Archive for the ‘Current Affairs’ Category

Facebook and more investor irrationality

Saturday, June 9th, 2012

I’ve never understood the stock market and share trading. While I get the occasional itch to roll the dice and play the buy/sell game, my limited disposable wealth, fear of loss accentuated by my ignorance, and a general conservatism that overpowers any budding gambler’s instincts have combined to keep me a passive and cynical observer of the markets. I derive some pleasure in the roller-coaster ride of the indices; more so in the inexplicable causes that power such a ride. Honestly, I find the whole thing rather irrational- despite all the sophisticated charts and trend graphs that they show or the percentages and ratios that some ultra-bright people keep talking about.

The Faceook IPO is the latest case in point. Till about a week or two before the IPO, Facebook and Zuckerberg were the global darlings. There was nothing better in the world than the IPO! The media hyped it up; analysts hyped it up and other than a lot of envy for a 20-something to be joining the ranks of some of the world’s richest billionaires, it was THE event worth looking forward to. Then, the D-day(s) happened. FB got listed, Zuckerberg got married, encashed some of the paper worth (probably for a honeymoon somewhere), the stock plumetted and a new term ‘zucked up’ got added to the English language. More analysis and a single conclusion- Facebook is grossly overvalued!

C’mon! What really changed in less than one week to create such a radical shift in opinion? In my understanding of factors that could influence stock price— and let me remind you, this is not an expert view–nothing had changed. Let’s list some of these potential factors:

a) The business itself
b) Business performance
b) The business model
c) The people running the business
d) Legal/ regulatory framework
e) The external business/economic environment

Other than the founder getting hitched and offloading a tiny portion of his holidngs for a little bit of liquidity, the post-Facebook IPO world hardly looks any different. Yes, there may have been a couple of additional academic papers published on global warming and its damning consequences; news of an aspiring politician being questioned in a corruption case in India or that AIDS is still rampant in a certain part of the world. But if any of these were to have influenced the downward spiral of Facebook stock, then I understand the phrase ‘that’s a stretch’.

Hopefully, some of my bright friends- who spit out fundamentals, P/E, shorting with amazing frequency- will help me overcome my prejudiced view of the irrationality of investors and the stock markets (they will need phenomenal patience, though). Or, is this quite simply the stuff that only genius is entitled to fathom?

Delhi blast: does it matter if the act is ‘cowardly’?

Wednesday, September 7th, 2011

India’s PM Dr.Manmohan Singh reacted to the bomb blast in Delhi this morning in a fashion typical of politicians and big government officials, terming it a “cowardly act“.

Question is, who cares whether the act is “cowardly”? Does it matter? The only things that matter are that innocent lives are lost and that terrorists have been able to succeed in killing people and creating terror. To the common man, it is an act that makes him more insecure, unsure of whether the government and its security forces are capable of protecting him; for the perpetrators of the blast, it is an impactful act that screams out the loopholes in the fight against terror.

Hopefully, the government will spend less time in choosing from one of the three or four standard terms used to describe events like these and focus on bringing the perpetrators of the crime to justice and prevent more such incidents in future.

‘Serving customers’ is a strategy?

Sunday, August 28th, 2011

“Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”

Guess who said the above? None other than the great Warren Buffet, after Berkshire Hathway made its decision to invest $5 billion in Bank of America.

I am surprised. Since when did ‘focus on serving customers well’ become a strategy? Shouldn’t that be one of the primary goals of being in a business (any business) anyway?

When a deal no longer sounds like a deal

Saturday, August 6th, 2011

I received an e-mail today from a Singapore daily deal site. As I glanced through, I saw one offer for something at S$28. The original price of that product was marked at about $320!

There are two ways I could have looked at it. The first one was: “Wow, what a deal! What a steal! Over 90% discount!”. However, that’s not what came to my mind. The immediate ‘reflex’ thought was: “What the heck! These guys have been minting money off us at that price!” Instead of feeling an affinity for the merchant offering that unbelievably low price, I felt a kind of revulsion—- I found myself questioning whether the product had been any good at all in the first place.

I see a lot of “deals” these days– after all that’s the flavour of the season now. But the more I see these outrageous sounding deals, the more I feel distanced from them. They seem to be becoming unrealistically cheap. I’m not sure if such deals are sustainable at all and if consumers will continue to be drawn towards them.

A deal has to sound and feel like a real deal!

Qantas or Air India?

Friday, June 3rd, 2011

We all know of the problems with (and of) Air India, which has figured in a few “worst airline” lists previously. I wonder if Qantas is striving to match or better Air India in the worst airline stakes. In fact, it has a new “first” to its credit that even Air India cannot claim: rats on board an aircraft that is about to take off from Sydney to Brisbane!

Does this say anything about the general upkeep of the airport and/or the aircraft? Thankfully, we haven’t heard of any ‘rodent warfare’ conspiracy theories thus far!

Better value for money, better service(s) in India compared to Australia?

Tuesday, May 31st, 2011

It’s not often that one gets to see a positive comment about India in the Australian media. Hence this article by Matt Wade in the Sydney Morning Herald caught my attention.

Be it mobile phone services, broadband, airlines and air tickets, India offers superior products at cheaper rates and therefore, greater value for money than in Australia, says Wade.

But, is Wade’s comment on the relative merits of what’s available in India consolation enough? Not quite, but may be we can take heart and rekindle some hope, for we in India can hardly stop complaining about product and service quality!