Sunday, May 27, 2007

Interesting Links while on vacation

Aristotle said that "All paid jobs absorb and degrade the mind". So how about being my own CEO for PersonalFinance 2.01 . Thoughts of a mind on vacation!

Yes, right now I'm on a vacation and conserving my energies even for this blog. But I do have some interesting links for you.

Rajesh Jain has an overview of India's digital infrastructure and it is indeed insightful and useful.

JDR of GetRichSlowly shares some resources for would be Entrepreneurs. It is more US centric but useful nevertheless.

Ajay Shah has an entry for those who are confused about monetary policy. Needs some knowledge of the background, though

"Ambition is a poor excuse for not having sense enough to be lazy", says Edgar Bergen. Interesting !!! I'm unabashedly lazy. And I'm so happy!!

Blog on Finance & Business

Monday, May 21, 2007

Strategy for your Investment Portfolio

As Indian companies continue to emerge and gain prominence on the world stage, those companies who outperform will be those who make better resource allocation decisions. Companies that do this consistently over time will lead their industries. It is time for corporates to strategise their Portfolio Management for competetive advantage and outperformance.

I like the word "strategy". Sounds good, no! Whenever I'm doing nothing at office and want to feel smart, I start "strategising on my options to leverage the resources at hand". Roughly translated it means, "I'm taking a nap".

Jokes apart, this is what I read in dailies:

  • The total value of M&A involving Indian companies was about $37 billion (Rs 160000 crore) in two months of 2007 as against $20 billion (Rs 86000 crore) in the whole of 2006. Is there some grand strategy there?
  • LIC, the Insurance behemoth, is in the process of carving two separate entities for its "Credit Card venture" and "pension business". Why is LIC diversifying into credit cards?
  • Jet and Sahara have finally decided to merge after 10 month of battle. Is there value in the deal?
  • Tata outbids CSN in the Corus deal? Did they pay too much?

I often wonder at the strategy behind the decisions.

"Optimizing Corporate Portfolio Management", authored by Anand Sanwal, is a useful book whose main premise is that where an organization allocates its resources is what truly drives it strategy and financial returns. So while company leaders issue strategy in presentations or in speeches, this is really not what creates strategy - it is where money gets spent that determines this.

Anand explains, "Let's take a very simple example of a company which has $100 to invest and whose leadership says that their main strategy is to focus on customer loyalty. However, when you look at where they invest their money, you see that $75 is spent on customer acquisition and $25 is spent on initiatives focused on customer loyalty. So even though the stated strategy is customer loyalty, the true strategy is one of acquiring new customers if you look at the resource allocation."

The book offers a practical methodology to bring this powerful discipline to your organization. The book is targeted at any organization struggling to figure out how to better allocate resources - this is every company and any sub-organization within a company, e.g., Information Technology (IT), marketing, R&D, sales, operations, product groups, etc who manage discretionary resources.

The book can be used to help general managers decide which product they should invest in or which country/region deserves more investment versus another. It advocates treating all investments as part of a portfolio whose risk and reward must be balanced - similar to the way a person tries to manage their money as a portfolio of investments.

The book also features case studies of successful companies deploying this discipline including AmEx, Cisco, HP, TransUnion and the State of Oregon. The case studies demonstrate that the CPM discipline can be used across organization of all types, across industries and also across for profit and not for profit (government) organizations.

I enjoyed reading the book and learnt a lot from it despite the agonising title (for a novice like me) !

Blog on Finance & Business

Friday, May 18, 2007

Personal Finance 2.01

How about a personal finance website? Not sure? Wait till I tell you more about my idea.

The site will be a one stop information site for all your personal finance requirements. It will have sections on (categories in brackets)


  1. Knowledge Centre (School, College, University level)

  2. Mutual Funds ( Basics, Company review, product review, comparisons)

  3. Stocks (Research reports, Financial analysis, technical analysis, comparisons)

  4. Insurance ( Basics, Company review, product review, comparisons)

  5. ETF ( Basics, Company review, product review)

  6. Bonds ( Basics, Company review, product review)

  7. Tax Planning ( Basics, product review)

  8. Retirement Planning ( Basics, product review)

  9. Children's education. ( Basics, Company review, product review)

  10. Calculators (Budgeting, Networth, Loan, Asset allocator, Risk analyser,etc)

  11. Blog by experts.


It will also have components like

  • Forum to discuss personal finance (questions and answers by the community)

  • Directory for finding Financial Planners

  • Web pages/Blogs for Advisors

I'm actually serious. Take a look at Personal Finance 2.01 which launches in July/August'07.

