Cautious Movement
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Volatility Investing
During volatile times, specially globally, value investors should pick stocks that trend...
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A question of personal finance
You’ve got an Ivy League education, a top-notch job and are well on your way to an enviable retirement portfolio. Congratulations! Can you help me solve an investment problem?
 
Imagine all of us, from birth, hold a single stock of a unique company. We cannot sell it, as nobody wants two. That would be one too many. And everybody already has one from birth. This company is all powerful; I mean Lord, God and then some. Imagine it controls not only its own business, but also how all our other investments perform, how we are taxed; our very life. It even controls how many hours we work to survive. 
 
Have you guessed the nature of this company yet? If you have, read on to see this company from an investor’s eyes. If not, here are some more clues. 
 
An annual, monthly, daily, hourly re-investment is essential in this company. In fact, it charges us for every transaction we make. Every year, this company also sends us a bill for services rendered, for future investment and to cover any loss incurred. These charges may be direct or indirect; tangible or intangible; and can even lead to a reduction of your life-expectancy.
 
We can work for this company or choose to work elsewhere. We, as investors, can elect one of us to represent us on the management and the board. 
 
Now, imagine this company is mis-managed. It has been run to the ground, has accumulated losses, holds untenable debt, is selling off assets, auctioning resources and is about to be graded as a ‘junk’ investment. 
 
This black hole in our investment portfolio is sucking in all our good money. In fact, we have to work 60-80 hours per week, instead of 40, to keep this company afloat, while we make enough money to meet our financial goals. Our very life is shorter by 22 years because we hold this stock. Instead of living for 87 years, we die at 65. Yet, it is compulsory to keep the company afloat.
 
What should we do? We can’t sell the stock, because everybody has one and nobody wants two. We could have exchanged it for a stock of a different company. But if you are reading this, you and I know, we are too old for that. 
 
All our other sources of income and assets seem minuscule against this one loss. It doesn’t matter how much printed money or land we have. Even the purchasing power of that paper, or land value, is determined by the creditworthiness of this company. And it is a breath away from ‘junk’ grade.
 
I am sure you have guessed the company and the stock I am talking about. This company is our nation and the stock we hold is its citizenship. 
 
Imagine if this happened with one of our usual stocks, one in which we had invested so heavily. And it was declared junk. How devastated would we be? How many sleepless nights would we spend? How would this animate our discussions? Investors even commit suicide when such an investment goes bust. But we don’t have a tear to shed for India?
 
It is because of our misconception that our individual income and assets make up for our collective losses. They don’t. There is no amount of profit you can make for dying stressful at 65, rather than living happily for 87 years.We have but one choice—to fix it!
Bharat Sharma, by email
 
The guilty are never punished
I have been reading the articles in Moneylife about regulators like SEBI, etc, and how they are not doing the job that they are supposed to do. I feel it does not matter whether you have a regulator or not. We Indians need to learn one thing—that the guilty are never punished—and, hence, companies and individuals dare to cheat in every field.
 
Let me give you an example. I had purchased a SIM card from Reliance, called ‘global SIM’ for my overseas travel. It did not work in Korea. My complaints got a standard response—‘we will investigate’. I got fed up and never followed up. On my recent foreign trip, again it failed. I followed up on my complaint. Customer care gave a similar response. Reliance showcases what TRAI had asked them to implement—an appellate authority email id for disputes, and a third level of emailing to the president of the company. It also listed individuals with their cell numbers for each region, in case a customer was not happy.
 
First, I tried the regional head, Pramod Borse. On hearing my complaint, he banged the phone down. Then, I wrote to the appellate authority; so far, I have not even got an acknowledgement. I, then, wrote to the president, whose email gave me an automated response stating that unless the appellate authority complaint number is given, they would not be in a position to help. Meanwhile, the customer care, after a long delay, wrote an email saying they did not find any calls during my overseas stay in their history and, hence, they cannot do anything. Imagine a company of the stature of Reliance having a customer care department, which can send such a reply. My complaint was that I was unable to make a call! So, the regulator has asked the telecom companies to have this framework. These companies display the requirements on their websites. But, ultimately, nothing gets done. I think we all should set aside a sum every year which would be expected to go down the drain. Only then, we would not feel unhappy about someone cheating us. In India, you will get duped, come what may, since nobody gets punished. My question is whether it is worth spending time on such fraudulent companies and regulators? I have learnt not to go near the name Reliance. But some other XYZ may be waiting in the wings to dupe me.
 
