Up, through highs and lows

July 27: 542 points down. July 30/31: 316 points up. August 1: 615 points down. The uncertainty has only begun, with the Sensex rising 50 points yesterday. This seesaw is here to stay and for investors who came in over the last four years, who so far have only met Mr High Returns, it is time to look at his shadow, Mr High Risk. Like it or not, Mr Risk accompanies Mr Returns. Sometimes investors think Mr Returns is their friend, and put in money as if the friendship will end if the increased investing stream ends — this is what has happened over the past four years, between May 2003 and today. At other times, investors feel close to Mr Risk and look to another entity, Mr Zero Risk, whose shadow is Mr Low Returns — the period between February 2000 and May 2003, for instance.

Opinion in The Indian Express, August 02, 2007

The agent may be mis-selling but why has IRDA allowed such an incentive structure?

There seems to be only one direction the insurance industry is headed: Down. Every other day we hear stories about how, in the pursuit of higher commissions, insurance agents are selling one investment product (ULIP) after another and not life cover (term policy). Households pay exorbitant upfront commissions that go as high as 40 per cent for a 20-year product, but the agent either disappears after three years or returns to churn the money into a new 20-year policy. Much has been written about this but most of the industry, regulator Insurance Regulatory and Development Authority (IRDA) and the Government have nothing to say or do.
What’s new is a two-day old email from an alert doctor. Here’s what he wrote: “I would like to draw your attention to a leading insurance company’s strategy. Recently, its agent offered to pay in cash if I disclose my diabetic patients’ names to the insurance company. Also, if anyone takes this insurance policy (offered to diabetics only), additional cash will be paid. And if more patients take the policy, other offers such as a Malaysia trip [are offered], according to slab.” He concludes saying, “Doctors are not expected to reveal diagnosis of a patient unless asked by court of law.”

Opinion in The Indian Express, August 01, 2007

Why Friday’s 540-pt fall won’t hurt much

It’s getting increasingly difficult to write definitive stories on markets in a flat world of 24x7 trading activity. Amid fears of a collapse in its housing market — an important, market moving financial indicator — the US market fell yesterday, leading to a contagion fall across the world. India followed too, with the Sensex falling 542 points or 3.4 per cent to close at 15,235.
But even as analysts were rolling their sleeves to buy some bargain basement stocks --- Reliance Capital, Tata Steel, Canara Bank and HDFC --- the US market got its aspirin in the form of its second quarter GDP numbers that rose to a healthy 3.4 per cent, the highest in the past 12 months.

Story in The Indian Express, July 28, 2007

What’s a company like NMDC doing in a category like Z-group?

Ever since the category was created on January 16, 2002, I have never looked at Z-group companies. These are companies that the Bombay Stock Exchange indicates are to be avoided like the plague, bottom of the investment barrel. A company gets the Z-halo if it violates three of seven listing criteria --- giving notice of book closure and record dates, submitting its annual report, submitting quarterly shareholding pattern, paying listing fees, publishing quarterly results, redressing investor complaints and implementing corporate governance practices.
So, what’s a company like National Mineral Development Corporation (NMDC) doing in a category like Z-group? A state-owned mining major, NMDC’s share price in 12 trading sessions has risen almost 70 per cent. Nothing shocking about that --- Z-group companies are known to be illiquid, with little or no investor interest, and thus ripe for manipulators, particularly in rising markets (in falling markets they crash, in indifferent markets they remain invisible).

Opinion in The Indian Express, July 21, 2007

Our gods, their gods

How dare you insult my god?
The keyword here is ‘my’. For, I don’t think we mortals have it in us to be able to insult someone or something like God. The entity we term ‘god’ would not be any good if he gets insulted by the mortals he created. And anyone who thinks otherwise needs to get his ideas about his god examined.

Opinion in The Indian Express, July 19, 2007

New world’s new faith

If it is indeed an African great-great-great-grandmother that all the people on this planet have as a common ancestor beginning some 50,000 years ago, it must mean — as Nayan Chanda argues in his brilliant new must-read, Bound Together — the Oneness of this planet that spiritualists and Darwinians claim to realise is probably truer than even they imagined. Blonde was black, tall was short, straight was frizzy and all were Africans who, in the Ice Age, went out in search of food.

Opinion in The Indian Express, July 15, 2007

Home truth index

Finance Minister P. Chidambaram launched the National Housing Bank (NHB) Index on Tuesday, which is India’s first housing price index to collect data and track fluctuations in the property market. How exactly will it work? What does this mean in terms of Government policy? What does it mean for you and me?

Article in The Indian Express, July 12, 2007