implement. When the index was 6000, there was a program on one of the Television channels. The 3 speakers were Comrade Raja, Shankar Sharma, and Rakesh Jhunjhunwala. Rakesh said people should not keep their money in savings bank account but put it in the share market. Raja was of course on a spiel about how Americans are here to corrupt (Oh completely as an aside did we hear any Comrade complain about Russia in Georgia?) us etc. Shankar Sharma told Rakesh “Aha, now that the market has reached 6000, you want the common man to lose money?” and put RJ on the defensive. However what happened to the market after that is well known! So to be fearful when others are greedy and greedy when others are fearful is nice to say, difficult to implement.

as life goes on…we will break some more myths.

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June 7 and 8 (2008) Nehru Centre, Worli, Mumbai, India will see an unique event for the retail investor. Many fund managers – (Nilesh Shah (icici prudential mutual fund), S Nagnath(dsp mutual fund), Madhu Kela (reliance mutual fund), Prashant Jain (hdfc mutual fund), Rakesh Jhunjhunwala (Rare enterprises) – an investor, Sanjoy Bhattacharyya, are all people who have spoken in the past), along with many company managements will come under one roof and give gyan on what to buy, when to buy, should you sell, etc.

It is a fantastic intellectual event happening for the 4th time, and the best part is it is free to the retail investor.

The title sponsor is Icici Direct and the silver sponsor for mutual funds is Mirae.

for registration www.myiris.com

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There is Shankar sharma who is predicting that the market might see 10,500 (when he says market can fall 50% from its previous top, I guess this is what he means), says we are in a bear market. He says the bear market can last 2-3 years.

Then there is Rakesh Jhunjhunwala who says market the market is in a correction mode – part of a bull market and this phase can last 12-18 months.

Frankly all these experts are guessing – and they are looking into a teleprompter or a tv camera not a crystal ball.

Getting the market right means -

1.getting the direction right (from 21k, the market will GO DOWN),

2.say by how much (it will go to 14,000),

3. how long it will be there (time that it will spend at say 14k), and by implication

4. when will it start going up. AND HAVE THE CONVICTION TO STAND BY IT.

Like John Templeton, I also do not know anybody who knows anybody who can get all the factors correct, all the time, every time. So stop listening to sure fire timing success stories – it requires too much discipline to be successful with Technical skills.

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Udyan Mukherjee is speaking to a host of experts to ask for their views.

Rakesh Jhunjhunwala – (whose call on the IT stocks last June was bang on target) says we are IN a BULL market, but we are going through a correction. And it will last about 18 months.

Shankar Sharma – who is of the opinion that we are in a BEAR market which can last 2-3 years.

Frankly we are all searching for that “magic pill” which will tell us the correct answer.

Unfortunately, there is no asnwer.

I think to be able to take any action (i.e. to know when to buy and sell) one needs to know the following:

1. At 21,000 you should have known the direction (markets will go down)

2. How low can the market go (say 14,300)

3. How long will it remain there?

4. When will it turn back up?

AND THEN HAVE THE CONVICTION that he is right even if he gets signs that he might be wrong!

And as John Templeton says, :I do not know anybody who knows anybody who has been able to time the market EVERY TIME! Surely, it looks impossible!

So are we in a bear market, bull market, sideways market, linear bear run, etc. is actually known only to Mr. Benjamin Graham’s fictional character Mr. Market!

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