People who equate self-worth with status find life turned upside down when they are handed a pink slip.
Gautam Chikermane
RECESSION WAS already looming on the horizon when four aircraft decided to ram it home to you. In less than a week after September 11, thousands lost jobs; in less than a month, hundreds of thousands more; over the next one year, 24 million are expected to be jobless. In an increasingly networked world, the effects of these job losses have been felt far and wide. Here in India as well. Layoffs don’t just affect your income, your financial security. All too often a job loss brings in its wake a fast-diminishing sense of self-worth, self-possession. With no phones to answer, no car to drive in, nowhere to drive to, nobody to deal with–all the familiar trappings of being successfully, gainfully employed–it’s easy to feel desolate and redundant.
But it’s also a misguided feeling. If a job alone decided our status and gave meaning to our lives, this whole business of creation would have been quite meaningless. Sure, a job is important–it’s our means to a regular income and to a position in society. But most important, it’s a vehicle of self-expression. There is such a thing as our calling, our dharma. When we’re lucky, the work we do is the work we were meant to do. When we’re not so lucky, we either find meaning in the work we do, or lead meaningless lives that pivot on the paraphernalia of our job–salary and status.
Column in Outlook Money
Monday, December 17, 2001
Saturday, December 1, 2001
Two-timers will rule
In these uncertain times, the key to staying employable is to acquire new skills and work on alternative careers.
Gautam Chikermane
IT’S NO longer in the realm of idle speculation or caged in the fertile minds of futurists–the age of simultaneous careers is upon us. It’s right here, knocking at your mind’s window, urging you to get going before you’re asked to go. If that sounds alarmist, here’s an eye-opening statistic: the International Labour Organisation estimates that 24 million jobs will be lost worldwide by the end of next year. In your 40s, even if you are safely ensconced in your career, you’ve probably gone as far as you can. As Peter F. Drucker points out in his latest article in The Economist: "A growing number of highly successful knowledge workers of both sexes–business managers, university teachers, museum directors, doctors–‘plateau’ in their 40s. They know they have achieved all they will achieve. If their work is all they have, they are in trouble."
Last month, in the US, I saw the first, most obvious signs of "trouble". During the one month I was there, the big American companies handed hundreds of thousands of workers the pink slip, even as the government did all it could to protect the profits of the very same corporations through a $150 billion bailout package. The story is only slightly different here. When we launched Intelligent Investor in July 1998, industry was in the throes of a recession and pink slips were flying all over the place. When the great dotcom dream soured, we witnessed a replay of the predictable industry response to slowdowns–mass layoffs hiding behind smart euphemisms like restructuring, rationalising, rightsizing...
Column in Outlook Money
Gautam Chikermane
IT’S NO longer in the realm of idle speculation or caged in the fertile minds of futurists–the age of simultaneous careers is upon us. It’s right here, knocking at your mind’s window, urging you to get going before you’re asked to go. If that sounds alarmist, here’s an eye-opening statistic: the International Labour Organisation estimates that 24 million jobs will be lost worldwide by the end of next year. In your 40s, even if you are safely ensconced in your career, you’ve probably gone as far as you can. As Peter F. Drucker points out in his latest article in The Economist: "A growing number of highly successful knowledge workers of both sexes–business managers, university teachers, museum directors, doctors–‘plateau’ in their 40s. They know they have achieved all they will achieve. If their work is all they have, they are in trouble."
Last month, in the US, I saw the first, most obvious signs of "trouble". During the one month I was there, the big American companies handed hundreds of thousands of workers the pink slip, even as the government did all it could to protect the profits of the very same corporations through a $150 billion bailout package. The story is only slightly different here. When we launched Intelligent Investor in July 1998, industry was in the throes of a recession and pink slips were flying all over the place. When the great dotcom dream soured, we witnessed a replay of the predictable industry response to slowdowns–mass layoffs hiding behind smart euphemisms like restructuring, rationalising, rightsizing...
Column in Outlook Money
Saturday, September 15, 2001
Saving is not equal to investing
We save to tide over difficult times. We invest to pursue financial goals like a comfortable retirement.
Gautam Chikermane
AT 22.3 per cent, India’s savings rate is respectable. And yet India, and Indians, are not wealthy. This high-savings-poor-savers contradiction occurs because we believe in saving for a rainy day rather than in creating wealth. We look at putting money aside for emergencies or even for a comfortable retirement, not to make our money grow and create wealth. We seek the security of keeping our capital intact rather than taking a well-planned risk with it. We focus on saving rather than on investing. One of the problems is our belief in this equation: saving = investing. I have seen even experts confuse these two words and use them interchangeably. While on the face of it they may be the same–in that both sacrifice present consumption for future use–in spirit, they’re not.
Different goals. People save in anticipation of uncertainties–a sudden hospitalisation, being out of a job for six months and so on. It’s all very well when there’s a cheque coming at the end of the month or when business is growing. But when things aren’t so good, this money helps them get by without too much misery. On the other hand, people invest to pursue life goals such as building a house, financing a child’s marriage or a comfortable retirement.
