theinnernetsurfer

[theinnernetsurfer]

Opportunities emerging from the crises

Let's start looking at a broad level and gradually narrow into an individual level.

In outer space

Over 8,000 satellites have been launched in the last 60 odd years. And for good reason. In these data driven times - space is much more than an exploratory subject.

Satellites improve our lives in more ways than we realise. Things like - d2h television, telephones and GPS navigation, climate studies, identification of mineral reserves, assessing soil quality and vegetation covers, timely notifications about forest fires, border encroachment, air pollution, oil spills, storms - are possible due to satellites.

Building space related capabilities is vital to getting ahead globally.

Understanding this moment in time, the government of India has announced initiatives to boost private sector participation. Henceforth, private players will have access to ISRO's facilities, other relevant assets, and geo-spatial data. Opening the door to private participation in future outer space travel and exploration.

This move is sure to create plenty of business opportunities. Consultants and professionals will find work in space related policy, approvals, compliances and regulations. Manufacturers who become a part of this supply chain could have a long run-way. And tech entrepreneurs who can use geo-spacial data to come up with creative solutions would be in demand.

An example of one such private player who has been making waves in this sector is TeamIndus.

Internationally

In the last few decades, the "Made in China" story has been rampant! Making China a dominant part of global supply chains. India too, has significant trade dealings with China.

That said, there cannot be a better opportunity to compete with "the factory of the world".

China's handling of the coronavirus has hurt their global image dearly. And large companies, especially American ones are looking for alternatives. Can India stake a claim? If yes, then how?

Udey Kotak recently took over as President of one of India's leading industry chamber - the CII (Confederation of Indian Industry). Here's an excerpt from an interview he gave to Bloomberg Quint -

"We need to change the model of how entrepreneurs build businesses in this country. We have to be ready for much lower percentage ownership and get institutional money to come alongside, to take the risks and co-invest, with high quality of governance."

He said this in context of a shift from debt-dominated financing to raising equity for building sustainable businesses. We've seen India's most influential businessman, Mukesh Ambani do just that.

So, if you're a business owner, with reasonable or no debt, this is an opportune time for you to channel your entrepreneurial side. Accept that industry consolidation is inevitable. Raise institutional capital. Don't fixate on percentage ownership. And with that liquidity, focus on building capacity in a China dependent supply chain.

Chances are, not only will you make it to the other side of this crises, but you will have the opportunity to thrive thereafter.

Nationally

More than half of India's 1.3 Billion citizens have lived in poverty for many-many years. It's been so bad that, access to toilets in the 21st century was such a big deal.

For decades the rural poor have migrated to urban areas in hope of higher income and a better future for their kids. They found work at factories, construction sites, mines, etc. generally in less than optimal working conditions. Their toil and labour, key to keeping the economy ticking. They built other people's dreams, often for a pittance, while their own dreams rarely found fulfilment.

After all this time, it's clear as day, that their move to urban hasn't panned out.

Now, due to the lockdowns we've seen reverse migration for the first time. The question is - will they return? I have my doubts. Especially about prompt returns.

Urban societies and policymakers must introspect and figure out how fairer opportunities can be provided to our rural folk. Recently however, the government has announced some measures for rural development, here's how we can participate -

Infrastructure - building cold chain facilities, post harvest management infrastructure, last mile logistics, etc.

Building businesses - Tech entrepreneurs, compliance professionals, logistics players, farmers and small scale food businesses, all have reason to be excited about the micro-food enterprises push and the agriculture marketing reforms.

Banking - Small finance institutions like Jana and Ujjivan have already been operating profitably in the rural space. My sense is the relationships built here will sustain for long periods. This segment should further boom in the years to come.

Education - Mobile and digital has made it possible to find audiences everywhere. From the other side, audiences hungry for quality content needn't be neglected any more. High quality education tailored to rural needs will flourish.

A key prerequisite to capitalise on the rural theme is channeling one's EQ (emotional quotient). Offering products and services tailored to rural needs, and powering that experience digitally. It's about time that rural markets receive their due importance.

Individually

Life is better when we seek to improve everyday. And that process starts with inquiry.

This is a great time to evaluate one's life.

How can we do better? At work, in society, in our relationships.

How can we improve? our headspace, our fitness, our eating habits, our lifestyle, our professional skills, and so on.

Of these, whichever feels pressing to you, is the one you should focus on. For example - upgrading one's digital skills is imperative going forward, or learning how to cook, etc.

But the two topics I want to emphasise, that in my opinion, no one should ignore are -

Money - How we earn it, how we spend it, how we feel about it. What options we have to protect, grow, enjoy and share it. And so on.

Mind-space - What's the relationship between the body, mind and soul. How can one always be peaceful. What are the mistakes we make that fritter away our positivity. And in turn our productivity.

