Wednesday, August 26, 2009

Extending JQuery Translate plugin to include raw text translations

There is an excellent JQuery plugin to translate text. This is based on Google Ajax Language API. This JQuery based translate plugin circumvents the limitation of number of characters that can be sent using the raw Language API. This is a serious limitation when integrating language API into our code, we cannot translate big documents typically having 2000 or more characters.

The translate plugin works very well, except there is a minor limitation, i.e. when we pass a raw text to it (which may contain line breaks, tabs and other special characters), the translated text strips out such characters back. Many times we need to preserve these in the translated text too.

The reason for this is because in the plugin, the language translate API is called using:

google.language.translate(text|content, srcLang, destLang, callback)
It always passes default text which the API interprets it as HTML markup. To pass a raw text, one needs to pass a content object with attributes {text: textToTranslate, type:'text'}. This way the google language API treats it as raw text and preserves the line breaks and other special characters.

So in order to have the jquery translate plugin work same way for raw texts also, I have extended the plugin to make distinction between type of the text to translate. One can pass the type in options.
Default is: type: 'html' and for text one would need to pass type: 'text'.
jQuery.translate(textToTranslate, languageToCode, {
type: 'text',
complete: function(translation){
//translation contains the complete translation of textToTranslate
error: function(){
//error callback

So I have extended the plugin to take care of calling google language API based on type. I have called this version as 1.3.10. It should work with jQuery 1.2+

Hope you find this useful. Any questions or comments feel free to contact me.


ps: download the above version from this link.

Tuesday, July 21, 2009

Water Babies

India is essentially an agricultural economy. Now why say that?! Agricultural and related activities accounts for nearly 17% of our GDP and employs nearly 60% of our labour force. Any growth in our economy happens from grass root level. It is this 60% of the work force that drives our economy. Past five to six years have been very good for our economy. Our GDP grew by average 8 - 9%. Agricultural growth may just have been in range of 2 - 4 % but the multiplier effect it created has resulted in this superb economic growth. Stable livelihood that agriculture has given to our 60% of population has resulted in money in their pockets. This they have spent on consuming goods and services other sectors have produced thereby giving India its much to talk about GDP growth.
Some may lobby for placing greater importance to IT in our economy or some may lobby for more and more SEZ. Others may talk about liberal financial markets for FDI and FII to pour money into our economy and few on disinvestment and all sorts of infrastructure building. However the bottom line is, all we need to ensure is that this 60% of population's pockets are never empty!
People point at our young crowd of IT and finance people in malls and say this is where our future growth lies in terms of consumption and spending by them. Yes we are a consumerist society and a consumption driven economy but the real consumption is not driven by this tiny mass of people we see flocking in newly built malls, its driven by this very 60% of agriculture labours spread across the rural hinterlands of our country (places which we hardly visit).

Speaking about importance of agriculture in our economy, on what is the output of this sector largely depended upon? Sadly, its still the monsoons. Our irrigation facilities are not so developed across the states and these farmers largely depend on blessings of rain god for their good livelihood. Building great agricultural infrastructure is another topic all together and may focus on this some other day, right now focus is on monsoons vs stock markets.
There are many charts which show correlation between GDP numbers and monsoons. Stock markets are said to be voting machines for a short term and weighing machine for a long term. What do they weigh? They in general weigh the health of our economy or in a long term conform to the GDP numbers. So if GDP numbers are good, our economy is growing, stock markets would also tend to have an upward bias. So as monsoons are co-related with GDP and GDP with stock markets, isn't monsoon co-related with stock markets.
This is the last thought that can come to someone's mind. Stock markets and monsoon, ha!

Let me try to analyze this issue a bit. Here I am presenting a chart of rainfall as % to LTA (long term average) and returns of sensex (a barometer for stock market), for the next year. So like in 1998 rainfall was 106% of LTA, and sensex returns in 1999 were -4% relative to 1998. Both the charts are scaled so as to overlap one another so as to see a co-relation.

One can clearly see a strong co-relation between rainfall in a particular year vs performance of stock markets in the following year. So we look at all possible numbers IIP, FII inflows, broker community's sentiments and what not, but a simple analysis of an event which has greatest impact on the lives of people which in turn have greatest impact on our economy can provide us with almost all the answers. Can it?!!

So with the current performance of monsoons, what would be the direction of stock markets next year can be anybody's guess. The point here is that many times something simple is more effective than something complex and just because something is so simple, don't overlook or ignore or replace it with something complex and hard to understand.

A public-opinion poll is no substitute for thought!


Tuesday, July 7, 2009

Is Bob Arum playing safe with Manny Pacquiao's next fight

With Floyd Mayweather Jr Vs. Juan Manuel Márquez fight postponed to September later this year due to Mayweather's rib injury, any chance of either of the two facing Manny Pacquiao may not happen till mid of next year. So who should Pacquiao fight next is a multi-million dollar decision. He is a prized fighter and there is a line of challengers waiting to face him. Who is the lucky one is what Paquiao's camp is working on these day.
As per reports, Miguel Cotto is coming out to be the chosen one. Question here is that is he the right choice for Paquiao.

Let us examine the possible alternatives. Firstly the big question is on what weight the fight should happen. I feel that the Super lightweight (140 lb) is the ideal weight Pacquiao should take the fight. As we saw in Ricky Hatton's fight, he is best at this weight. So who all can be his opponents at or around this weight (+- 4 lbs)

One boxer that readily comes to our mind is
Shane Mosley. He is a world class boxer with huge fan following and a formidable opponent for Pacquio. This no doubt can be the best fight we all would witness in present times. However he is little too bigger for Pacquiao. At 5'9'' and fighting at 147lb he can no way make it near 140 lb. I think this was perhaps main reason for talks between these two camps to breakdown and another may be split of fight purse as Mosley's camp would want a close 50-50 split.

