Sunday, August 20, 2006

Mutual Fund Investments and the Sensex

Very often we see and hear the statutory byline .. Mutual Fund investments are subject to market risks ...

Its only a half-truth (the Ardh Satya) .. Mutual Fund investments are NOT subject to market risks ... they are subject to FUND MANAGER inadequacies !!!

They tell us that the Mutual Fund (MF) Net Asset Values (NAVs) will go up along with the markets (Sensex/Nifty) and come down also alongwith the markets .. but that these are relatively safer and one should invest in these rather than equities .. yeah, sure !

Yeah ?? Sure ??

Consider this ...the BSE Sensex made crazy highs in the month of April-May 2006, before the infamous "correction" took place. From dizzy heights of 12,500+ the Sensex crashed to 8,500 levels .. and now has crawled its way back up to 11,500 levels.

To be more precise, here's what happened over the past 4 months...
On April 18th 2006, the Sensex closed at 11,821.57
On August 18th 2006, the Sensex closed at 11,465.72

This is now, down just 3% from that April 18th closing.

So if I'm not mistaken, what these MF guys were (are?) trying to tell us is that if anyone has put money in MFs, well .. the value of that investment is also going to come down ... ok .. fair enough .. caveat emptor .. we've been warned !

The flip side being that since these MFs have well-educated and well-trained fund managers with loads of money (yours and mine!) at their disposal, in addition to a battery of experts working for them round the clock, our money is better off handled by them.

Cool, sounds very good.

Now, any "expert" will tell you that its next to impossible to "time the market" .. but it figures that if one has given himself (or herself) up to a multi-crore MF (Reliance, ICICI and SBI are by no mean small) they are probably better equipped to try to time the market, than say .... you or me !

Ok .. we're still cool ..

But, now brace yourselves for the crunch...

Given below is a brief summary of the performance of a few top ranking MFs (rankings given by in parentheses).

The first figure is the NAV on April 18th and then the NAV on August 18th ... and the difference.
Magnum Tax Gain (No.1) .... 47.98 .... 44.39 .... -7.5%
Magnum Global (No.2) .... 37.47 ... 33.89 .... -9.6%
Magnum Balanced (No.2) .... 32.6.3 .... 30.43 .... -6.7%
HDFC Tax Saver (No.3) .... 123.71 .... 140.34 .... -11.9%
Magnum Contra (No.3) .... 34.33 .... 30.91 .... -10%
Kotak Balance (No.4) ... 23.736 .... 22.17 .... -6.6%
Birla Buy India (No.4) ..... 17.66 .... 16.55 .... -6.3%
Magnum Multiplier Plus (No.4) .... 44.24 .... 40.62 .... -8.2%

I bet you're surprised, eh ?

If the Sensex is now, down by only 3%, how come the MFs are still down by 6-10% ???

Incidentally, if I'm not mistaken, none of these schemes had declared any dividends during this period either ! Atleast if one would have invested in equity directly, he would have received some dividends .. or some rights .. and maybe, even a bonus ! But here, zilch !

If you're a fund manager, you've already set sail with a barrage of reasons .. ok .. may be you DO have a reason .. but hey, isn't there a sucker born every minute !

Now, here's my question: If MFs are subject to market risks, then why don't they recover equally well ?

Investors in MFs are generally for retired persons with a low appetite for risk and the above data bares the great fraud being committed to them.

SEBI & AMFI should seriously consider taking strict action against MFs who are not able to "manage" OUR "funds."

In case you are really looking for increasing the value of your investment, over the long term, you should invest half the money in front-line (Sensex/Nifty) stocks and the other half in Nifty Junior stocks .. and forget about it for 4-5 years. You WILL make money !

But I also have a suggestion for anyone trying to invest in Mutual Funds for the long term. Be your own funds manager. It's simple ! Here's what you do...
1. Open an online Demat account that allows you to purchase MFs online ( is a good one).
2. Identify which MFs are the ones you want to invest in (Visit and for a good run down on these).
3. Decide how much you would like to invest in a calendar year, in each MF. Divide that amount by 52 and every week invest these amounts in the MF of your choice.

