Debt is alway safe...really?

One thing every MBA student & RM & Financial adviser and every other tom, dick & harry involved in business of investing will tell you is - Equity = risky and Debt = safety. However, if recent event with regards to one JP Morgan Scheme are to go by, you would be in for some shock.



So JP Morgan Asset Management Company put out notice/press release on 28-Aug-15. here is copy Link here or below is the content copy paste

"In the general interest of the Unit Holders of the JPMorgan India Treasury Fund and JPMorgan India Short Term Income Fund, JPMorgan Mutual Fund India Private Limited, the Trustee Company, has decided to limit the redemptions in the above referred two schemes effective August 28, 2015. Accordingly, the Redemptions in these two schemes will be limited (“gated”) to a percentage limit not exceeding 1% of the total number of Units outstanding on any Business Day as mentioned in the Paragraph III. Units & Offer, Section B. Ongoing Offer Details ‘Right to limit Redemptions’ of the Scheme Information Document of each scheme and the Trust Deed. Any Units which consequently are not redeemed on a particular Business Day will, subject to the further application of the Trustee Company’s right to limit Redemption, be carried forward for Redemption to the next Business Day. Redemptions so carried forward will be priced on the basis of the Applicable NAV (subject to the prevailing Exit Load) of the Business Day on which Redemption is made.

Investors should note that Redemptions shall include Switches, STPs and SWPs also.

Each capitalized term herein has the meaning assigned to such term in the Scheme Information Document.

This notice must be read in conjunction with, and forms an integral part of; the Scheme Information Document (SID) and Key Information Memorandum (KIM) of the JPMorgan India Treasury Fund and JPMorgan India Short Term Income Fund and may not be distributed without the SID or KIM"

In simplified word it means, if you have invested in this particular debt mutual fund scheme, you just can't sell/redeem it. rather it is restricted to 1% of total outstanding units on any day. Now one of best thing about MF is liquidity, one can get money pretty easily. but above thing seem to go against very characteristic of MF. so question arises why? well its to do with paper/securities that scheme had invested in. One of the security/paper turned out sour or of not that good quality or they gave money to company as loan and company is now unable to pay....meaning your money is gone.....poof.

I am not sure what happens to investor money, whether they will lose it or probably global parent JP Morgan may bail out to protect its reputation. However henceforth you know if anybody says debt fund are safe how much it really is.

Read, Learn, Improve - 29-Aug-15

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Green for Bull or Bear?

Since there is mayhem in market, I wont indulge you in too much gyaan except "Buy quality stocks and sit tight"

Here is something interesting i notice on BSE website. In market parlance colour Green is associated with Bull or market being up, while Red is bear and indicates markets are down. so If markets are down font colour reflect the same, however today I noticed for a moment it was not. Like when sensex was down by 1000 odd points, fonts were actually in green colour



however it changed after sometime

Smartphone makers are copying Dell

It was probably 5 years back, when I was thinking of buying a new laptop. If you have been born in 80s you would have experienced most of all tech revolution unfolding before your eyes. So like in 90s when IT revolution had picked up (Infy had IPO sometime in 1994 or 1995 I think) people were getting hooked on to idea of automation and tech, corporate had gone on major capex drive to computerise their system as much as possible. And then internet came in public domain and college kids got hooked and started demanding PC (personal computer). If you went to market you had two options, branded and non-branded which was called assembled in local lingo. Branded was very expensive, to give you idea I got my first PC with config of Intel Celeron (Pentium 2 was in thing and expensive), 10 or 15 GB hard drive with RAM of around 150-200MB, an colour monitor, key board and mouse and all major software windows, office, adobe & acrobat and few games – all for Rs30-35,000/-, this was around 1999-2000. These days one can get better deal on flipkart or any other online store for around ~Rs20-25,000. Mine was assembled and not branded, hence comparatively it was cheaper compared to brand at that point of time.



Fast forward to 2009-10 and I was thinking of buying new system and thought to go for assembled as it would be cheaper. However, I found that branded laptop was almost equal or slightly expensive compared to assembled plus it came with warranty and all original software. Choice was clear, I opted for branded (Dell). Dell was started my Michael Dell in his college dorm, where he assembled and sold PC to buyer (assembled...just like Indian) he was eliminating middle man in selling PC to customer. He could sell cheaper as he had no middle man to share commission and also pass on cost benefit to attract customers. Beauty was he scaled this model on global level, tie up with key supplier of components, buy in bulk get raw material cheap and let customer design (config) his PC and sell it.