Next can be Andre Berto. Undefeated welter weight (147 lb) champion. He may not have that a big fan following right now which may deter Pacquiao's camp to take a fight. Another reason can again be his reluctance or inability to make it to 144 - 140 lb range.

As we move down the weight category to 140 lb we have an option of Andreas Kotelnik or Timothy Bradley or say Nate Campbell. Kotelnik is busy fighting Amir Khan, Bradley may be less experienced and Campbell may be too old to take on Pacquiao. Also none of these fighters have a big fan following to make a great PPV fight.

Lets move further down to 135 lb category. One name that comes to my mind is of Edwin Valero. He is is a great fighter, a south paw, has tremendous punching power and speed. Just like Pacquiao! Further he is available and has shown interest in fighting Pacquiao. What more adds to the fame of this guy! He is currently Lightweight WBC champion. He holds a perfect record of 25 victories and all these coming by a way of knockouts. Infact first 18 of his fights were won with a KO in first round itself. He may not have fought many quality fighters till date, but he surely deserves a chance to take on one, and who could be a better opponent than Pacquiao. I think this fight is the best fight which Manny Paquiao camp should consider as next one.
Here are few reasons for same:

  1. Both boxers have same size and the contracted weight to fight would be ideal for both. They both would be in best shape making it a great fight to watch.
  2. They both have similar energy levels, speed and punching power.
  3. Purse negotiation won't be any problem for Pacquiao's camp and even a 65-35 split can be arranged.
  4. There would be great air behind the fight. Valero has a good fan following now, has fought in USA and has a claim to fame that is always knocked his opponent down.
Coming back to the choice of Cotto. I just don't think it is a good choice. Cotto seems like a fighter on a decline and had struggled to win against Clottey in his last bout. Also there may not be much air behind the fight.

Where do we go now!


Tuesday, June 30, 2009

IT Software Freelancing - Choosing a right buyer

We see numerous articles, blogs over the internet where people have written how to choose and select the right provider for the job.

Here is something opposite, its from the provider perspective on how to choose right buyer and their projects. I have been freelancing for over 5 years now and have applied and got projects from number of freelancing sites like odesk, guru and rentacoder.

If you have done your homework well, have good skill set and bid competitively and selectively then there a good chances of success in this fragmented world of software freelancing.
Speaking of success, what is general success rate?
My experience on bidding on project shows that if you qualify as a good freelancer, good success rate would be anywhere between 5 - 10%. Now that seems low, but actually it is not, here is a bit of breakup on where you bid goes:

  1. Buyer selects you 5 - 10%
  2. Buyer selects someone else 10 - 25 %
  3. Bid goes waste 70 - 80% (yes that is right!!!)
The third includes - job expired, project itself canceled or project itself did not start after buyer selecting a provider.
There has been lot of profiling done on providers, their demographics, their competence, but seldom or never has the buyers been profiled (also because buyers profile unlike the providers is not publicly available).

Who is this typical entity on the other side of the fence (whom we would never meet, as most of the projects are transacted online with people in different geographies)?
Possible answers:
  1. Would be a small company how does not want to go through the troubles of having physical presence in a different geography.
  2. Would be a startup (but incorporated) company working on a new concept and has plans but not enough cash to hire full time employees.
  3. Would be a stealth startup (not incorporated), taking a long shot on something, would be a one man show who is still busy in his full time job.
  4. Would be a middle man trying to hire someone cheap for the local market to work on his clients projects.
  5. Would be an individual like the provider, trying to get something done or taking a long shot at some concept.

As we see that 70 - 80% of the bids go waste, so unless buyer belongs to first two categories described above, there is a pretty good chance that your bid would end up in waste.

Freelancing market is still fragmented, there is still no sign of organized biggies of the IT and software world (Microsoft, Google, Amazon, Facebook etc.) entering this market. They either have their captive units in local or offshore markets or enter into defined contracts with offshore vendors for their IT needs be it support or development or services work.

I continue to believe that the startups that would be big tomorrow would still be the ones that have an energetic team physically located and working together at one place. Something like Google or even Facebook or Twitter cannot happen using offshore freelancers. So we as providers cannot hope for many long term, big budgeted projects and would have to bid regularly on small to medium size projects. Thus with all this background there comes a need to know where to bid, as actual projects are scarce and competition is high.

Here are some pointers that may help to choose the right buyer or project:
  1. Every good freelancing site has steps to verify or review a buyer, like the payment verification, contact details verifications to know the entity is real. They usually stamp such buyers along with the projects they post. Look for these. Usually buyers under category one or two would have these.
  2. Next comes the project description itself. There would be well defined scope of the project or well defined criteria for providers needed for that project. This shows they have plan and again buyers under category one or two would fit these. Ignore projects with clone of this or clone or that or where from the project description it is not clear what the buyer wants. Avoid projects with generic descriptions, which are so general that there would be many bids and in the end project would never take off.
  3. Projects have clear guidelines on the time estimate i.e. duration, hours per week, no of providers needed or tentative budgets. Again buyers under category one or two have to go through this process for every project because they are incorporated and budgeting is needed for planning. Avoid projects with open or unsure budget duration. These would seldom take off ending your bid in waste.
  4. Many freelancing sites give a brief work history of the buyers posted projects. Like how many projects he posted, how many got started, size of the projects etc. If someone has posted many projects but none took off you can assume he falls under the category 3 - 5. No point wasting your bid on that.

Thus by understanding the online freelancing world better and profiling the buyer better, you can improve your strike rate and spend more time working on right projects than bidding on waste projects.

Hope this helped!


Friday, June 19, 2009

Easy solution to strip certain HTML elements using XSLT with Groovy

I won't waste much time explaining XSLT or Groovy. Refer the links associated with each to know more about these.