Opinion in Outlook Money
Gautam Chikermane
AT 22.3 per cent, India’s savings rate is respectable. And yet India, and Indians, are not wealthy. This high-savings-poor-savers contradiction occurs because we believe in saving for a rainy day rather than in creating wealth. We look at putting money aside for emergencies or even for a comfortable retirement, not to make our money grow and create wealth. We seek the security of keeping our capital intact rather than taking a well-planned risk with it. We focus on saving rather than on investing. One of the problems is our belief in this equation: saving = investing. I have seen even experts confuse these two words and use them interchangeably. While on the face of it they may be the same–in that both sacrifice present consumption for future use–in spirit, they’re not.
Different goals. People save in anticipation of uncertainties–a sudden hospitalisation, being out of a job for six months and so on. It’s all very well when there’s a cheque coming at the end of the month or when business is growing. But when things aren’t so good, this money helps them get by without too much misery. On the other hand, people invest to pursue life goals such as building a house, financing a child’s marriage or a comfortable retirement.
Opinion in Outlook Money
Wednesday, August 15, 2001
UTI is... UTI is not... UTI is...
More than bad management or low returns, the problem at UTI is a structure that encourages corruption.
Gautam Chikermane
DESPITE ALL claims and actions to the contrary, in its functioning, in its structure, in its very reason for existence, the Unit Trust of India (UTI) is, quite simply, a mutual fund–a medium not only for saving money but equally to create wealth and meet life’s major financial objectives. There are seven main characteristics that make a mutual fund. Had UTI adhered to them, the current crisis would have only been one of bad fund management or low returns–a problem not entirely restricted to UTI. These seven points are why mutual funds are the best investment vehicles, not only in India but across the world. In my opinion, in five of these, UTI scores ‘Poor’, in two it scores ‘Fair’. Overall score: Poor.
Professional management. When an asset management scheme (AMC) floats a scheme, it brings into the product a few of the top minds in the field of finance. These are experienced and skilled professionals whose job is to research companies, analyse industries, crunch numbers, evaluate the future, observe stock prices, interest rates, currency fluctuations and so on. They then match these analyses with the objective of the investors. Only after this rigorous exercise do these professionals buy stocks, bonds or gilts. So, for a small fee, you get the services of these professionals, services that would otherwise be impossible for you to avail of. UTI’s score: Poor. Due to its large holdings, the skills of fund managers have not been allowed to develop, as they are prisoners of inter-scheme transfers (a fund on which there is redemption pressure sells to one which new investors are buying). Besides, research took a backseat in the past few years, as investigations reveal.
Opinion in Outlook Money
Gautam Chikermane
DESPITE ALL claims and actions to the contrary, in its functioning, in its structure, in its very reason for existence, the Unit Trust of India (UTI) is, quite simply, a mutual fund–a medium not only for saving money but equally to create wealth and meet life’s major financial objectives. There are seven main characteristics that make a mutual fund. Had UTI adhered to them, the current crisis would have only been one of bad fund management or low returns–a problem not entirely restricted to UTI. These seven points are why mutual funds are the best investment vehicles, not only in India but across the world. In my opinion, in five of these, UTI scores ‘Poor’, in two it scores ‘Fair’. Overall score: Poor.
Professional management. When an asset management scheme (AMC) floats a scheme, it brings into the product a few of the top minds in the field of finance. These are experienced and skilled professionals whose job is to research companies, analyse industries, crunch numbers, evaluate the future, observe stock prices, interest rates, currency fluctuations and so on. They then match these analyses with the objective of the investors. Only after this rigorous exercise do these professionals buy stocks, bonds or gilts. So, for a small fee, you get the services of these professionals, services that would otherwise be impossible for you to avail of. UTI’s score: Poor. Due to its large holdings, the skills of fund managers have not been allowed to develop, as they are prisoners of inter-scheme transfers (a fund on which there is redemption pressure sells to one which new investors are buying). Besides, research took a backseat in the past few years, as investigations reveal.
Opinion in Outlook Money
Wednesday, August 1, 2001
The Essential Drucker
An essential, but incomplete, compendium from the mahatma of management.
Gautam Chikermane
AS I eagerly await Peter Drucker’s next book (the last one, Management Challenges for the 21st Century, was published in 1999), all I get are compendiums–Peter Drucker on the Profession of Management (1998) and, now, The Essential Drucker. No one’s complaining–be it a book, an article, a collection or a speech, there is always a freshness and a deep insight into everything this mahatma of management touches. Even in his early-90s, Drucker is, in a sense, much younger than many young writers (including myself), and more open, more incisive than all of us.
This collection–put together by Drucker himself–is essential, but incomplete. Essential writings on management, the individual and society include masterpieces drawn from his 30 books in a 60-year-long career. So, we have The Information Executives Need Today, a must for all leaders; Picking People: The Basic Rules, a must for every manager; and The Second Half of Your Life, a must for everyone. It is incomplete because it is my firm opinion that Drucker can’t be sliced: in every book, he takes up a theme and expands on it in great detail, and surgical procedures don't do justice to that theme or his handling of it. How, for instance, can you encapsulate the vastness of his 1985 classic Innovation and Entrepreneurship in five small excerpts?