The coronavirus has forcefully hit the pause button. It was like one long red-traffic-light. Though it has turned to yellow, there's still time to when it fully goes green. And till then - it would do you good, to take a minute to introspect.

#opportunity #india #coronavirus

[theinnernetsurfer]

#2 Financial Crisis

The world is passing through a Financial Crisis!

But, what does that even mean?

During conversations we often repeat something that we’ve read or heard. Somehow, this makes us feel good, because it proves that we know the topic. After all, that's exactly what exams in school were about.

Let’s stop to ponder, is knowledge simply the ability to parrot information from various sources? Or does that act only create the illusion of knowing? Should we not dig deep to really understand the basics of important topics?

While talking to a friend about the financial crisis caused by the coronavirus, I realised that I needed a better understanding of it.

I'm writing about it here, so that the time I took to delve in can also benefit you. I hope you’ll enjoy it.

This note is structured in the following format –

#2.1 - What is a financial crisis?

#2.2 - Comparing the Corona Financial Crisis (2020) with the Global Financial Crisis (2008)?

#2.3 – What can we do? What is the government doing?

#financialcrisis #economy #india

[theinnernetsurfer]

#2.1 - What is a financial crisis?

Hi! I hope you’ve read #2 before getting here. If not, please click on the link.😊

—

In context of finance, a crisis arises when – the financial system stops functioning smoothly.

So, what is this financial system?

The financial system is a time machine for money! Through it, those with surplus money (let’s call them savers) can transport their savings into the future, with the hope / expectation of getting more of it later. And those who need money today (let’s call them borrowers), can borrow it from the future.

The nonstop working of any machine requires constant supply of fuel. Similarly, this time machine needs the uninterrupted flow of money (facilitated by both – savers and borrowers).

A key assumption here is – money is the ultimate counterpart - a participant in every transaction. This makes money a desirable commodity in society, like a safety net.

Everyone strives to use this time machine efficiently… in order to maximise their safety net.

During a crisis, the flow of money in the machine starts to choke. This could happen due to a problem in any part of the machine. Sometimes demand is hurt, or supply can't come through, mindsets of participants can change, an unusual event can cause damage. There can be many kinds of causes. But in effect, the flow of money chokes.

This causes distress to all participants, cos now, their safety net is fading. Savers fear that they wont get their money back. Borrowers can't pay back what they owe. New borrowers can't find any lenders. And thus, confidence in the time machine’s potency is lost.

This was from a banking and financial system point of view. Now let's consider it from the real economy's standpoint.

Generally speaking, economies reward activity! And activity leads to more activity. Businesses are started, jobs are created, savings are made, demand for goods and services rises, businesses prosper, banks give credit to businesses with growth prospects, investors make money, and so on.

Like a game of musical chairs.

But what happens when the music stops?

Everyone scrambles for a chair. In this case, everyone scrambles for liquidity (= cash or bank balance).

And the people who are left without chairs, in the game, lose. Similarly, and unfortunately, some people lose dearly during a financial crisis  –

businesses stagnate or even fail,

resultantly, many people lose their jobs,

a stressed business environment causes stock market crashes,

many assets lose a large part of their financial value since there are no buyers,

economic growth gets crippled (due to lesser demand and lesser supply),

currencies can weaken,

and broad pessimism spreads about the economic future.

Sounds daunting, doesn’t it? Well this is what the world is going through right now. And it’s never been more important to educate oneself.

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Continue reading – #2.2 – Comparing the Corona Financial Crisis (2020) with the Global Financial Crisis (2008)?

#financialcrisis #economy

[theinnernetsurfer]

#2.2 - Comparing the Corona Financial Crisis (2020) with the Global Financial Crisis (2008)?

Hi! I hope you’ve read #2 and #2.1 before getting here. If not, please click on their links.😊

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Let’s first understand both –

Global Financial Crisis 2008 (GFC)

Oversimplified version

Ever since the start of the 2000s, residential real estate prices in the US had been soaring, and everyone wanted to make money in this boom.

Banks were giving loans to anyone, who was willing to mortgage the property back to the bank. Even without considering the borrowers’ creditworthiness. The assumption was – the prices of houses would keep rising.

Due to this, banks found themselves sitting on thousands of mortgages. So, they decided to sell these mortgages to other investors and financial institutions around the world, who wanted in on the action. The buyers of the mortgage received the right to receive interest and principal, and if the borrower defaulted, the right to take possession of the property.

Soon enough prices of these houses became unsustainably high, and started to fall.

Now, upon default of instalment payments by the borrower (which was inevitable, as loans were given to people with poor creditworthiness), on taking repossession of property, the owner of the mortgage couldn’t sell the house (since there were no buyers left) to recover their money. The result? Huge losses!