Problem in our hand is that we many times scrape html for existing sites to create one mashed up html. Many times we don't want certain html elements to be included in the resultant html. How do we do that? Fortunately XSLT comes to our rescue. Also on the implementation of XSLT engine I would be using Java based Groovy scripting language. Scripting languages are best to use when you want quick results. You can bootstrap the scripting engine quickly from your server and get the job done. Groovy is a very useful scripting language and now a web framework GRAILS based on Groovy has come up to help you develop web applications with minimal effort. I think in future this is going to be a serious competitor to much popular Ruby based RAILS framework.

So lets jump to the problem and its solution:
Problem we have is that from the html defined in input variable we don't want certain div elements to be included, in the resultant html.
We simply define a valid XSLT pattern for same.
Here it is: div[@id='ad*']
This simply means that exclude all divs whose id starts with 'ad'.

The solution is described in the Groovy script below.

import javax.xml.transform.TransformerFactory

def pattern = "div[@id='ad*']"
def input = """
<div id="ad1x1">
this is NOT OK!
<div id="ab1x1">
this is OK!
this is OK!

def xslt = """
<xsl:stylesheet xmlns:xsl="" version="1.0">
<!-- By default, copy all nodes unchanged -->
<xsl:template match="@* | node()">
<xsl:apply-templates select="@* | node()"/>
<!-- but strip the matched ones -->
<xsl:template match="${pattern}" />

def factory = TransformerFactory.newInstance()
def source = new StreamSource(new StringReader(xslt))
def transformer = factory.newTransformer(source)
transformer.transform(new StreamSource(new StringReader(input)), new StreamResult(System.out))

So as you can see defining pattern is so simple, all you need is some html element and its attributes to match for exclusion.
The resultant html after transformation would have the same input html minus the excluded elements.

Hope you found this useful.

Any comments feel free to contact me.


Wednesday, June 17, 2009

Always invest for future but don't forget the past

Investing is always done keeping future in mind. When today I invest in any business I am mostly interested in what the cash flows would be in future. Based on these estimated cash flows I come up with my intrinsic value of the business and then based on what market is offering me I decide on my buying decision. The business may have done great in past, however if I somehow feel that the past performance can no longer be replicated I won't buy into that business no mater how attractive its current price is relative to its past earnings.
As Mr. Warren E. Buffet rightly puts: If past history was all there was to the game, the richest people would be librarians.

P/E or price to earnings ratio is one of the commonly used yardstick to evaluate any business. The question here is what P/E we should use trailing or forward. Most rookie investor blindly follow trailing P/E. This is very easy to calculate and can be calculated fairly accurately. Business may (deceptively) look very attractive on this parameter, however when there is no visible earning potential in future, soon it turns out to be very expensive. What mostly happens is that earnings fall sharply and then even with little or no fall in price the P/E ratio becomes very high and same business which looked cheap a year back now looks very expensive and all we are left with is holding a dud business.

So should we use forward P/E? Math isn't simpler here too! Forward P/Es are not easy to estimate and each analyst comes up with his own estimates of same business. Whats even more dangerous is that every month depending upon cheer or gloom in the market, they continue to revise their own estimates of P/E. Investor ends up even more confused with all these flip/flops.

Evaluating individual business based on P/E does no good. One should not pay too much attention to this parameter at the time of buying a business. What one can do is look at the business you 'really' understand and use your own experience and judgment to estimate future cash flows of the business. Discount them at an appropriate discounting rate to come up with intrinsic value of that business. This exercise has to be done in complete isolation from market. Don't do such a thing like if market price is 100 and then you say that my acceptable entry price would be 80, this way you are nothing but a slave of market moods and all you would end up is speculating and not investing per say. If your honest valuation comes to 50 even if current market price is 100, stick to that and one day you would find that same business quoting below your valued price. Buying a business quoting a discount of your estimated intrinsic value and not at a discount of current market price is a better way of making expected returns from the market.

What I have so far mentioned has lot of subjectivity attached to it like 'business you really understand', 'honest estimation of cash flows', but again investing itself is subjective in nature and not objective or algorithm driven like many people assume it to be.

As I mentioned at start that past numbers don't translate to same for future, you should still look at a business's or company's past. A business which acts like a black hole for capital would continue to do so in future too and keep on raising or sucking more capital year on year to survive. A business which hasn't gone anywhere in past 10 years is unlikely to go somewhere in next 10 years too. A business run by dishonest management would continue to churn out fraudulent numbers in future too in order for growth to appear real. So if a business has done good things in past there are good chances that good things would happen in future too, provided surrounding conditions are still favourable for that business to survive (which your understanding of that business should tell).

The investor of today does not profit from yesterday's growth.


Tuesday, June 16, 2009

Would Opera's new move take browsers and eventually WWW to a new level?

I have long been big believer of peer to peer type of network model than client-server or cloud based model. Reason I think so is that unlike before there is not much difference between client and server. Client i.e. you personal computer today has sufficient CPU and memory capacity to act like a server. Also with advances in communication technology we get high speed broadband right at our doorstep. The difference between client and server is narrowed down a lot as compared to what it was two decades back. Same machine acts as server at some places and is used at client at some places. Thus every machine is essentially a peer to others.

Most of the current and new web 2.0, is still working on a client server model and now a new buzzword called cloud model. Do we really need some centrally located servers or cloud of servers for our basic needs of networking, when same can be done right from our desktops or now even from mobile and other hand held devices. All we need is that these machines should be uniquely identifiable or have an IP address. We then can run a server right where we are and then these servers do the job of connect to other such clients and in a way build a peer to peer network. Skype is a good example of same and torrent based file sharing another. They all run on this peer to peer logic and are fairly popular.