Book review in Outlook Money
Gautam Chikermane
AS I eagerly await Peter Drucker’s next book (the last one, Management Challenges for the 21st Century, was published in 1999), all I get are compendiums–Peter Drucker on the Profession of Management (1998) and, now, The Essential Drucker. No one’s complaining–be it a book, an article, a collection or a speech, there is always a freshness and a deep insight into everything this mahatma of management touches. Even in his early-90s, Drucker is, in a sense, much younger than many young writers (including myself), and more open, more incisive than all of us.
This collection–put together by Drucker himself–is essential, but incomplete. Essential writings on management, the individual and society include masterpieces drawn from his 30 books in a 60-year-long career. So, we have The Information Executives Need Today, a must for all leaders; Picking People: The Basic Rules, a must for every manager; and The Second Half of Your Life, a must for everyone. It is incomplete because it is my firm opinion that Drucker can’t be sliced: in every book, he takes up a theme and expands on it in great detail, and surgical procedures don't do justice to that theme or his handling of it. How, for instance, can you encapsulate the vastness of his 1985 classic Innovation and Entrepreneurship in five small excerpts?
Book review in Outlook Money
Sunday, July 15, 2001
Invest well to spend smartly
The here and now is all very well, but you need to save and invest to take care of your future needs.
Gautam Chikermane
TRUE, THE starving stomachs of the 40-year-long Socialist era had to be filled. So, now that the economy has been liberalised, cars, TVs, VCRs, CD players, chocolates, jeans, shoes, drinks–just about everything the wealthier classes had aspired to earlier–are being bought as if they will disappear tomorrow. Much of this buying is financed by debt; so not only are they spending much of what they have, they are borrowing to do so! But the race for the latest goodies is never-ending: it could be a Furby for your daughter today or a holiday on the moon tomorrow. The question you need to answer is this: what are my financial priorities? Let me explain. I’m listing three absolutely essential, absolutely ‘boring’ things all of you will definitely have to spend on. Make sure you’ve planned for them before you buy the next fashion statement.
Opinion in Outlook Money
Gautam Chikermane
TRUE, THE starving stomachs of the 40-year-long Socialist era had to be filled. So, now that the economy has been liberalised, cars, TVs, VCRs, CD players, chocolates, jeans, shoes, drinks–just about everything the wealthier classes had aspired to earlier–are being bought as if they will disappear tomorrow. Much of this buying is financed by debt; so not only are they spending much of what they have, they are borrowing to do so! But the race for the latest goodies is never-ending: it could be a Furby for your daughter today or a holiday on the moon tomorrow. The question you need to answer is this: what are my financial priorities? Let me explain. I’m listing three absolutely essential, absolutely ‘boring’ things all of you will definitely have to spend on. Make sure you’ve planned for them before you buy the next fashion statement.
Opinion in Outlook Money
Saturday, June 30, 2001
Which risks should you take?
Risk goes far beyond the usual volatility-reward equation and applies as much to earning money as to investing it.
Gautam Chikermane
IN MY previous column, Are they Investing or Gambling?, I had shown a methodology of climbing the ladder of risk by according 5 extra percentage points to each rung of higher risk that investors climb. So if ‘risk-free’ government securities give you a tax-adjusted return of 17.1 per cent, the next level of risk, say a mutual fund, should give you 22.1 per cent and so on. This was a simplistic, back-of-the-envelope, directional look at risk. But what is risk? How much risk can we take without getting financial indigestion? Is one man’s risk the same as another’s? Or is risk-taking a highly individual activity, a solitary journey towards wealth creation?
What is risk? The most common way of defining risk is something like this: the fluctuation in the return on your investments and, leave alone the potential for or extent of growth, the possibility of losing all your money. There is also this commonly used mantra–high risks translate into high rewards–which need not be true all the time, as the recent carnage in technology stocks showed.
Opinion in Outlook Money
Gautam Chikermane
IN MY previous column, Are they Investing or Gambling?, I had shown a methodology of climbing the ladder of risk by according 5 extra percentage points to each rung of higher risk that investors climb. So if ‘risk-free’ government securities give you a tax-adjusted return of 17.1 per cent, the next level of risk, say a mutual fund, should give you 22.1 per cent and so on. This was a simplistic, back-of-the-envelope, directional look at risk. But what is risk? How much risk can we take without getting financial indigestion? Is one man’s risk the same as another’s? Or is risk-taking a highly individual activity, a solitary journey towards wealth creation?
What is risk? The most common way of defining risk is something like this: the fluctuation in the return on your investments and, leave alone the potential for or extent of growth, the possibility of losing all your money. There is also this commonly used mantra–high risks translate into high rewards–which need not be true all the time, as the recent carnage in technology stocks showed.
Opinion in Outlook Money
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