Category: Anecdotes

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Anecdotes Realty

What my Mother-in-Law and Warren Buffett have in common

Warren Buffett penned a recent piece where he talked about his real estate investments.

One was an investment in farmland in 1986 where the normalized return from the farmland he calculated to be 10%

The other was an investment in New York Realty where the unleveraged rental yield was around 10%

Both these investments worked out very well for him

Whats interesting to me was that both the investments gave him double digit yields when he invested.

Realty investors know how difficult this is to achieve.

In Mumbai,residential yields are now around 2% and commercial yields are around 6%.

The only other person I know who is getting double digit yields on the current value of her property is my Mother-In-Law.

Maybe,I should blog less and listen to her more !

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Anecdotes

Jim Rogers:How I lost everything by investing

After I was in the business for a couple of years, I made a lot of money and I thought, this is easy. I was selling short, I waited for the market to rally, I took all of my money and I sold short. Within 2 months, I was wiped out, I lost everything. I knew what I was doing about the companies, they all went bankrupt eventually. But in the meantime they all skyrocketed and I did not have staying power so I lost everything.

I realized how much I did not know about markets, about other people`s emotions. I realized there was a great deal that I needed to learn. Markets are not rational and you have to factor that in. Eventually they are rational, but there are times when they are not.-from Jim Rogers on the Markets

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Anecdotes Excerpts

Why one should avoid investing in public sector banks

“I had sanctioned a hefty loan to a large business group. A week later the owner of that group called me up saying that he had got a call from an influential  politician’s office to pay up a certain amount, which would then be adjusted against his dues to the bank… under the NPA head, of course. I called up the politician and made it clear that my bank would support no such deal. A few days later I got a call from a senior ministry official asking me if I would interested in taking charge of another PSU bank. I knew this time I had over reached myself, and my days in the current job were numbered. So I agreed to the offer. But there was no word from the finance ministry after that. A few weeks later, I called that person and asked if there was some progress on the earlier conversation. I was told that post could be mine if I was willing to shell out money.

“Do you know what the going rate for a PSU bank chairman’s post is? Take a wild guess,” he said.

“Rs 10 crore,” I replied.

“It can go up to as much as Rs 40 crore, depending on the importance of the bank. I told him that I don’t have even Rs 4 crore on me, leave alone Rs 40 crore. I never heard from him again,” R said.-from FirstBiz

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Anecdotes

Bhave Vs Subrata Roy

One afternoon in June 2010, following normal practice, Roy was ushered into a meeting room adjacent to the Sebi chairman’s room on the seventh floor of Sebi Bhawan, the headquarters. According to Sebi insiders, their conversation went something like this:

Roy: The Reserve Bank has prejudiced Sebi officers. They are taking a negative view on Sahara’s (initial public offering) application without justification.

Bhave: What’s the issue? They are yet to get information they had asked for. Where’s the bias? Submit the information. We can have another meeting on this…

Roy: We have taken legal opinion and we are not required to send the information to Sebi.

Bhave: Sebi is not concerned about the legal opinion. Sebi has asked for the information and it needs to be submitted.

Roy: They are voluminous… It’s summer and many of my people have gone on leave. It’s difficult to collate all information.

Bhave: Let the employees come back from their summer holiday. We will wait.

Roy: If you can clear the application meanwhile…

Bhave: No, no… That can’t happen. We need to scrutinise…

Roy (suddenly standing up): Bus, itna hi? (That’s all?)
(He had possibly expected the Sebi chief to hint at a way out after Sahara had exerted much pressure on the regulator, but Bhave seemed unperturbed.)
-from BusinessToday

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Anecdotes

Two stories from Rahul Bhasin

 Rahul Bhasin is a private equity investor who is trying to invest in Indian factories despite the government of India emphatically telling him that this is not a smart thing to do. He had two stories to tell me. The first is as follows: Bhasin received a business investment proposal from a dynamic entrepreneur in Tiruppur. The proposal involved dismantling the existing factory in Tiruppur and moving it to Oman. The entrepreneur claimed that despite Oman’s high labour costs, the sheer ease of doing business there would make this proposed shift economically viable and profitable. Needless to say, Bhasin, being an Indian patriot of the subdued variety and not a hyper-minister, was not sure whether he should weep or laugh. The second story is about a run-of-the-mill factory. The factory manager answered all questions competently. When it came to questions relating to the use of the back-up diesel generator, the manager started to fumble. Finally, he said rather sheepishly: “To tell you the truth, Mr Bhasin, we have never had a need to use the back-up generator in years. Our power supply has been quite reliable.” No prizes for guessing — this factory is in Gujarat-from IE