Next step is to make general www peer to peer. I think first step here is taken by Opera. They have come up with a concept called opera unite. What opera has done is that it has placed web server at every client. This way everyone runs their own host device, with their own applications running on their own hardware, which can then be accessed from anywhere using any web browser. All this is to be rolled into their web browser. Opera is also providing extensive documentation to developers to create their own 'unite' applications and make it available www wide. Only drawback is that all peer to peer connection would be routed through the unite proxy. I think with time this limitation would be circumvented and internet would really be peer to peer they way it was originally envisioned.

Would other browsers particularly Mozilla's firefox join the bandwagon. If they do so then there would really be a need to standardize a p2p protocol to enable cross browser communication. Is this next step towards web 3.0 or semantic web, I don't know, but sure something to look forward.

Some of the web transactions still need to be client server, however much of the social networking which we do today can easily be done peer to peer (after all this is what social networking is about - peer to peer interaction). Would this change or endanger the current social networking platforms, I don't know, users would decide that.

Chains of habit are too light to be felt until they are too heavy to be broken!


Friday, June 12, 2009

JQuery combobox plugin fixed for IE7

A useful JQuery plugin to display HTML Select element has been developed by Sanchez Salvador and team. Latest version can be downloaded from here ( The plugin is good and fulfills the need of having a uniform select boxes across browsers.
However the latest version when tried on IE7 was causing page to jump whenever we selected any dropdown box. The reason was that the implementation was done by using focus and blur events of Javascript on the div wrapping the select box. In IE7 what happens is that when we focus any div, it cause page to auto scroll to the view where div is located causing page jumps. The same used to work fine on earlier versions of IE namely IE6. The same also works fine on FF2 and FF3. It seems that as MS upgrades the version of their IE they make many fundamental changes, which causes developers like us to rewrite certain parts of our applications to support them on their newer versions.
IE infact has few other bugs too, namely handling on z-index of CSS, which I think they have fixed it in IE8 (making it W3C compliant). For fix of this we had to patch using IFrames. There are some more issues like setting min/max-height/wdith is not possible in IE. For these too there are some custom fixes of patch available. Maybe thats the reason why browsers like FF are more popular with development community. I hope IE sticks closer to w3c standards in their coming versions.

Anyway coming back to the issue with the JQuery combobox plugin on IE7, this issue of page jump has been fixed, by changing the implementation of dropdown show/hide using mouse click events instead of using focus/blur.

The latest package can be be download from here ( I am calling this version
So if you are a user of this plugin and have been facing this problem in IE7, this version may help you. If you have any problems feel free to contact me.


update: Please download this link for a bug fix.
update: The JQuery combobox plugin made compatible with jQuery version 1.3.x. Please download it again from this link for the latest copy.
update: The JQuery combobox plugin made compatible with jQuery version 1.7.x. Please download it again from this link for the latest copy.

Friday, June 5, 2009

How big can Indian IT services market grow

Today I was reading an interesting article. This is by our own NASSCOM. Some of the key numbers in this article are:
1. We exported $47 Billion worth IT software and services in this fiscal year.
2. Domestically we consumed around $13 Billion worth of IT software and services this fiscal year.
3. That makes current size of our IT software and services market to be around $60 Billion.
4. This sector now employs around 2 - 3 Million workers, which today is still a very tiny fraction of around 200 - 240 Million non-agricultural workers we have to feed.

We have big hopes from this sector. Some pundits have said what Oil did for middle east and Manufacturing did for China, IT is going to do that for India.

As I scroll down the article, I find global IT software and services sector to reach $1200 Billion by year 2012. Assuming some growth after that too, it should reach around $1500 by year 2020.
Assuming outsourcing to India is still a preferred option by then and we capture 10% of the market, our size of IT market is going to more than double to $150 Billion. I think that is a reasonable estimate of size of Indian IT market in next decade or so (a decent long term view point).
We are employing around 2 - 3 Million workers now, it may generate maximum employment for say 10 Million workers by then, which again would be a tiny fraction of some 300 Million non-agricultural workers at our hand.

If we ascribe this size to our Indian IT market, then lets look at a valuation of one of the leading listed Indian IT company.
It has a market cap of $20 Billion and revenues of $4 Billion. So it has a share of around 6 - 7% of total IT revenues in this sector. If we grow to $150 Billion by 2010 and this company maintains same percentage share, it would have revenues of $10 Billion by then. What would be its profit margin. That depends a lot on following factors:
1. Labor cost
2. Rent of Land cost
3. Last but not the least value of Dollar against Indian Rupee.

Would the exchange rate stay at around 45 Rs/$ or reduce to a lower level. With so much of dollars printed recently its hard not to justify a lower rate.

Assuming a liberal 20% margin by then it would earn around $2 Billion. So we are today valuing a company at 10 times what it may earn more than 10 years from now. Is this something justified. Well all depends upon our risk perception. Also depends with how much confidence you can predict a long term earning profile of a company. Given a lot of risk factor to exchange rates and also given a liberal estimates for the size of IT industry and this company's revenues, I might not like to pay more that $5 - 6 Billion for its entire business. Today its valued at $20 Billion.

Certainly Indian IT industry has a long way to go forward. I am very positive on Indian IT sector in general. However I also feel that valuation of many companies are done with a lot of optimism.

To conclude by a quote from Mr. Warren E. Buffet:
It is optimism that is the enemy of the rational buyer.


Thursday, June 4, 2009

Its just mean Baby!

Any trend usually tends to converge to its mean. In stock markets the index which represent weightage average of basket of stocks is no different. Indexes are made of individual stock prices. Stock price is a measure of valuation of the company's business. It simply says what investors are willing to pay for an equal pieces of residual interest in that company's business. Residual interest is the value left for common shareholders after all the debt and other obligations are paid to respective holders. So its a value of the company's business and sum total of all such companies businesses give an indication of what economy of a country is worth, or at least the trend of that economy. That is, if in long run companies are more profitable than previous years, economy would more or less be positive and these companies would attract increasing valuation or higher stock price as time goes. So in a nutshell the trend of economic growth and stock markets growth should co-relate in long term.