This is my own variant of the Systematic Investment Plan (SIP). The upside being that SIP does this once a month on a specific date - but by doing this 4 times a month .. you can get an even better "average" cost of purchase.

Unless, of course, you're just looking for someone to place the blame on !

Well ... and that's how I feel ...

Saturday, August 19, 2006

Have you ever wondered ...

Have you ever wondered .. whatever happened to ...

... Jennifer Grey (that young girl in the movie, Dirty Dancin')
... Macaulay Culkin (the Home Alone lad)
... Harold Faltermeyer (the guy who did Axel F, the theme of Beverly Hills Cop)

For more answers ... please visit (great site ... for those nostalgia buffs) trying to come to terms with what happened to the yesteryears' stars. Be ready for some rude shocks though !

We need to build a similar one here to quench our local thirst for knowledge (and trivia) ... for starters I have a few (and please feel free to grow this list).

Whatever happened to ...

... the first Liril girl (Carol Lunel, I think ?)
... the guy in the Lifebuoy soap Ad
... Amin Sayani
... the girl in the Nirma Ad
... IK Gujral (ex-PM)
... the baby on the Parle-G biscuit pack
... Lalitaji (of the Surf Ad)
... Lajoji (Anita Kanwar) of Hum Log

Quite a varied list.. anyone having answers to the above, please post them to "comments."

In any case, as I mentioned once earlier, public memory is very shortlived, we tend to forget things pretty soon ... but then I guess that's how we are supposed to be.

Just think, if we were to carry around with us .. all the baggage (that we've seen and/or heard throughout our lives).. forever ! Woah ! That's more than a brainfull of unnecessary stuff.

Well ... and thats' how I feel ...

Shorter memories and growing resilience

Despite what all the psychoanalysts (and psychologists, in case they are a different set) say .. I am firmly of the belief, that public memory is generally shortlived ...

There are innumerable examples, right before our eyes ... issues that had taken us all by storm- made front page news for days together - taken up valuable (ha !) Parliament time ... just gone .. POOF .... vanished into thin air !

Whether it is the scams, the rackets, the burning social issues, the natural disasters, the infrastructural failures, exposed corruption ... whatever the issue, sooner or later, we have forgotten them, moved on and claim to have become "wiser" and more "resilient" with the experience !

I think there's more to it than just that. I feel it's a way of insulating ourselves from the "bad" things that have happened. Much like having an attitude of "Let's put all this behind us and look ahead and move forward ..."

Sure, one must always keep looking forward - but as it has been wisely said, "Those who forget History, are condemned to repeat it !" Not that we need to keep looking over our shoulder, but what amazes me is the way in which we "bounce back"(pretty much like the Sensex, that crashed to sub-9000 levels and then is back at 11500 levels to smash the Cassandras).

Look at what we've been through .. and honestly, ask yourselves ... do you really know what eventually happened to .... the Harshad Mehta Stock scam ... the Fodder scam ... the Telgi Stamp paper scam ... the Tehelka scam ... the Kargil Coffin scam ... the Diesel adulteration scam ... the Milk adulteration racket ... the post-26/7 Disaster management plan ... the actual benefits of the plastic ban ... the great Bombay First plan ... the Dance Bar-girl rehab plan ... the Ghatkopar Bomb blast case ... the call-center girls' security issue .... the list is endless !

I wonder if any one of us even remembers (as far back as) the 1984 riots ! ... and I don't even want to venture further back ... into investigating Subhash Chandra Bose's and Lal Bahadur Shastri's deaths !

Another thing I have noticed is that the moment we have a scam that breaks out into the open - we immediately, as an official response, get a "committee" to investigate into it !

Answer me these ...
- How many conclusive (or for that mater, inconclusive) reports do you recall having seen or read ???
- Why aren't these reports made public - after all it IS in the Public Interest, right ?
- Why doesn't the Government post these on the Internet ?

There is just no accountability ... we have had 7 blasts less than a month back across the city, great big brouhaha .. big noise .. VIP visits (which upset the administrative framework even more) and then what ?? ... an investigative committee (or ATS, whatever), which is still struggling to get leads !