Panic started to spread! Frenzy hit its highest point when major financial institutions started considering bankruptcy. AIG came close, and Lehman Brothers bit the dust in September 2008.

Hence, the flow of money in our economic time machine got choked, and the ugly effects this has in the real economy ensued.

Corona Financial Crisis 2020 (CFC)

Oversimplified version

An epidemic first identified in Wuhan, China in December 2019, by March 2020 started spreading all over the world. COVID-19 or simply the coronavirus, mainly attacks the human respiratory system, is contagious, and can be fatal.

To combat this pandemic, global leaders effected nationwide lockdowns – asking citizens to quarantine themselves within their homes. Since savings lives was the foremost priority.

These lockdowns delivered an agonizing blow to the economy, bringing many business activities to a halt. Translating into – lower production, breaking of supply chains, a halt in infrastructure projects and real asset sales, and so on.

During such uncertain times, paralysed by low or no inflows, meeting monetary obligations becomes harder and harder for businesses and individuals.

This situation forces people to eat into their savings - their prized safety net that they’ve spent years accumulating, through efficient use of the economic time machine.

All this has created a pessimistic environment, impeding the flow of money in the financial system, and crippling the real economy.

Comparing the CFC and the GFC

How it started?

The lockdowns effected to control the coronavirus’ spread, hurt the real economy. This in-turn suffocated the financial system which took the form of the CFC.

The GFC originated from bad behaviour in the financial sector and spread to the real economy.

The thinking behind the solution?

In CFC, since the foremost threat is the threat to human life, the hunt for a vaccine is on and how! To combat the financial strain – a variety of measures have been and continue to be taken (more on this in #2.3).

During the GFC, faith in the financial system was broken, so the solution had to inspire confidence in the financial system. It was hoped, that that would also heal the real economy.

Uncertainty (the hallmark of any crisis)

During the GFC, storied financial institutions were collapsing. Time and again, they gave out the message that they were fine, but no one knew whether to trust them.

One can only guess, how the post-COVID world would be… what’s the future of manufacturing, retail, travel, hospitality, sports, entertainment, and so on?

Global Coordination

During the GFC, central bankers and policy makers from the largest economies in the world came together at a G20 meet to coordinate economic relief measures to stimulate economic activities. In general there was coordination between nations.

During the CFC, there is gross mistrust between the two largest economies. Though there is phenomenal coordination between scientific and medical groups to combat the disease, on the economic side, countries seem to be taking tailored approaches.

I hope this gives you some insight into what we are facing, with the backdrop of the previous major financial crisis. With that, let’s move on to the next one.

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Continue reading – #2.3 – What can we do? What is the government doing?

#financialcrisis #coronavirus

[theinnernetsurfer]

#2.3 – What can we do? What is the government doing?

Hi! I hope you’ve read #2, #2.1 and #2.2 before getting here. If not, please click on their links.😊

—

As with most things in life, the coronavirus too shall pass.

But from what we've seen in the last three months, it's set to stay longer than we all initially anticipated. Till a vaccine comes around, our focus should be on how we can position ourselves, to not only survive this period, but also come out stronger on the other side?

First, we must realise that though the lockdowns have ended, the threat to human life remains. History tells us that - the Spanish Flu of 1918 was most devastating in its second wave. And there could very well be a second wave of the coronavirus in India. So let's continue to be cautious, wear masks, exercise social distancing and maintain a high level of hygiene.

Second, since the economy has slowed down, and it looks like we're going to be in a recession for the next 2-4 years, we must invest in ourselves. Improve our skills and build new ones. One could use this time to improve one's health, mind-space, digital expertise, and so on.

Three key lessons ring through for individuals and organisations alike -

Be more conscious of how your actions affect Mother Nature.

Debt is a double edged sword. If you have any, pay it off as soon as possible.

Invest in digital.

While science and healthcare have do the heavy lifting of saving lives, policymakers must shoulder the burden by saving livelihoods and incomes.

Let's look at what the chief commander - the Reserve Bank of India (RBI) and the captain of the ship - the Government of India (GOI) have been doing to steer the ship to safety.

Reserve Bank of India

The RBI’s job is to regulate the flow of money in the economy, with the goal of controlling inflation. How does it do this? Well, the RBI regulates all the banks and NBFCs. And those two, put together, effect the flow of most of the liquidity in the system.

The RBI has taken a number of steps to free up liquidity and add more of it, to keep the economic time machine ticking. The rationale is - when businesses find themselves in a hole, they need extra liquidity for some time to dig their way out. By making liquidity available to the banks, the RBI has encouraged them to lend, and this should revive the economy ie. bring back the flow of money!