Our country's economy is usually measured by GDP numbers. GDP comprises of agricultural sector, services sector and industrial sector. Most of the companies listed in stock exchange are in services or industrial sector which today comprises 80 - 85% of GDP numbers. Thus any trend of stock market index should match the trend of GDP growth. However we all know this is far from true. Stock marks gyrate from huge bullish rallies to great bearish depression. How can we use this gyration to our advantage in making investments decision. Answers lies in 'return to mean'. Any significant deviation from the mean is followed by reversal which converges towards that mean.

Before showing on how this is valid or how we can use it, first let us approximate the mean growth of business of companies which would translate to growth rate of stock market's index. Our GDP would grow at an average rate of 7 - 9% for foreseeable time in future. Even long term average of past 15 years of growth is around these range. We add to that 4 - 5% of average inflation. That makes growth in business of companies around say 13%. Which is roughly the rate at which one should expect stock market indexes to grow.

Now lets see how as our Stock Market's most prominent index, BSE - Sensex has performed since start of 1991.
Blue line is the index value and red line is what index should have been if it strictly followed the 13% growth.
So you can see at times it was greatly above this red line and at times was much below it. However every time is crossed this mean, it eventually reverted.

1992 - 1994 were bullish times followed by a bearish market 1997 to 1998. Markets again turned bullish briefly during 2000 (dot com bubble) and then engulfed in a prolonged bearish market during recession of 2001 - 2004. We again saw economic revival post 2004, thanks to trillions of dollars pumped into the market by central banks across the world. This money trickled into India via FIIs and then we saw an unprecedented bull market which lasted till 2008. During this time markets deviated from its mean like never before. What was the result, as markets deviated from its mean like never before, they fell towards that mean like never before. The recession of later half of 2000 caused panic worldwide. If somehow we could have avoided the temptation to commit ourselves at start of 2006 when this frenzy began and had lot of patience then we would have again had the oppertunity to make some wonderful investments three years later. Anyway hindsight is always 20/20, but does offer some lessons.
Come start of 2009, we were at last seeing some sanity towards valuations of companies. However they were still not at those juicy level witnessed in 2002 - 2003 (just look how low below mean markets fell that time). However this sanity lasted only few months, thanks to next round of even bigger chunks of money pumped by the very same central banks. Much of this money was pumped in to revive the economies worldwide and now this money is moving into the emerging markets like India. As you see markets have again bounced back away from the mean. So when would they return back to the mean, no one knows, but as history has shown they eventually would.

As an investors what we can do is, be wary of lofty promises and projections made by some companies to eat up this new pumped in capital. You would get a chance in future where once again you could buy pieces of wonderful businesses at attractive prices. There are good businesses around even now, however your returns from investments are largely dependent on the price you pay. If you are paying too much price for a piece of good business you may still loose money or better still your recovery horizon may last far longer than hoped for. So by stretching the time, why lower the rate of return.

I think what has been mentioned so far is nothing new. It has been iterated many time before and is something very simple to understand. So is investment, its simple but needs lot of temperament and patience. Its very easy to be swayed by next bull market, by looking at your neighbor making pile of money by dabbling in worthless stocks, but that's not a winners strategy. What would lead you greater wealth is stay clam, have a realistic expectations and do your homework right.

It is more important to say "no" to an opportunity, than to say "yes".


Tuesday, June 2, 2009

Investing - the web 2.0 way

We are using web 2.0 to collaborate, network and share ideas increasingly in our lives. We would be members of some or other social networking sites, registered to some or other groups and forums based on our interests. These activities may or may not help us in our professional and personal lives. All depends on how effectively we use the tools provided these platforms. Here is a look through on how web 2.0 can help us in making investments decision.

Firstly, join few forums or groups that have active discussions related to stock markets and investments in general. These may be found on some or other social networking platforms or sites that hosts forums and groups (like Yahoo and Google) or sites dedicated to stock markets itself.

Next, start screaming your stock tips in these boards, luring investors or traders to invest in your stock tips. This would lead to run (up) in the prices of the stocks you recommended. When they have sufficiently run (up) offload your holdings making a decent profit. (Ha Ha, just kidding)

Markets are usually gripped with excessive optimism or excessive pessimism. There are times when investors are ready to pay anything to get a piece of that worthless stock, and at times they are ready sell for anything to get rid of that blue chip stock. Market's behavior is very erratic and sudden. It takes no time to reverse the sentiment. If somehow we are able to watch and measure this very behavior we stand to make right investments decisions.

So how can web 2.0 help us here. In this connected world, news and sentiments travel quickly. By being part of right forums and groups, you can get access to information about markets. This would include personal views and opinions of fellow members, links to new articles mentioning what experts are saying that time and then many research reports by various investment houses. These give you holistic view point of what market mood is. Key lies in measuring the market mood. Its very much like thermometer is used to measure the body temperature, these forums and groups measure the markets temperature - how heated or how cold market is.

If you would have paid attention from start 2006 to end of 2007, views were generally optimistic in these forums and groups:
1. There were more board members participating.
2. There were more and more personal opinions and so called stock tips.
3. The links which posted (so called) experts take on market were generally positive.
4. Research reports in some or other twisted way project much higher growth and optimistic targets.
In short the good times were here to stay forever. This was different (was the undertone)
Such signs usually indicate market temperature is running high and time is to stop making further commitments (without much deliberation) into the market.

Come later half of 2008 to couple of months back, views were almost pessimistic now:
1. There was declining to the point absolutely nil participation from board members.
2. Every one was predicting doom and you could hear sad stories of they portfolios.
3. The links which posted (so called) experts take on market were now revised to new (further) lows.
4. Research reports in some or other twisted way project everything to a lower level than what currently was.
In short it was like end of the world has come and we are going to stagnate forever.
Such signs usually indicate market temperature is running low and time is to start making further commitments (with deliberation of course!) into the market.
So those who gauged the market sentiments correctly and did invest when no one was investing sure must be feeling lucky and happy today.