Look at the British intelligence ... Hat's off to them !

They caught the guys BEFORE they blew up the airplanes .. and here we are .. 6 weeks later .. and still sifting for clues ! It's probably no wonder, why James Bond is such a cult figure - after all he was (is ?) a British agent !

I read Shobha De mention that the less said about Mumbai's spirit of resilience and ability to bounce back, the better. She's right ! We need to be really angry at what has happened to us ... and not sleepwalk around saying .. "Well, this is life .. and we need to get on with it !"

The general public likes to get over things quickly especially if they are negative thoughts (a good thing in a twisted way, though). But it seems to be more of a question of "mind over matter" ... if you don't mind, well .. it doesn't matter !

Well ... and that's how I feel ...

Wednesday, August 16, 2006

Independence Day - just another holiday ??

India celebrated it's 60th Independence Day on August 15, 2006.

For most people, it was just another holiday, a chance to spend time with friends and family. I guess the only people really busy were those involved in education and politics (including the government agencies). They are the only ones (barring a few NGOs, Corporates and Housing Societies) who unfurl the National Flag.

Which brings up a few questions ...

1. Do we really understand the relevance that Independence Day has today ?
2. Why do we celebrate it the way we do ?
3. Why do we celebrate 2 national days (Republic Day is on January 26th) ?
4. Is it just another holiday ?

Honestly, I don't have any answers to this .. just more questions ... and a few thoughts.

I wasn't around when Independence happened, but yet, when in school, we attended the celebrations (though, reluctantly, I must admit) and sang the usual patriotic songs, heard a variety of patriotic speeches (in English, Hindi and Marathi) .. and generally waited for it to get over !

The sad thing was that while we were in school doing this, we usually missed the fun part - watching the Nation celebrate it on TV. Of course, this is nothing compared to the show we get to see on Republic Day ... and that was always the trade off ... miss school and get to see the Parade. Once college started, it was up to us whether to attend or not, and the choice was pretty clear !

Those of us who read the newspapers and watched TV must've noticed nothing new this year around ... the same "forced" carmaderie .. the forced patriotism .. the forced nationalism ...

Even the PM's address to the nation echoed of the same run-of-the-mill threats to anti-national forces, infrastructural development and the call for upliftment of the poor. Sounded much like Nehru's speech ... and if we haven't got it right for 59 years ... we better start doing this differently or hey, even maybe different things (with apologies to Mr. Shiv Khera).

Coming back .. it makes me wonder why do we even celebrate the two days separately ... in my opinion (and I could be terribly wrong here !) ... I believe that Independence Day has a whole lot more relevance than Republic Day .. and yet we do a much better job on Republic Day - what with the grand parade, show of military strength, etc.

The common man on the street may be able to point out the difference between the two days very easily (for those who are still guessing .. Independence Day is the day the British stopped ruling over India ... and Republic Day is the day India adopted its Constitution). Now do we really need to put the nation through TWO days of Nationalism ? Why don't we celebrate just one day .. and go the whole hog on that day ?

I don't believe that a grand show of (forced?) nationalism twice can get us to be a better nation .. and we can definitely do without the extra holiday. I don't really think we can afford to have even one more holiday !

Our country has, possibly, the highest number of Public Holidays in a calendar year ... The official Central Government list puts it at 13 (Ha !) .. but being the "secular" country that we are ... we are benevolent enough to allow the State Governments to add their own special days ... and then there are the Banks .. who have their own list, which may or may not synchronise with either of the Government lists !!

In addition to this, we celebrate birth anniversaries and death anniversaries of various Gods, Goddesses and National personalities .. and that's not all .. we also have a few "observed" days .. like National Integration Day .. Communal Harmony day ...

For a sample list of festivals, one can visit

If I'm not mistaken, this year (2006), the banks have a total list of 50 (yup, that's right) Bank Holidays, spread across various States !

One such list is available at (no offence intended to the particular Bank).

The actual number of non-working days increases a lot more .. taking into account the various other problems that we face ... Strikes ... Bandhs ... Floods ... Terrorist Attacks ...