I wonder how soon before this model is replicated in cell/mobile phones. In some way it already is, xiaomi and one plus one/two, don’t manufacture but rather design and get manufacturing done from third party vendor and sell it through online stores only and no offline – marketing & promotion is probably done jointly. However no TV ads, no need for distributor or retailer and logistics company, number of activity that organisation do is considerable cut down. But how long before third party vendor or a new vendor decides to directly offer customer ability to design their phone based on catalogue they already have?

How to get Bang for your Buck

Being Analyst means to keep questioning your friends & colleague about their company. Here is one such tale from talk.

Once there was big FMCG Company, one of the key activity of an FMCG company is advertising. If one carefully observes advertising & promotion is key part of strategy. There is substantial money spent on making those ad - hiring right models, directors, jiggle writer, travelling, music composer, etc. However most important of all this is ad agency or to be more precise “Creative”, one who actually think of ad (they are real talent of ad agency). FMCG company typically meets client servicing manager who understands what message client (FMCG) wants to convey through ads to customer (Target Audience) then goes and conveys it to creative team. Then creative team goes about thinking of what ad should be like. (In this case product belongs to ready-to-eat kind of product).

Thing about creative people and creativity is, one cannot really motivate them or stimulate it. Try being creative on purpose and chances are one would fail.  Creativity comes at its own pace, one cannot simply throw money or car or chocolate or anything other materialistic stuff to induce creativity. Creativity is like making baby, one need loads of passionate love to consummate, one needs patient to carry it out around for 9 months, one needs dedication to continuously take care of it and finally probably the most important “courage” to delivery it. However many think there is shortcut, like taking 9 women and 1 man and telling them you have 1 month to make a baby (its like equally telling someone “come with idea or you are fired”)



Something similar happens while making ads, in order to make your brand stand out from others, your brand needs to communicate message that creates very specific image in minds of consumer or deliver right message that it gives certain/stands for value. However this idea on how best to do it has to come from creative person, who operates on altogether different tangent. There are tons of ad agencies in world, one can hire anybody to do the job, but it takes genius to pull out creativity from creative team. One can pay software engineer and ask him to write code on urgent basis, but cannot ask painter to come up with creative piece on urgent basis.

FMCG Company appreciates this very best, so in order to pull out best creativity from team, it arranges for visit of creative team to schools, colleges, office etc places where people discover joy of food. Remember your lunch time in office, chances are most of the time first thing one does is, ask fellow friend “tere dabbe mein aaj kya hai?” You and he get excited on discovering your favourite vegetable. So that is something that tickles or ignites creative peoples mind and makes them think. Because of such stimuli creative guys are able to come up with better idea.

This is called true way to get bang for your buck, obviously this beats all other forms ;)

This gives one real insight of how FMCG industry, ad agency and whole industry operates. However key thing is best companies truly know how to motivate and get best out of employee or vendor. Best companies/Leader understands money & fear can only motivate up to extend, one needs to truly cherish & appreciate art (regular or not so regular job) that people do on day in day out. If one observe closely one would notice idea of motivating creative, came from brand team of FMCG Company. So imagine how much effort they took in not only to understanding consumer but also creative people who work for ad agency. Now obviously these brand managers in turn were hired by HR people, so some credit goes to them who hired such a smart people. To top it up these HR guys probably put in lot of effort in hiring right people because of organisation culture, which in turn was probably created by founders & senior management of the company. So it’s kind of big circle that feeds on each other.

Read, Learn, Improve - 15-Aug-15

Space mining is closer than you think, and the prospects are great – Link here

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The video game dream: a pakistani teen gets rich quick in e-sports – Link here

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Read, Learn, Improve - 8-Aug-15

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Chinese Textile Mills Are Now Hiring in Places Where Cotton Was King – Link here

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Don't teach a man to fish. Just give him the goddamn fish – Link here

Want to Hire Great People? Stop Asking Stupid Interview Questions! – Link here

What Is Our Attention Really Worth? – Link here

Why This Company Could Reshape Franchise Funding – Link here

How Toshiba delayed a $100 million loss with two words: 'uncorrected misstatement' – Link here

Why A 21-Year-Old Is Building OYO As An Uber (And Not An Airbnb) For Hotels In India – Link here

How youtube became the new food network – Link here

What the nose knows - it can fundamentally change the way you relate to other people – Link here

In hunt for good cultured company

Once Analyst was job hunting, given some work experience he has figured out it makes sense to work with a company that has good philosophy / culture/ core value. Because if you get that one thing right chances are rest all (money, work profile, good boss/mentor, solid learning etc etc) will follow on its own. So here is one such incident of Analyst on hunt of good company to make his career.