Also you would notice that now market temperature is slowly rising as the activities in these groups and forums is coming back to previous highs (so are the markets!). Whereas economy has still not recovered.

So being glued to right piece of information on web 2.0 and using that information in making investments decision helps (or not), only time would tell. In my personal opinion this does help. You don't need to watch those TV channels or spend time and money on countless seminars and workshops, just the ubiquitous web 2.o is enough to bring everything to your screen. Whats important is how you like to use that information.

I end by famous quote by Mr. Warren E. Buffet:
Be fearful when others are greedy and greedy only when others are fearful.


Monday, June 1, 2009

Raise, don't Earn - seems to be the motto of the street

Indian stock market's sentiment turned bullish from (a prolonged) bearish one in the month of May. Single event responsible was the Left parties failure to gain any significant seats in the parliament to influence government formation or its policies. The 'Dalal' street was euphoric with this development. They perceived it as a major boon to our economy. Now government would be able to implement privitisation in many select sectors (even upto 100%), and disinvestment of many Public Sector Undertakings (PSUs). This would eventually lead to more foreign money in form of FDI and FII coming into Indian markets. So far they have not been wrong. Awash with fresh capital, thanks to trillions of dollars pumped into the system by developed countries, insitutional investors (FII) brought in record 3 billion dollars in just 2 weeks, with 1 billion dollar in a single day. Result was obvious, major stock market indexes have run up 25 - 30% in this time.

With so much of 'hot' money sloshing in the markets, everyone is racing to grab it. After over one and half years of severe winter we have seen spring. No one knows how long it would last till next winter sets in. So just get your hands filled with whatever you can! Raise, don't earn is the new motto of the street these days. Today no one is talking that are going to earn this much in coming season or if companies earn this much then markets would rise these many points. All the talks are in the lines of we are going to raise this much or market pundits saying if markets can raise this much then it would rise these many points. Suddenly it looks like future earnings no longer play any role in valuation or growth of a company.

Around two years back, some promoters of some companies were raising capital, today these are the very ones who are once again back to raise more. That time taking advantage of bull market, these shameless promoters sold worthless papers to gullible and greedy investors. When tide turned these promoters went into hibernation, nothing was heard from their companies in announcements as what their future plans are. What happened to the capital raised - no clear answers were provided. Meanwhile the investors holding their paper scrambled to dispose it. Now when (it seems) that market is out of woods, these very promoters are coming out of their hidings, again making the same old lofty announcements and using same old cheap tricks out of their dirty bags to once again raise the money.

We all remember these promoters issued themselves warrants worth millions of dollars when the market was bullish. Their 'purported' argument was that they believe in long term growth of the company and are committed to invest their money at some future. When market tanked and the price fell below the warrant issue price, they let it lapse. Talking about long term investment horizon of these people! They were just interested in cashing in the bull market, believing that market price would be higher than issue price at the time of conversion. Just after a month of getting their warrants lapsed, they are again issuing themselves these warrants albeit at a lower price. Who are they kidding! With so ease they let these warrants lapse (and then re-issue, like a library book) that some time I wonder that do they really make the upfront payment of 10% at the time of issue. No serious investor would let his hard earned money go down the drain this way.

So trick is so easy, claim to invest some by issuing warrants to themselves, then bring in more money by QIP and hope market price remains high. It mostly does in a bull market as issue price is higher than the current market price. If things don't go as planned then renounce the warrants and start the exercise all over again.

I think issue of warrants to promoters should be banned. If money is to be raised then it should be done the right way, i.e. let all shareholders participate via 'rights issue'. In many ways, I see these warrants are much worse than stock options scheme.

Well, till there are loopholes in the system which lets promoters take their company and rest of the shareholders for a ride, all we can do is be more watchful of events happening around us. With all focus shifted to raising money and earning none, be wary of such companies and promoters. We burnt our fingers once, but lets not do it twice.

Earning growth may remain muted for some years to come, as lot of trash piled up in the street has to be cleared first, which would take time.

So till then remember:
The higher they rise, the harder they fall!


Sunday, May 31, 2009

Floyd Mayweather jr. vs. Juan Manuel Marquez and the winner is Manny Pacquiao

Every decade of professional boxing witnesses extreme competition in some or the other weight category. In 70's it was heavyweight division with Mohammad Ali, Joe Frazier and George Foreman fighting for the top crown. We witnessed some of the best boxing bouts among them in that decade. Come 80's and the action sifted to welterweight-middleweight category with Sugar Ray Leonard, Thommas Hearns and Marvin Hagler giving us some of the best bouts among them for this decade. Come this century and clearly focus has shifted to the lightweight-welterweight categories. These weight divisions are extremely competitive with some of the best rated boxers fighting here. Well some day I would try to list great bouts to watch and believe me list would be very long!

On the day of Hatton Vs. Pacquio fight a big announcement was made. Mayweather Jr. decided to come out of a 16-month retirement to fight Marquez on July 18th. With now 1 1/2 months left for this bout it has started gaining interest of boxing fans across the globe. Bout is on HBO PPV and maybe fought at catch weight of 144lb. This is a non-title bout and I think Marquez would still be keeping his lightweight WBA and WBO titles. Mayweather is a younger, bigger boxer here and is 3/1 favorite to win this bout. However predicting in boxing is also dangerous and upsets happen all the time. Remember when Buster Douglas being 40/1 underdog defeated Tyson for the unified heavyweight crown. Anyway we are not here (right now) to discuss this fight. We may do so as the due date approaches, we would like to study the impact of this bout on next big fight that may happen towards end of the year.