Yes, there could be some damage, like, rise in inflation (since more money is available but activity levels are still low), and some defaults by borrowers who are unable to dig their way out of this situation. But the other alternative is the death of many, many businesses.

Here is a simplified version of steps taken by RBI -

For the banks -

Banks are required to keep a certain percentage of its deposits with the RBI and an additional percentage with themselves, as a safety measure to meet withdrawal requests. These percentages have been reduced by the RBI. This frees up money for lending.

Lent money to banks at attractive rates. This additional money was to be used to purchase corporate bonds, commercial papers and non-convertible debentures. This would ease redemption pressures being faced by companies borrowing through bonds.

Guided banks to put in place disaster recovery and business continuity plans. Example - alternative data sites, etc.

Allowed banks to participate in offshore currency markets. This allows banks to hedge their risks.

Reduced compliance and regulatory burden on banks.

Added funds to NABARD (National Bank for Agriculture and Rural Development), SIDBI (Small Industries Development Bank of India) and NHB (National Housing Bank). These provide long term funding to agriculture and rural sectors, small industries, housing finance companies, NBFCs and micro-finance institutions.

The RBI is the banker for the Central Government and State Governments. States are allowed to borrow up to certain limits only. These limits have been increased and terms of borrowing have been relaxed.

Other measures -

Eased compliances on exports.

Offered a liquidity facility to mutual funds, to support them during mass redemption pressure during this time.

For the benefit of all borrowers - offered moratorium period on loans taken from all financial institutions, and then extended the period due to continued stress.

Government of India

The GOI is similar to a team of whole time directors who run a massive company called India. They’re tasked with a wide range of functions. From an economic policy standpoint however, the GOIs job is to achieve the economic growth target in an inclusive manner, and reduce unemployment. How is this done? By supporting the business and entrepreneurial environment in the country through - development projects, tax and regulatory policies, fair and approachable departments, attracting foreign investment, access to finance, and so on.

The GOI has taken the following steps to save lives and livelihoods, and to reposition India as a stronger economy. It's an ambitious plan covering a multitude of topics, and execution will be key.

For economically backward classes - Direct benefit transfers, free ration, free gas cylinders, special credit facility for street vendors, doubled cap of collateral free loans to women in self-help groups, loan relief.

Financial support to - senior citizens, widows, specially abled, women jan-dhan account holders.

For migrant labour - shelters created for urban homeless providing three meals a day + essentials (face masks and hand sanitisers), free food grains, MGNREGA support to returning migrants, etc.

For frontline workers - free - medical insurance with ₹50 lakh cover, masks, hydroxychloroquine tablets, PPEs.

For farmers - direct benefit transfers, distribution of many more kisan credit cards, and agri loans with moratorium benefit announced.

Total overhaul of the agriculture supply chain planned through a new central act (coming soon). Through cluster based approaches micro enterprises will be formalised. Schemes for transportation and storage of all fruits and vegetables announced. These reforms will allow farmers to access a wider market and get better prices for their produce, and should attract participation from the private sector, agri entrepreneurs and startups.

For MSMEs (Micro, Small and Medium Enterprises) measures like - collateral free loans, equity infusion, TDS relaxations, eased compliance, provident fund contribution. Disallowing global participation in tenders up to ₹250 Crores. Liquidity support to lenders.

For formal economy workers - health and safety code made applicable, annual health check-up and appointment letters made mandatory.

Tech driven online education - Radio and podcasts to be used. 3 channels launched, 12 in pipeline. Support for visually and hearing impaired students. Health and emotional well being support for students, families and teachers launched. Top 100 universities to be permitted to start online courses.

Reforms focused on the ease of doing business announced - empowered group of secretaries appointed to fast-track clearances, project development cells within each ministry to be set up, states to be ranked on investment attractiveness to promote healthy competition.

Sector specific initiatives announced in - power sector, battery storage, coal mining, minerals, defence, aviation, social infrastructure (roads, railways, public facilities, etc), space exploration. This should bring in more private participation and hence improve efficiency.

Some other initiatives -

Changed FDI policy to protect Indian companies from opportunistic acquisitions from abroad.

Infused liquidity into power distribution companies.

Schemes announced for converting government funded housing in cities into affordable rental complexes. And incentivising development of affordable rental housing.

Set up PM Cares fund - to combat the pandemic.

Set up a Rural Infrastructure Fund.

Afforestation initiatives launched to help restore ecological balance and provide jobs.

Provided financial support to dairy corporations and beekeeping initiatives.

Offered relief to fisheries industry.

Vaccination and tagging of animals done on a large scale.

Though I'm concerned about the spread of the pandemic, the ominous second wave, and the cruel impact COVID will have on our country's fiscal deficit (amount by which government spending exceeds government revenue) - I genuinely feel optimistic about the prospect of India coming out stronger on the other side of this financial crisis.