So once a small time company called up, Analyst had not heard too much about it, pay level was pretty less, but out of curiosity he went for first round of interview with HR person, here is small transcript of interview

HR: so tell me something about yourself

Analyst: .....blah blah blah blah (mainly talks about skill areas, what he can do, what he likes to do, what he is good at, etc)

HR: your family background

Analyst: .....blah blah blah blah (yes you gone hire them as well)

HR: where did you do your MBA from?

Analyst: institute that is sister-concern of Mumbai’s No-1 MMS Institute, (where nobody likes to go, but I went and got my MBA at less than half the cost of most major institute, also managed to have fee payback in 1^st year of job itself)

HR: ...oh....ok..... (I could figure out she was not really impressed by the name of institute)....so was it full time or part time or correspondence

Analyst: FULL TIME....there was class where students use to go and sit on bench and professor use to come and use OHP to teach us

HR: oh ok that’s nice (seems convince that my institute does exist and not fake one) ......what about your graduation.....what you did and which college?

Analyst: .....blah blah blah blah (thankfully its known name)

HR: ok nice (smiling...as she recognised name of my graduation college)

Analyst: ..... (Glad to know HR finally understood something)

HR: so why do you want to leave your current job?

Analyst: I don’t understand or can’t get along with culture & philosophy of current management

HR: but what if you join us tomm and don’t like our culture too?

Analyst: I believe that is why we are having this meeting, so to understand each other better.

HR: ya....but you see....we don’t have culture

Analyst:......ummm.....what.....how is it possible?

HR: our company has 200 people but only 6-7 people sit in HO with whom you would be working, so what culture would be there to talk about.

Analyst: I am sure there are something.....some central philosophy/ guiding principle which drives those 6-7 people.

HR: those 6-7 people report to Chairman, so he drives (orders) them.

Analyst:  ok......2 things (1) they don’t go to chairman for every decision right?......so what are key principles that helps them make right choice. (2) your chairman also takes decision so how does he decide what choices to make?

HR:....ummmm...(has thoroughly confused looks.....manages to say).....so what are you trying to say

Analyst: what is sense of your purpose?, why do you do what do you do?

HR: well that’s easy....CMD looks forward for monetary gains....

Analyst: so if money is the motive there are 10 other business that can help him make money ...why this business and not those 10?

HR:.......ummm......I am not sure

Analyst: no problem......I think may be I will get those answer from Management

HR: ya...thanks for coming....I will speak to management about your profile and I will get back to you.

This is India – Quantity = Quality

This is India – Quantity = Quality

Once analyst applied for a position in leading jewelry retailer, here is transcript of the interview

HR: tell me something about yourself
Analyst:... blah....blah....blah
HR:...hmmmm... (Followed with long pause as he is going through CV).......hmmm.....(those thoughtful words are utter when one doesn’t understand anything about financial or business analysis, in between he plays with his iPhone)
Analyst: ... blah....blah....blah, so that is what I am , what I like doing
HR: so do you have any idea about jewelry company?
Analyst: throws industry facts & figure, company specific facts, key success factor in business, important variables that needs to be monitored, key risk & how to manage those
HR:...hmmmm...(facial expression says it all....I don’t understand a shit pal.....let me check my whtsapp)
Analyst: ... blah....blah....blah, so that what basically I know about jewellery industry.
HR:  so tell me something.........which job have you applied for?
Analyst: (bit startled)......MIS Costing & Finance
HR:...ummm.....ummmmm.
Analyst: quickly removes print out of JD posted on job-sites
HR:  ...hmmm..... (While looking at it)....ok...you know there are too many openings so I got bit confused.
Analyst: ok
HR:  tell me something.....have you done any kind of homework about our industry & company?
Analyst:  (copy pasting previously given answer but in new format) throws industry facts & figure, company specific facts, key success factor in business, important variables that needs to be monitored, key risk & how to manage those....blah blah blah..... blah....blah....blah.
HR: (is checking out his iPhone again) ok pal......we are in process of interview other candidate...so will let you know once we decide
Analyst: ok....thanks for having me.
HR:  on the way out of office, hey Analyst...do me a favour....make a new CV that is bit bigger than current one (1-pager)...its bit smaller.
Analyst: ok sure (whatever happened to concept of “Minimum Words, Maximum Impact”).

 

Read, Learn, Improve - 1-Aug-15

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Warren Buffett’s Family Secretly Funded a Birth Control Revolution – Link here

How One Life Hack From A Self-Made Billionaire Leads To Exceptional Success – Link here

Buyback Extravaganza – Link here

Why Women Choose Not to Have Children – Link here

The thing about flat stock markets – Link here

Algorithm Aversion — Why people don’t follow the model! – Link here

20 People You Don’t Want to Invest With – Link here

How Facebook's video-traffic explosion is shaking up the advertising world – Link here

From Germany to India: Two hitchhikers on their way east – Link here