This is the only way to lead a stress-free life. I call this a ‘no tension fund’!
Dr Shreedhar Archik, by email
 
Audits are required
Thank you for organising the Open House with Dr KC Chakrabarty in which Moneylife Foundation members, other trade bodies and forums got an opportunity to raise their queries and grievances. I would like to strengthen my request that audits—internal and external—are required for all technology processes and manual processes at branch and head office levels of all public and private sector banks. It should include the KYC (know your customer) process as well. This has been one of the initiatives of the Institute of Chartered Accounts of India, (Chartered Accountants Journal, April 2013, page 7). Implementation and full-fledged practice of the audit system is a must. The problem is that, like Dr Chakrabarty mentioned, we cannot close the banks. So, non-compliance (NCs) issues have to be identified and improved within a quick timeframe. Also, red-flagged issues have to be attended to urgently, to prevent mishaps. All audits have NCs and opportunities are given to become compliant. Major failures have to be dealt with seriously and not by bhai chari, or you-scratch-my–back, I-scratch-your-back attitude. 
Adi Daruwalla, by email
 
Customer service is wanting
The service of United Bank of India is wanting. At one time, their service was great; but now it appears that some employees take immense sadistic pleasure to harass you, when you write to them to implement GoI MoD (Government of India, Ministry of Defence) letters on which they are supposed to take action. Instead of trying to solve the problem, they go around with all kinds of vague excuses. This will delay/ hold back the legitimate dues of the pensioner. They fail to correlate letters issued by the government from time to time to the disadvantage of the pensioner. 
Bidyut Chatterjee, by email 
 
Many thanks for your email. If you look at the Bank’s website, you will see that it has a board level customer services committee as well as a standing committee on customer services. The address will be on the website. Please do write a complaint. Banks are required to take this seriously and report to the Reserve Bank of India as well. If you do not get a response, you can escalate your complaint. — Editor
 
What one normally preaches?
This is with regard to “Governance Deficit in Infosys?” by Sucheta Dalal. The article gives some ‘rationale’ for the present situation in Infosys. It also gives an insight into the movements at the top during the past one decade or so. When it comes to inter-personal relationships involving high values (in terms of money) and family relationships, ideologies and philosophy, what one normally preaches is difficult to practise. There cannot be convincing explanations for NRN’s (Narayana Murthy) comeback, Nanden Nilekani’s shift to Delhi or junior Murthy’s induction, if we do not factor in the ‘sentiments’ attached to money, power and family. 
MG Warrier
 
Senior citizens’ problems
This is with regard to “Higher insurance for bank deposits: who will pay for it and why?” by Sushmita Gopalan. Insurance limit (DICGC) is a very good point that has been raised! But Dr KC Chakrabarty did not accept it. Senior citizens’ problems are genuine. It is very sad that the issue has not been taken up. The point should be raised again and again... until it is accepted. Good Moneylife team! 
Ramesh Popat
 
Damocles’ sword
This is with regard to “Visaka Industries: Sheltered” in the Street Beat section. What will keep valuations down is the ‘asbestos’ factor. It is like the Damocles’ sword over this company’s share price. 
R Balakrishnan
 
Abused to the hilt
This is with regard to “New Banking licences: Confusions galore in RBI’s clarifications” by Vinod Kothari. The government is pushing for new banks because old banks have exhausted their resources and cannot give more loans now. Old banks may close shop soon, if customers start enforcing their rights. Hence, the government wants some new banks, so that they can also be abused to the hilt. 
Dayananda Kamath 

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