Irrespective of the outcome of this fight the person to gain maximum out this is Pacquio. Today Manny is the best pound for pound fighter in the world. A fighter whom everybody would love to challenge. He has a very large fan following, his bouts would directly go as PPV and would guarantee few million dollar purse to the challenger. If you are looking for retirement and would like to make decent money to support rest of your live, challenge Pacquio! Today both Mayweather and Marquez would like to challenge Pacquio and who would that (first) person be, is this fight all about. So person to gain for this for a even bigger fight is Pacquio.

Lets look at Marquez. He is a great fighter, probably towards end of his career. He has fought Pacquio twice. First in 2004 where he came back from three knockdowns in first round to notch up a draw. Second in 2008 when he lost a close split decision. A re-match is definitely in line and fans and boxing pundits eagerly waiting for that. Professional boxing is all about negotiating right contracts and right fights at right time. Pacquio's promoter Bob Arum said, the fight will happen but only after there is time to "put a little air" under it. I think there is no better time then now and all the air is under it! If Marquez wins he would get to challenge Pacquio and Pacquio would fight because this would be the biggest fight he can get.

Lets look at Mayweather Jr. He is no doubt a great boxer. He has clean record, never lost a single professional bout and was best pound for pound fighter before his retirement. The title which now belongs to Pacquio. So who is the best pound for pound fighter? Whole boxing world is eager to know that. Mayweather is perhaps the best boxer whom Pacquio would like to fight. This fight would again be a big fight with both boxers having a large fan base. What would make the fight even more interesting would be completely different geographies/culture each boxer represent. Good enough to generate right kind of hype around this fight. So if Mayweather wins he would get to challenge Pacquio, more so Pacquio would like to fight Mayweather as this would again be the biggest fight he can get.

Pacquio is at a stage where his team should choose best of fights for him. He is right at the stage where if everything executed professionally would take him to the path of greatest boxer in the history of sport (both fame and fortune wise), and more pre-challenge fights like this one is what he would like to see.

And we'll keep on fighting - till the end!


Saturday, May 30, 2009

Second tsunami of greenbacks

Stock markets worldwide are booming. They have notched up record gains since march this year after a record free fall since start of last year. As usual markets participants and observers are divided in two camps. One say that this rally is for real and is going to continue, the others say that its nothing but suckers rally. Both have put forth cogent arguments to prove their points and its hard to side with one. One thing I have learnt in stock markets is that its a very futile and dangerous exercise to predict the direction or quantum of market movement. Your chances or being right are around 50%, which is as good as a coin tossing experiment. What we can do instead is to analyze the causes of market movements. That does help is in taking informed decisions for future.

Last bull rally ended somewhere in 2000 - 2001, with the burst of tech bubble coupled with social/political disturbances around the world, caused markets across the globe to fall. There was an economic slowdown and the central banks responded to this by lowering the interest rates and pumping in lot of money. Leader in doing this was the central banking system of USA, commonly known as the "Fed". It lowered the interest rates to record low of 1% and pumped in lot of greenbacks. From a negative issue of T-Bills in past 4 years preceding 2002, it issued around $1 Trillion T-Bills in next three years from 2002 to 2004. (And I am not including other GSE backed securities like raised by Fredi and Fannie and muni bonds). With so much of money raised, it started percolating into the system, where it should not have gone. First it went down the lane of less credit worthy borrowers, which today we all know as sub-prime and Alt-A mortgage crisis. There was still lot of money supply left and it then started moving into emerging markets. These markets which usually ran a thrifty economy, were not used so much of "hot" money into their system. All this barrage of freshly minted greenbacks created a sort of tsunami in their economies. Asset prices of all types of assets rose to dizzying heights. We all remember crude at $150 per barrel and not to speak of property prices in your neighborhoods.

This eventually led to inflation and then to combat inflation central bankers fired another arrow from their quivers. This was raising interest rates to suck the abundant liquidity. This had another fallout, which resulted in huge default in mortgage loans, as the interest payment rose, and this led to sub-prime crises. With asset prices falling world wide, interest rates rising, one thing lead to another and soon we were in another economic crises (worldwide). Economies across globe went into tailspin around mid of 2007, with some countries even declaring bankruptcies. Crises which emerged from developed economies actually affected emerging and under developed economies far more that developed ones. This recession was (or is) much deeper than the last one of early 2000's and some drawing parallels with the great depression on 1930s.

So it looks like the life came back in full circle to bite us in the rear. Once again central banks resorted to lowering the interest rates to all time low. Much lower than the previous recession. Even the money pumped into the system by central bankers was far more that last time. Some estimate that around $4 trillion has been pumped world wide so far. The issue of T-Bills by Fed itself amount to $1.5 - $2 trillion in past two years. This so far has done some work (or at least have appeared to) have done some work in ameliorating the disastrous impact of this economic crisis. So the question here is, once again doing the same things which were done last time which resulted in even a bigger crises, won't lead to a even bigger crises next time.

All this money, now in the system is finding ways to be allocated. In west especially US, credit worthy borrowers don't need loans. Lenders being just bitten from the sub-prime bug don't want to lend to credit worthless borrowers. So again all these greenbacks floating in the system are waiting to hit the emerging economies. Is a second tsunami of greenbacks waiting to happen? We have got some trailer of this in past two - three months with stock market indexes rising as much as 75%. Around 30% in just this month alone! Question we need to ask is won't it lead to another inflation bubble and to combat that once again excess liquidity would be sucked so again money would move out of these economies leading to another crash.

When would this happen (if at all it would happen), what would be the story next time (like sub-prime last time), no one knows. What we do know is similar experiment is past yielded some results and those are the results we should watch out for or anticipate for, or at least worry for.

Happy new world!