#economy #atmanirbharbharat #india

[theinnernetsurfer]

#1 Learnings From The Past Week

“And once the storm is over, you won’t remember how you made it through, how you managed to survive. You won’t even be sure, whether the storm is really over. But one thing is certain. When you come out of the storm, you won’t be the same person who walked in. That’s what this storm’s all about.”  ~ Haruki Murakami

Humanity is passing through extraordinary times. We are amidst a fight against a virus, which will change life as we know it. On a personal and societal level, we must rethink – hygiene, health, sanitation, travel, and many other facets of our lives. At the world level – leaders will have to reconsider topics like globalisation, healthcare, interdependence for essentials, and so on.

Being an ardent student of investing and a keen observer of society, this has been a time of intense rumination for me. As a human, I’m disturbed by the uncertainty, like most of us. As an investor in the markets, I’m enthralled by the heightened learning phase that is upon us, and the investing opportunity that comes with it. And finally, as a spiritual aspirant, I constantly try to remind myself of the highest truth – that everything is divinity, and that creation, preservation and dissolution are a part and parcel of life.

With the backdrop of these uncommon times – Via this note, I’m sharing my learnings with you. I hope you’ll enjoy them.

I’ll be covering the following (linked) – #1.1 - Wealth accumulation and redistribution cycles. #1.2 - Where is India in this cycle? #1.3 - Considering the above and the effect of COVID-19, where lies the next investing opportunity?

#india #investing #wealth #business

[theinnernetsurfer]

#1.1 Wealth accumulation and redistribution cycles

Hi! I hope you’ve read #1 before getting here. If not, please click on the link.😊 ---

Everything in creation is cyclical.

In nature there is – day and night; summer and winter. Humans have – birth and death; highs and lows. Similarly, businesses and economies have – booms and busts; consolidation and diffusion. One cannot exist without the other. Day merges into the night, and as the night recedes – day announces its arrival.

Once we see an entire cycle play out, it becomes easier to spot the signs that signal its impending turn.

Over the past 40 years or so, no economic trend has been as prevalent as consolidation. The large corporations have consolidated to become larger and larger. The unending appetite for growth has driven firms to aspire for gigantic size and scale. Their fast-increasing size and scale gives them more and more power to provide better, faster and more diversified offerings, and hence their might compounds over time. On their way, they acquire or crush the competition, and gobble up even more market share and profits. In the times that we live in, Tech is an appropriate example of this – Apple, Microsoft, Google, Amazon and Facebook have become larger than the economies of many countries. But this phenomenon has repeated itself many times over in history. Just that each time, the industry was different.

This trend has had its influence in investing as well – growth investing has outperformed value investing for many years now; returns from passive index funds have beaten out returns from actively managed funds in most cases; and the phenomenon of investing in a great company at any price has become popular.

This trend of mass consolidation at an economy wide level, has led to concentration of large amounts of wealth and power in the hands of a few. And this has started to show in the data. “The world’s eight richest men now control as much wealth as the poorest 50%”

Too much wealth and too much power always brings complications. On the side of the incumbents there is fear of losing it and a desire to grow it more and more. And on the other side, those left behind often have the hunger of catching up and taking a larger slice of the pie.

In times of consolidation, the have-nots always outnumber the haves. They often feel a deep sense of injustice, and this sense of being left behind brings political change, which in turn brings economic and policy change. The best example of this is the election of Donald Trump as President of the US. His vote bank comprising mainly of blue-collar workers who have felt squeezed out due to rapid globalisation and shifting of their jobs to foreign countries with lower wage rates, in search of additional profits.

Demands like – breaking up the largest organisations due to trust issues, and increasingly regulating them to the point of slowing them down, start to appear. There have been calls for hiving off Amazon Web Services from Amazon, and YouTube from Google. And data privacy has become a geopolitical issue that countries discuss on global forums.

As situations like these gain steam, eventually the cycle turns from one of wealth accumulation to one of wealth redistribution; from consolidation to diffusion. Also, it’s we must recognise that this is nothing unusual. Even the phenomenon of rain is the same. Clouds take more vapour from large water bodies and distribute it evenly everywhere else especially to areas where there is a drought. The way I see it, big clouds have started to form.

Another sign of redistribution is that one of the world’s richest and most influential people (Bill Gates), pledging most of his wealth to philanthropy – through the Bill & Melinda Gates Foundation. And his friend Warren Buffett following suit.

Since it is an extensive cycle, it turns slowly. But I would argue that it will turn more quickly than most people expect. And once it does, it’s effects will show up in investing too – value investing will again gain steam, and actively managed funds will have better returns than passive index funds.

Since investing is about predicting the future, it can never be 100% accurate. An astute investor, however, should take the time to learn from history – what has been and what it tends to become.