Which brings me back to the real relevance of celebrating Independence Day. The common man is happy (and even grateful) to enjoy the Independence he has ... but I don't think that THIS is what our fore-fathers had in mind when they laid down their lives.

We definitely have the independence to rule ourselves ... no outsiders involved now .. right on ! But do we really enjoy the quality of life that we were supposed to get out of this foreign rule oppression ? The way in which the Government functions sometimes makes you feel that we need to have another war of Independence ! We seem to have merely replaced one set of oppressors, with another !

Yesterday, I saw Rajdeep Sardesai say on TV that in a survey taken, a majority of the youth-respondents actually were aspiring to earn just about Rs. 5,000 a month ... while less than a third were aiming for Rs. 20,000 ! Our sights are set so low for the majority, and yet we are unable to fulfill these aspirations .. and we wonder why so many take to unscrupulous activities.

These (misguided ?) youths don't really care for the fight for Independence ... One dialogue in a recent movie, Dus, probably summed it up for these guys ... when asked by the main protagonist as to why a member of the protection squad had betrayed his team members (and country) he said ... something to this effect .... "My father retired at Rs. 18,000 .. I probably will at Rs. 22,000 ... they (meaning the "enemy") named a sum of money that I couldn't even dream of .. and my scruples and principles just crumbled before it."

I think we need to do a lot more ... not by merely increasing awareness of the relevance of the Independence Day, not by having more cultural programs, not by unfurling more flags, not by singing more songs, not by making/delivering more speeches .. but by actually instilling a sense of belonging and ownership in the common man. Yeah, right .. I know .. easier said than done !

Each one of us needs to believe that we have a responsibility towards giving ourselves and our neighbours a better life .. and that we CAN do it.

I believe its this sense of helplessness, this futility of effort, this "chalta hai" attitude, this fatalistic view of life, that really needs to be overcome first, before we can really begin to see some changes ...

Well ... and that's how I feel ...

Monday, August 07, 2006

Pathetic State of Mumbai Roads

Another rainy day ... and another tryst with the Mumbai roads !

I get the distinct feeling that one of the two things have happened:
1) Vehicles plying in Mumbai City have wheels which "erode" the roads
2) Road Construction companies have started using infinitely substandard construction material

Any which way, its the road traveller who suffers .. . giving a new dimension to the Hindi word for journey ... "safar" ... which till now just bore its similarity to the pronounciation !

For those who speak the new variant mix of Hindi-English ... called Hinglish ... "I'm going on a safar" could very well mean that they'd be making a road trip in Mumbai city !

With technology improving and with manufactuers getting more innovative, one would have thought that something as basic as building roads for a coastal, tropical city would not be equal to rocket science ! But our guys have made it out to be just as difficult !

Well, actually, maybe not ... maybe they'd just like the roads to be reconstructed every other year or how else would they stay in business ... oops, how else would they ensure everyone else stays in business !

A win-win for all ... constant employment for road construction workers, stable demand for material ... and something easy for the Municipal Corporators to keep themselves busy with ... what with preparing Tender specifictaions and vendor shortlisting and reading reports and having interminable committee meetings ...

Here, in Mumbai, we often hear these politicians tout phrases about how they'd like Mumbai to be like Shanghai ... yeah sure, that's one plan that's going to get Shanghaied ... and the less said about the tout-ing, the better !

Well ... and that's how I feel ...

Sunday, August 06, 2006

Accurate Mumbai Weather Forecast !

I have noticed that the weather reports that appear in our newspapers .. are invariably at least 24-36 hours LATE !!

After having poured and poured for 24-48 hours the reports will wake up and forecast another 24-48 hours of Heavy to Very Heavy rainfall ... and more often than not, those are just about the brightest days of the week !

Well .. okay .. I may be exaggerating just a bit !

When questioned on the inaccuracy, the main reason being cited is that ... the "poor" BMC .. the "poor" cash-strapped State Government and the "poor" Central Government cannot afford to have a Doppler Radar for Mumbai .. so that they can keep the country's Financial capital "afloat" !

.. and guess what .. now the latest in the line of excuses (oops, reasons) is that they have the funds .. but have not found the ideal location to install this Radar !!!