Friday, May 29, 2009

Dare to be different - what BJP should do now

Circa 1999 - coalition politics was at helm and India had witnessed 5 general elections in past 10 years. BJP along with NDA became the coalition to garner most seats i.e. 270 out of 545. With support of TDP of 29 seats it comfortable got the majority and formed the government. This was first time in 10 years a party or alliance was given such a clear mandate and without much doubts this government looked to last whole 5 years which it did.

Another thing happened around the time was Congress or (UPA - the coalition), got a new leader, Ms Sonia Gandhi. Firstly congress did not have much bargaining power in terms of seats to threaten the formed government and secondly under the new leadership it decided that there was not much long term gains in de-stabilizing the whole democratic process. What it decided was to behave like a responsible opposition and strengthen the party and its alliances. So it went for long terms gains at the cost of shot term gains, which today when we look back sure worked out to be a perfect strategy.

BJP on the other hand had a very big coalition, it had to appease all in a hope for five years at center (for the first time). This in many ways backfired the future prospects of BJP and weakened it internally. There was lot of internal dissatisfaction among its members and in order to appease all alliances it angered some to an extent they left coalition in coming elections. BJP was never able to put forth its own agenda that displeased some of the party members and above all displeased the great Indian voter class which showed it the boot in next elections.

Next elections was in-fact no surprise, BJP went in with fewer partners, angry voters and lot of internal instability. No wonder it lost. However there was a blessing in disguise, it was given a chance to be a responsible opposition and win back support of voters (which Congress did this time). However BJP was far from being a responsible opposition. It constantly opposed government in its every development efforts, and to top it all when we needed the whole India to unite against foreign attacks, it did just the opposite. Instead of showing solidarity with the ruling government, it constantly blamed and bickered with them.

India has come a long way in past 20 years. We have a lot higher literacy rates, much better education system and lot lesser poverty as compared to those times. There is a still long way to go. The point political parties should notice that today there is no way to win voters with usual histrionics and firebrand speeches. People or the voter class are lot smarter and want results. If you give them clear objective results, they are with you else you are shown the door. There is no tolerance for incompetence anymore.

These facts are very evident in current elections results. States where ruling parties (irrespective of the alliances) did good development work, stayed in power, rest were shown the door. This elections have marked the emergence of politics at national level and local politics fighting for a narrow cause have been defeated. So looking at the changes in the social scenario of India, if BJP at all is to have any chance of success it should do the following.

Firstly, dare to behave responsibility. One has to be a bigger person in order to win greater support. First thing BJP can do is support the current government in coming vote of confidence. No one has done this kind of act before, this sure is going to send a strong message among Indian public. Be a responsible opposition, in times of distress to nation, show solidarity. Oppose and oppose logically where you feel current government is wrong. Remember Indian public is now smarter to understand a good argument.

Secondly, dare to be alone. Let the Indian voters know that its working for the cause of whole nation and just a particular sect of people. Further in its current coalition there are many parties which only fight for narrow local causes and if nothing they are slowing the BJP down. I think BJP (or matter of fact any national party) has better chances of succeeding alone in future.

Thirdly, dare to say no. Today maximum politicians in current lok sabha with criminal background are from BJP. Say no to such people in deciding whom to give tickets next time. Infact this practice should be followed by every political party. Remember in democracy government is by the people, for the people and to the people and not vice-versa.

These bold steps may not grant a chance of success in next elections or even elections after that, but one has to loose something in order to gain something. So in order to gain long lasting support of the people, one has to let go some of the popular practices which are actually not that effective.

Where do we go now!


Thursday, May 28, 2009

Is Oscar De La Hoya most overrated boxer in the professional boxing's history?

We all know professional boxing to be an individual sport. A sport where brawn wins over mind. However it is one the strategic professional sports I have seen, somewhere in line of motor racing or golf. Individual sports where whole game depends upon performance of one individual (whom we all see perform and cheer for) are more mind involving as against team sports. We do not see a team upfront here, but behind the scene its the team (of thinkers) that is responsible for success or failure of that one individual who is there to earn fortunes not only for himself but for the whole team backing him.

Professional boxing is a sport where success and fortune has not solely depended upon the talent of the fighter. There have been instances when some of the greatest champions of the world have struggled to make ends meet where as some of the lesser known boxers have basked under the glory, fame and fortune which at times many critics doubt that if they deserved it at all. So what makes or breaks a boxer. Its the team surrounding him, his trainer, manager and promoter. If you look at some of the successful boxers (financially too), they always had a great team around him. There have been also cases where unscrupulous managers and greedy promoters have destroyed the career of some great fighters and robbed them of their well deserved success and fortune.

There are many many examples from history to verify this but lets focus on boxer under question.

Oscar De La Hoya
is perhaps one of the most financially successful boxer in the history of this sport. He has earned around $700 million from this sport. However what about his talent as a fighter. Its far pathetic then many many lesser known boxers. In his last 14 bouts in past 9 years he has lost six of them. He has lost to all the strong contenders of his era like Trinidad, Mosley, Hopkins, Mayweather, Pacquio. Even some of his later victories where quite controversial like with Felix Strum. In his earlier career he had some success fighting lesser known boxers, or older boxers like Chavez who were way past their prime and also mostly near his home town ie states of California and Nevada. In fact he has never fought outside US, and fought way less (14 times in past 9 years) which shows how selective or narrow was his fight pickup criteria. All great boxers right from Jack Johnson to Ali to Tyson have had bouts around the globe with diverse fighters. They fought just way to much so as to be beaten at near end of their careers.

So what made him so successful. It was his team, which negotiated right contracts with fellow fighters, TV channels, picked up right and safe fights and above all created a media hype around him right from his pre olympic or amateur days.

So its lot more than raw talent to be successful in this sport or for mater of fact in any professional sport, and Oscar sure has shown us the way.

Keep on rocking in the free world!