“History doesn't repeat itself but it often rhymes.” – Mark Twain

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Continue reading - #1.2 - Where is India in this cycle?

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Note - Post #1.1 has been inspired by this video.

#wealth #cycles

[theinnernetsurfer]

#1.2 Where is India in this cycle?

Hi! I hope you’ve read #1 and #1.1 before getting here. If not, please click on their links.😊

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India is unique… like everyone else. Our nation has its own set of core competencies and its own set of problems.

On our theme of wealth accumulation and wealth redistribution – India is somewhere in the middle. At the individual level, accumulation has been very much prevalent, and here, there have been some rude policy shocks. Like –

Demonetisation – rendering hoarded cash useless (presumably that on which tax hadn’t been paid),

Increased surcharge on the income of the super-rich, and

Taxing long term capital gains and dividends,

all policy moves, made to discourage building enormous personal wealth. So, at an individual level, wealth redistribution is clearly sought for by India’s policy makers.

But, alongside these strict measures for individuals, tax rates on corporate profits have been reduced. Large public-private business initiatives in Healthcare, Education, Banking etc keep getting reported in the news. The government’s desire to build large organisations also shows in the ongoing mergers of public sector banks to create fewer but larger banks (although that has much to do with the dearth of professional talent as well, even that feeds into the consolidation theme).

When we consider these moves in unison, the intent of the government rings through. They want business leaders to become more comfortable with building financial muscle within organisations, as opposed to taking it out to build ostentatious lifestyles. Their view is – as the years roll on, a well-capitalised large organisation keeps serving society, but even enormous personal wealth tends to get frittered away in luxuries over time.

Inefficiencies in smaller (especially legacy players) and public sector players continue to become opportunities for competing well capitalised private players. And well-run large organisations continue to take advantage to become larger still.

Hence, the wealth accumulation (or consolidation) trend seems to be going strong on an organisation level.

Policy makers continually examine ways to include those at the bottom of the economic pyramid in national progress. But it’s not just their job. Our job as responsible citizens is to support causes that pull at our heart’s strings. Everyone contributes differently – some do so with their time and effort, some with their financial resources, and others with their intelligence and connections. The perfect dish requires all ingredients in perfect quantities.

Individually (and as families), on the topic of wealth accumulation vs redistribution, we all need to reflect where we stand in that cycle. We must realise that – if there is a mound somewhere, there is bound to be a pit elsewhere. To bring about balance, wealthy people, of their own volition, must utilise their wealth for the welfare of the deprived sections of society.

As they say, “Beyond a certain point – don’t yearn to increase your standard of living, increase your standard of giving!

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Continue reading - #1.3 - Considering the above and the effect of COVID-19, where lies the next investing opportunity?

#india #wealth #policy

[theinnernetsurfer]

#1.3 Considering the above and the effect of COVID-19, where lies the next investing opportunity?

Hi! I hope you’ve read #1, #1.1 and #1.2 before getting here. If not, please click on their links.😊

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COVID-19 is nothing like anything humanity has experienced in recent memory. There is uncertainty around the depth, spread and duration of its impact.

If there’s one thing all markets hate – it’s uncertainty. This uncertainty around the economic and social impact of COVID-19, has brought extreme volatility to markets around the world. Foreign institutional money is running for the safest of safe assets – US government treasury bonds and selling off everything else. This excess selling in the stock markets has depressed prices considerably. Stocks of even the most incredible businesses are available at cheap prices.

Every investor who has liquidity at this point is faced with a conundrum – Will the market fall further? Should I buy now? If yes, what should I buy?

Let’s first enlist the risks faced by market participants –

We don’t know till when the lockdown situation will last.

We don’t know the extent to which businesses, supply chains and the financial sector will be hurt. This will have a direct impact on how long it takes for supply to come back into the economy.

We don’t know what the general economic situation in the country will be like and how long it will take for demand to come back.

What will the policy stance be like – taxation wise, infrastructure spending wise.

Now, once we are past this, what can we reasonably expect?

India’s economy will definitely grow. Considering the policy focus, the demographic dividend we enjoy, and the rising wave of entrepreneurship.

With rising geopolitical tensions, each country is becoming more and more cognisant of their own needs as opposed to those of others, and wants to reduce its dependence on others. Thus, the captive demand coming from India’s demographic is going to be a key driver of growth. Our economy has very low dependence on export, and that will play to our favour.

The consolidation trend has wind beneath its wings so, large well-capitalised businesses have the best odds of surviving the storm.

Since India’s growth story is stronger than almost any other country’s, in its dire search for returns foreign capital inflows will happen again.

