Green Initiatives

The only solution to most of India's and probably the world's problems is controlled usage of the resources we have. Be it Oil, Natural Gas, Minerals or Electricity.

For example, controlled usage of Oil can be done by using public transport as far as possible, walking to the neighborhood mall rather than take the car there (you'll save on the parking fees too), maintaining your vehicle in top notch condition and a million other ways based on your vehicle and usage. Controlled oil usage not only contributes to reduction in oil demand in a Oil-Deficient country like India, but it also results in a much lower air pollution in the big cities.

The governments be it the state or the center will never do anything about it since their biggest revenue streams (tax-revenue contributors) are the big Oil-Import and Refinery Companies (BPCL, HPCL, ONGC, etc) and any reduction might result in budgeting difficulties for their thousands of needs.

Electricity on the other hand is different from Oil. The governments do have a benefit in reducing the consumption of electricity (wastage). It can be used for more productive applications. It can then be distributed to smaller villages and towns which to this day do not have any form of electricity. But the governments should probably go big on advertising cost-savings and companies going green will help too. My current employer too has its "Green Initiative" going great guns.

The Dark Knight!!

Watched "The Dark Knight" yesterday. A definite must-see. Loved the scene where Batman jumps off IFC, the scene where the Bat-Vehicle turns into a Bike, loved the Joker for all his dialogues ... the list goes on.

An almost perfect movie, now being dubbed as the best super-hero movie of all time, and also possibly the best movie of all time.

Here I come ... China!!!

Finally looks like I might in fact get to visit China before I head out of HK (maybe for good) after all.

A month or so ago, I decided to apply for the GIFT's Young Leader's Programme (YLP) since it looked like a good opportunity to visit China (Urban - Beijing and Rural China - Ningxia Province) and also an opportunity to work on a project that has a lot of benefits to the community and also a good opportunity to work with some top executives of private and public enterprises in Hong Kong.

I finally got selected for the program last week and now pending my China VISA approval. Getting a VISA to China is the challenge of the year thanks to the China Government's clampdown of Visa issuance to all and sundry including possibly a few million potential visitors to the Olympics, I should be in Beijing during the Olympics (although it is still doubtful if I'll get to see the olympics live). One thing that surely reduces my chances of getting a VISA is the fact that I am going for a project organized by an NGO - that's one word that's giving nightmares to the officials in Beijing.

If my VISA gets approved (hopefully I should know in a couple of days), it is a definite spoiler to my india travel plans and my mom's plans of getting me hitched before I head out for my exchange since I might head out to London directly instead of coming back to HK and / or going to Bangalore.

Before I wrap up this post, if you are aware of anyone or any organization who would sponsor a poor student's expenses of this trip and do its bit for a poor village in China, do pass on my contact to them or vice-versa. You can read more about GIFT at the following web-page.

Investing in the stock market ... science or art?

This is probably the best time to write this post - what with the sensex at its 52 week (or is 72 week) low, most emerging market indices down anywhere from a third to half their value about six months ago. Every business news website is speculating on whether this is the bottom or is there more to come. This is the first of two parts on how to invest in the stock market. It's called the Lazy Man way of Investing. This is for those who do not have the time to research and invest in stocks or Mutual Funds.

Q. How to begin investing?
A. Start investing a fixed amount however small in an Index fund or mutual funds via SIP. This takes care of two things - One - it provides the discipline of investing i.e. no temptation to invest more in a rising market to burn more than is necessary and two - not investing in an under-valued market and lose on the upside. Two - It provides averaging which ensures that your overall costs are not skewed toward

Q. What about Mutual Funds?
A. In a developed market like the US, an index fund is probably the better choice due to the lower costs and better overall performance. But these are still not that well-established in emerging markets. So a mutual fund which has a good performance over the past 8-10 years and has outperformed the market consistently is a good choice. Take care to look at hidden costs in the performance description and look at performance after costs to see if they out-perform the market.

Q. Growth or Dividend MFs?
A. Growth - Helps grow the nest egg much faster rather than pay taxes for dividends and reduce the upside.

Q. How many MFs?
A. 5-10 MFs divided across key sect

Q. What about the hot stock that my friend recommended?
A. Even if your friend has an IQ of 175 and is the whiz of Stock Investing, I'd personally recommend you do not go for it. For one, it shows you are not taking responsibility for your actions by blindly following. Even if there's a tip, find out why he feels this stock will rise, see if its close to its 52-week high (a warning sign of speculation), and do your due-diligence before investing.

Q. What about stocks?
A. Stocks surely provide better returns if you do enough home work before investing. For one, the costs are lower if you do not keep buying and selling stocks on a daily basis (which is a sure no-no for investing). In fact it is not called investing (does speculation sound familiar?) and there is a lot more opportunity to find under-valued stocks that will provide a much greater upside.

Q. Standard checks before buying a stock?
A. Strong Earnings, Consistent Growth, Honest Management, History of utilizing Retained Earnings effectively, History of Share Buy-Back, Low P/B ratios. Do your own valuations using standard techniques and buy stocks that are trading at a sufficient margin of safety (2/3 recommended). In summary, if you do not have the time to do some or most of this, try to stay away from stocks till you have the time.