For crying out loud .. we have enough of the sea that is being reclaimed - some of it, even unauthorisedly .. so I'm sure the CRZ authorities can make a concession for something as critical as this !!!

So I decided to try and find out on my own .. about when will it rain and when it won't ... and I came across a site which had fairly accurate weather reporting for Mumbai city ... here it is for those of you who are also struggling ...

(Disclaimer: I have no financial interest in this website !)

Meanwhile, the authorities (and maybe even the media) can refer to this website and publish, relatively more or less, accurate info !

Well ... and that's how I feel ...

The Plastic Ban .. one year later ...

It's been over a year since Mumbai city was flooded ...

The main reason for the flooding was cited to be the indiscriminate use of plastic bags .. especially the thinner variety (20 microns and less). Since thin plastic apparently has an "ability" to get into the drains and clog them ...

Nothing, obviously, was mentioned about the non-existent waste management programme of the BMC. Waste management .. waste disposal .. waste recycling .. a lot of words .. very little importance accorded to them by the powers that be !

In its anxiety to show the people of Mumbai that it had done something worthwhile .. the Government went right ahead and "banned" the use of thin variety of plastic. The law formally came into place this year .. and the minimum thickness was raised from 20 micron to 50 micron ! Good show, guys !!

Well .. now that we are supposed to have banned the 20 micron bags and forced all manufacturers to switch over to thicker 50 micron bags .. there shouldn't have been any flooding this year, right ? Wrong .. the bags which earlier used to "go with the flow" .. have started clogging drains earlier .. since they are thicker now !!

The ban has not really made people switch away from plastic .. they have just moved to the thicker variety ! Result ? Prices of all plastic raw materials have gone up by about 15-20% over the past few months ... and guess who is paying for all of this ? .. You and I are.

.. and the manufacturers of these basic raw materials are laughing all the way to the bank, since they now are getting a higher price on account of the sudden demand increase; and are also actually selling more volumes !!

Other manufacturers who use this plastic to pack their products in .. are facing increases in packaging costs, which they promptly pass onto the unwitting customers .. you and me .. and it's Double Jeopardy for us .. not only does the flooding continue, but we now have to bear these increases as well .. Great going, guys !

Meanwhile, the Government is completely silent on the much needed Waste Management, Waste Disposal and Waste Recycling plans.

Hat's off to the politicians ... I hope the delimitation of constituencies which plans on giving more seats to the urban areas will force these guys to "look after" their vote banks .. if not out of their own civic sense, but at least out of their own selfish needs to "preserve" their seats !

Maybe we should also ban a few politicians who make irresponsible rules without getting into the consequences of the laws they promulgate, or is it the bureaucrats who are responsible ... we will never know .. or will we ?

Well ... and that's how I feel ...

First Post

Well ... and that's how I feel ...

Aug 6th. First Post....

More rain in Mumbai. Spent the day at home reading two newspapers (The Hindustan Times and DNA) refreshing break from the Times, which I was used to, ever since I could remember reading the morning newspapers.

Too many issues that I find unacceptable.

Let's start with them one by one ... the failure of the civic administration, my pet peeve ..!

I heard the Municipal Commissioner say that our Mumbai city's drainage system is very old, upgradation would take about 2-5 years and that it cannot handle something more than 3 inches of rainfall per hour .. or something to that effect. I wonder if Mumbai's rainfall has increased that much only over the past 2 years .. at least till then there didn't seem to be as much flooding. I find it hard to believe that Mumbai's rainfall has increased substantially over the past few years .. is there any statistical data to substantiate this ?

Can anyone from the Met. Dept (IMD, I think) actually verify whether rainfall in Mumbai city has actually increased over the past 2 years ??? I think not ...

The only good thing that seems to have come out of our last years' flooding experience is that we now have a few telephone numbers to contact the BMC's "Disaster Management Cell." For what it's worth .. they actually work .. I've tried it ! They actually give out relevant information - Surprise ! Surprise !! Makes you feel that there is hope ... and we need to keep trying.

... now if they only get their own teams to call up each other and figure out what needs to be done in a "Disaster" .. we'd all be better off !

Well ... and that's how I feel ...