Despite the above, most businesses are expected to have a bad year in terms of the profits they generate. Sure, some businesses will do better than the rest. Such businesses should come from – the consumption sector (everyone needs to eat), telecom (increased data usage), pharmaceuticals (for medicines) and the healthcare sector (hospitalisations and consultations).

Service sectors, banking, manufacturing, and infrastructure would slowly find their feet once this is over. Each in its own time. How quickly a business recovers will depend on how essential its offering is to human life and then to essential businesses. As and when demand returns, it’ll first flow to the essentials.

So, how can one invest in these times?

One can buy index funds in a staggered manner. Example – a Nifty50 ETF. Bifurcate the amount you want to deploy into equal parts and invest it over a period of 6 months, buying at the dips. This strategy comes straight from our consolidation theme, that the large organisations will be the first to recover.

If one has in-depth knowledge about a sector and how it behaves, its market leaders (those who have a competitive advantage over others) if their prices have fallen significantly can be bought, again in a staggered manner. Be sure to check that the company does not have very high debt. With a 3-year horizon these should do well.

If one prefers commodities, gold can be bought. I prefer gold bonds to buying it physically, but you can take your pick. The rationale behind investing in gold is – global debt is over 3 times global GDP. This shall further increase due to the impact of COVID-19. As countries will be forced to borrow more. All this in tandem will lead to large scale currency devaluations, and when that happens, everyone will rush for the safest store of value... Gold. The question is – how long will this take?

One can even consider a combination of the above. 

Finally, I would like to add – when we’ve held a stock for long, and in times like these its price has mostly fallen (significantly). We generally want to hold it, at least till we recover our initial investment. But this is imprudent. We must use the market wide depressed prices as an opportunity to buy the best businesses. Prices don’t fall so much without there being uncertainty, so don’t wait for it to pass, once it does, these prices won’t be available. While investing – it’s more important to make money, as opposed to making money in stock A or stock B.

#investing #wealth #markets

[theinnernetsurfer]

Financial Planning

We all plan... Some of us plan our day, Most of us plan our careers, All of us plan our vacations, But very few of us plan our finances. I wonder why?

Is life all about money? - No But is money important? - Yes Don’t we work hard to earn it? - Yes again. Then why don’t we take the time to Think about why money is important to us, And make a plan to manage it well?

Having done this for years, I’ve heard all the excuses, “There’s just too many options” “I can’t deal with the pushy sales people” “Mom/Dad handle everything” “There’s enough for me to not be bothered” And many more... But are these approaches sustainable?

Ignorance is bliss, it is said Albeit, at a lower level of reasoning. Those with life experience will tell you Real bliss, is in wisdom! There’s peace in knowing that A task that needs to be done... has been done.

A well thought out financial plan If you would sit down to craft Will not only give you a sense of calm about your money, It will also be an exercise in self-discovery, It’ll soothe your financial anxieties, And set your expectations right.

I’d like to nudge you to not defer this exercise... Most financial advisors would guide you well Having the 10th best plan is better Than not having one. And if you so choose... I’d be happy to make yours with you.

#financialplanning #investing #money

[theinnernetsurfer]

My Dadaji

My Dadaji... A wonderful man with the softest heart and the firmest resolve - led his life rather simply,   Though his lifestyle wasn't lavish, he was immensely wealthy in moral fibre,   Be humble, work hard, serve your motherland, be righteous, have faith, love God!   He lived these values, every second of every day. Born in Amritsar at the time of British raj, he dreamt of Independent India with his idols - Sardar Patel, Bhagat Singh, and Chandrashekhar Azad, Just a 19 year old in 1947, he did all he could - to do his bit in the freedom movement. He then went on to become a founding member of the Jan Sangh in Punjab, One of Punjab's most loved sons, he served her people with a selflessness and fervour. He married my Dadi in 1958, a woman with character and values to match his own,   She stood by him like a rock through all his travels, and his jail-time during the infamous emergency. Together they raised 3 beautiful children - Alka, Sanjay and Poonam, They raised them with lots of love, but discipline always came first. In his illustrious political career, he played many roles with which came power and importance, But power failed to corrupt his being, and importance couldn't inflate his ego - because in his heart he was only a sevak. He wasn't great because of the positions he held, the things he did, or the votes he garnered, He was great because of the love he shared - with each and every part of God's creation, in every moment of his life. One day before his beloved country's 71st Independence Day - he became independent of his worldly ties, his old weakened body, and ascended to his Lord's lotus feet,   He has left behind a family that's still reeling from the shock, with tearful eyes that miss his jovial presence. How he was ever helpful, encouraged dialogue, was more than kind to his juniors, and loved the girl child before it was cool to do so...   So many memories of a life lived so well. As millions whose lives he touched send thoughts and prayers, we begin to fathom the legacy he has left behind - Take care of the little things, and big things will happen. Through stories he taught us that the soul is immortal, and birth and death are certain realities of God's play called life, We pray that he's reached his Bhagwan, chanting what he so often repeated - "Hey Mere Ram, Hey Mere Malik, Kripa Karo Mere Malik, Kripa Karo."   Balramji Dass Tandon will live on through the values he instilled in all who he touched.   Jai Hind!  