Q. What about high-dividend yield stocks?
A. Very good way of picking some wonderfully under-priced stocks. In fact right now, some stocks in the sensex have current dividend yields of 8-10% and are big names in their sector and have either consistent or growing dividend record. Why would you say no to a interest rate of 8-10% and growing and a good chance of a higher price when the market recovers.

Q. Any recommendations?
A. Read Question on Friends' recommendations above. :-) I don't want to be cursed. The truth is I haven't done enough due-diligence on any of the stocks myself and don't feel comfortable recommending. And golden rule is even if I do, you will do all due-diligence before buying the stock.

Q. Portfolio recommendations
Stocks to Bonds: Between 75:25 in an under-priced market (like for example now) and 25:75 in a over-priced super-heated market (like 6 months ago). Do a re-adjustment of portfolio my looking at your portfolio at fixed intervals like once a month or once every 3 months. Of course, this needs to be done with your future cash needs in mind and should not be applied as is.

Q. Anything else?
A. If you hold a large portfolio of one share (like in the case of a Stock Option from your company that you want to either partially or fully sell at a certain price), look at the below post to see an opportunity to gain a good premium on the stock until it reaches that price. I will be trying it sometime soon .. so should be able to help you set it up in the near future (if you are interested).

Before you fall off to sleep reading this super-long post, let me end with a cliche I came across recently.

The No.1 Rule of Investing should be "I shall not lose my Capital".
Rule No.2 reads "I shall not forget Rule No. 1"

If you like this post, buy me a beer!

PS: A few tips from the master himself

Covered calls and Naked Puts

I don't think I can explain this well enough for anyone to trade these options just by reading this post. But these definitely are really powerful tools that I recently got exposed to in Prof. Rao's class that allow you to make the most of some of your stock holdings. I plan to apply them soon with his blessings ... ;-) read guidance!!!

1. Scenario 1: Stock A is right now at 120. I want to buy it only if it comes to 100. You can actually make some premium for the money you have reserved to buy these shares at 100 by selling a Naked Put and assuming A does not hit 100. Of course if it does, you will need to buy the shares from the guy who buys the Put options from you if he exercises it. But that was exactly what you wanted to do anyway. :-) You now have some additional premium thus lowering your overall purchase price.
2. Scenario 2: A is right now at 80. I want to sell a lot of A at 100 when it hits 100. Sell Covered calls of A at 100 and you earn a premium for doing that in case A does not hit 100. If it does, you achieve what you wanted to achieve and are able to sell your share at your target price.

Problems: The lots are really big - so you need to be a really big trader to make money here. But if you do have such huge lots, you are supposed to be able to conservatively make 1-2% per quarter which is quite significant since it is a fixed revenue stream.

Another reason why it pays to not hold more than 10-15 stocks in your portfolio.

Warning: Apply at your own risk or at least after doing your research. I haven't yet applied it myself.  :-)

If you like this post, buy me a beer!

Recollection of my first lesson at HKUST!!!

This was my first lesson at HKUST. Learnt from a professor whose class I exempted from. But before I got the exemption, my letter requesting for exemption got a sharp response back within minutes. Why???

My first line was "Hi James". Which unfortunately was his last name. With the other name being Lancelot, How was I supposed to know? And in addition, he wanted to be addressed as Prof. Lancelot James or Prof. James. Coming from a US company culture (In INFY and GAP), this was  a new one for me.

Here are some rules which you might want to follow in your back to school time.

As a rule of thumb, always address your professor formally, as Dr. X or Professor Y. If they invite you to address them by their first name, then use it. But it's polite to always assume the professor wants to be addressed formally, unless they tell you otherwise.

Consider the norms at your school. At some conservative schools, students never call professors by their first names. At some liberal arts colleges, it's the norm to address everyone informally. Ma'am and Sir might be appropriate as well, depending on where your school is, and manners never hurt..

Don't call professors Mr. or Mrs. This is a high school convention, not a college one. Your professor might feel disrespected if you refer to him or her by this less prestigious title. Also, many female college professors are liberal and do not like to be called Mrs.

Never assume it's okay to use a first name. Sometimes students assume it's okay to be informal if the professor is young, or female, or a minority, or nice, or whatever. This is not polite.

Call your professor something. Students sometimes feel so uncomfortable that they speak to their professors without using a name at all. This is pretty impersonal. Remember, if you're unsure, just use "professor."

This goes for emails too. Emails to a professor are a formal correspondence, and you should use good email etiquette and be as polite to your professor as you would be in the classroom. Unless your professor has invited you to use his or her first name, begin the email with, "Dear Professor X."

Don't be afraid to ask. You can always ask the professor how he or she would like to be addressed. Just ask politely.

My 8x8 Cell for the last 10+ months :-)

Struggle for work

Earlier it was fighting for an internship .. now its about fighting for work at our internship at Citi. Apparently, there is no work at least in our division. Or maybe its just that we are so efficient that we finish it before he gives us work. :-)