Hot Links:April 2, 2012

Some stuff I am reading this morning:

CBI to file chargesheet against Aurobindo Pharma MD ? (Business Line)

Why the gloom is likely to persist (Mint)

FII Withdrawal Symptoms (Business Standard)

India’s economic monsoon (FT)

SEBI Watch:Broad guidelines on algorithmic trading (SEBI)

RBI Watch:Great speech by RBI governor on globalization (RBI)

Euro was flawed at birth and should break up now (Bloomberg)

Ten most foolish things a trader can do (Newtraderu)

Keynes as an investor (WSJ)

Warren Buffett scorns gold.Bad move ! (Daily Reckoning)

Did Goldman Sachs own a prostitution website ? (Nytimes)



Horses for Courses

A great chart.


And the money spinners are…

Many times the stocks that make the most money for investors are the ones that nobody expected to do well.

Consider the best performing NSE listed stocks for the quarter Jan 2012-March 2012:

Sanwaria (Up 174%)

Goenka (Up 152%)

IVRCLInfra (Up 127%)-The open offer battle certainly helped here

Sanghvifor (Up 124%)

WockPharma (Up 117%)



Is the Govt of India like Goldman Sachs?

Consider the following actions of the Govt of India:

Govt of India auctions a block on ONGC on 1st March, 2012.Two weeks later, the same Govt announces an increase in cess on oil production from Rs.2500 per tonne to Rs.4500 per tonne.As per RS Sharma,former CMD, ONGC,  “The cess hike will have a bearing on ONGC’s revenues to the extent of Rs 5,000 crore per annum”

The timing of the govt. for the ONGC sale was good, not so for the investors who bought it.

This is similar to the actions of Goldman Sachs.Goldman Sachs sold structured products to investors knowing that they would blow up and in some cases, it actively bet against the same products.

Such sharp deals by Goldman Sachs,Lehman Brothers and their like led Warren Buffet to label them as a “carny”

A carny is  a carnival barker hawking rigged games to tempt cash out of unsuspecting bystanders.

The Govt of India by acting as a “carny” has done itself no favors especially when it has huge disinvestment plans lined up (30000 Crores for this fiscal)

Contrast this sort of behavior with that of the Tatas.

Ratan Tata took TCS public in late 2004.Many times he was asked why did he wait so long, considering that during the late-1990s software boom TCS’s revenues were growing at nearly 60% a year, twice the current rate?

Here is his classic reply (which would have made JRD proud):

“There was a moment six years ago when we considered floating this IPO. But one concern was that the stock markets in India then were not valuing IT stocks realistically. Had we gone public at that time, Tatas being in an enviable position in terms of the money they collected, we would have left many of our shareholders dissatisfied. This was because the IT industry went through a slump [subsequent to 1990s]. We would like this share to be one that investors are happy with, where they see growth, they see enhancement of their shareholder value.”


The Govt of India should act less like Goldman Sachs and more like the Tatas.


Weekend Reads

Great reads for the weekend:

India’s economy: Losing its magic (Economist)

A devastating critique of the government-The usual idiots (Mint)

What goes up must come down (GMO)

Warren Buffett’s 50 Billion $ decision (InvestingNotebook)

Student Loans for kindergarten?( Forbes)

IIT Coaching in Kota – Feel sorry for today’s kids (Caravan)

Raging (Hazing) in Ivy League colleges-a true shocker (Rolling Stone)

Found this strangely funny-Male model thrashed and swindled by women (Mumbai Mirror)