#family #rolemodel #leader

[theinnernetsurfer]

The Mind

We live in our heads Caught up in our own little world In memories, thoughts, and plans We fritter away - all of our days. In every idle moment, We're active... in our heads. Before we do, after we do, Whether we do, or we don't, We think, and think, and think... To the point of exhilaration, often exhaustion The relentless mind knows not else For to a man with a hammer, every problem is a nail We wake every morning with renewed energy And intoxicated in it, the mind runs hither and tither From prospective vacations, to alternate career paths, From big future plans and unprecedented fame, To tiny misgivings and bitter regrets In our heads, a new adventure each day But by night, feeling emotionally spent Unable to think and plan any more The mind, seeks the peace and calm of sleep Yet charges in random directions at the slightest chance Frustrated and sleepless, we vent - why so restless, Oh mind? Can't you just 'be' for a bit? How can we just - be? How can we reign in the flow of thoughts? We've always been like this, haven't we? Constantly thinking, never stopping. We only ever stop when - Playing sport, reading a book, writing a note, Listening, talking, working, managing... Doing!!! The mind is still and calm - in doing! Oh the irony! In action there is peace, And in inaction there is fatigue, So - Don't think! Do! Put one foot in front of the other With each and every step, You'll see just enough light to take a couple more Faith!!! There's no power like faith! In not thinking, doing, and having faith, You'll get far more done in a day than you do in a week, Happiness and contentment will be your new best friends, And the grand plan a higher power has for you, Will unravel before you! Now and again, the monkey mind, will knock the door of your silence, "Let's take a quick, harmless jaunt in imaginationland!" Guard yourself! It sounds alluring, But is sure to mess with your peace. Life principles are simple! Following them diligently however, is tough. Sure, giving advice is easy, But I pray you give it a try... Having succeeded in doing so in the past, And having lost it since, I miss that poise, pace and peace, every single day! I hope to find it again, soon. And I hope you do too.

#spirituality #mind #thoughts

[theinnernetsurfer]

Seeking

When I created humans I gave them a physical form like mine A heart and mind like mine And placed in the depth of their soul Knowledge of my existence. Hoping that, one day they’d seek me

I put them into creation (maya) Among other beings, birds and beasts Who were all also designed by me Why did I do all this? Well, I was lonely, you see, There was no one to know who I am So I designed all this for my pleasure, but with a purpose!

Then, to run this project well I appointed some managers (devas) Made them incharge of fundamental aspects Like - earth and fire, wind, water and space Birth and death, knowledge, wealth and power Designing, preservation and when needed, destruction too.

Out of my fondness for creation I instilled in my staff noble qualities Like fairness (dharma) and love (prema) With these they run this system perfectly, as per the laws of Karma In every system, however, at times there are special requests And we needed a department for that too

With time, the wish fulfilling department became the busiest Uncontrolled multiplication of desires led to greed and anxiety Soon, peace was nowhere to be found Now, my children started looking for answers, which made them seek me The incessant yearning for a solution Readies the aspirant for the highest learning

Why seek creation when, The creator is ready and willing to be yours? Why continue on a circular journey when - The destination is at the centre of the circle? Why not end this aimless journey, And start the ultimate pilgrimage?

This is the end goal! Each ones final homecoming! Strive to finish this game... I’m waiting for you, within you With a big smile, arms open wide to welcome you back Asking the same question I’ve always asked... Would you rather play the same game, again and again? Or would you like to win it?!

Seek that, Seeking which, You shall never have to seek again!

#spirituality #seeking #life

[theinnernetsurfer]

Oh dearest Lord...

Oh dearest Lord… How should I thank you? Day after day, in every moment, You make your presence felt. Reminding me of your love for me, Tending to me, cajoling me. Smiling with me, at the wonders of nature. Smiling at me, when I look to you in gratitude. Reassuringly smiling, when I’m pained.

I know that each one and every thing, Comes from you, and is verily you. So why is it that most have a flaw or two? Then you smile and whisper - “Do you think a flaw taints my being in one and all?” “That is the unwanted you, in you, that I must chisel out.” “The fact that such chiseling is yet to happen, is why you are still here.” “Once done, your outer nature will be the same as your inner one.” “And that is me!”

“And then you shall see what I see, That from me you have come, and to me you must return. Traverse this journey with love, March for me, and I assure you, one day - You shall merge with me.”

#spirituality