Thursday, May 17, 2007

Web 2.0 tools for Finance professionals

"Spreadsheets and other essential tools for finance professionals are moving on to the Web, and as they do, they're acquiring new functionality to facilitate seamless collaboration and data exchange", Susan Kuchinskas says in the article published in BNet titled A Beginner's Guide to Web 2.0 tools for business

Three web 2.0 tools for finance professionals are:

Google Docs and Spreadsheets Google's Web-based word processing and spreadsheet applications are great for collaboration, and they're compatible with their Microsoft Office equivalents.
Zoho Sheet An online spreadsheet service that's compatible with all Excel documents. An application programming interface (API) is available for enabling seamless integration with many other software tools.
SalesBoom This hosted service started out as a customer relationship management product; today it has expanded to include commission and expense management. Limited customization options, but well-suited for smaller companies.

Read the entire article for tools for other business uses.

Blog on Finance & Business

Wednesday, May 16, 2007

10 things we hate about Finance

Fool.com has a writeup on the 10 things we hate about finances

Even worse is ignoring them!! And the best guy to help you out is YOU!!

Blog on Finance & Business

Tuesday, May 15, 2007

Optimizing Corporate Portfolio Management (CPM)


As Indian companies continue to emerge and gain prominence on the world stage, those companies who outperform will be those who make better resource allocation decisions. Companies that do this consistently over time will lead their industries. It is time for corporates to optimize their Portfolio Management for competetive advantage and outperformance.

"Optimizing Corporate Portfolio Management", authored by Anand Sanwal, is a useful book whose main premise is that where an organization allocates its resources is what truly drives it strategy and financial returns. So while company leaders issue strategy in presentations or in speeches, this is really not what creates strategy - it is where money gets spent that determines this.

Anand explains, "Let's take a very simple example of a company which has $100 to invest and whose leadership says that their main strategy is to focus on customer loyalty. However, when you look at where they invest their money, you see that $75 is spent on customer acquisition and $25 is spent on initiatives focused on customer loyalty. So even though the stated strategy is customer loyalty, the true strategy is one of acquiring new customers if you look at the resource allocation."

The book offers a practical methodology to bring this powerful discipline to your organization. The book is targeted at any organization struggling to figure out how to better allocate resources - this is every company and any sub-organization within a company, e.g., Information Technology (IT), marketing, R&D, sales, operations, product groups, etc who manage discretionary resources.

The book can be used to help general managers decide which product they should invest in or which country/region deserves more investment versus another. It advocates treating all investments as part of a portfolio whose risk and reward must be balanced - similar to the way a person tries to manage their money as a portfolio of investments.

The focus of the book is not on describing why CPM is important but in showing people how to implement a CPM strategy. It also features case studies of successful companies deploying this discipline including AmEx, Cisco, HP, TransUnion and the State of Oregon. The case studies demonstrate that the CPM discipline can be used across organization of all types, across industries and also across for profit and not for profit (government) organizations.

Anand beleives that the complexity of decision-making cannot be boiled down into two dimensions or some overly simplistic framework. Decisions within organizations require using data and are much more complex. CPM understands this complexity and is about providing a way to make better decisions in a more holistic, complete way.

Anand holds a degree in finance and accounting from the Wharton School of Business and a degree in chemical engineering from the University of Pennsylvania. He is currently handling the American Express’ CPM effort which spans the entire organization and captures over $4 billion of per annum discretionary investment spend. He is infact also the holder of a CPM patent.

So "Optimizing Corporate Portfolio Management" is a book from the horse's mouth and is a pragmatic approach on how to link capital allocation to strategic planning. Anand's approach to enterprise portfolio management is lucid for a beginner, practical for a practioner, and provides a lot of insights for the experts of CPM.
Blog on Finance & Business

Monday, May 14, 2007

Story of the Eagle and Change

The eagle has the longest life-span of its' species

It can live up to 70 years

But to reach this age, the eagle must make a hard decision

In its' 40's its' long and flexible talons can no longer grab prey which serves as food

Its' long and sharp beak becomes bent Its' old-aged and heavy wings, due to their thick feathers, become stuck to its' chest and make it difficult to fly

Then, the eagle is left with only two options: die or go through a painful process of change which lasts 150 days.

The process requires that the eagle fly to a mountain top and sit on its' nest There the eagle knocks its' beak against a rock until it plucks it out After plucking it out, the eagle will wait for a new beak to grow back and then it will pluck out its' talons. When its' new talons grow back, the eagle starts plucking its' old-aged feathers

And after five months, the eagle takes its' famous flight of rebirth and lives for ...
30 more years



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The Corporate Shark

I reproduce a mail forward from Hemalatha which is immensely motivating. Here it goes....

The Japanese have a great liking for fresh fish. But the waters close to Japan have not held many fish for decades. So, to feed the Japanese population, fishing boats got bigger and went farther than ever. The farther the fishermen went, the longer it took to bring back the fish. The longer it took them to bring back the fish, the staler they grew.

The fish were not fresh and the Japanese did not like the taste. To solve this problem, fishing companies installed freezers on their boats. They would catch the fish and freeze them at sea. Freezers allowed the boats to go farther and stay longer. However, the Japanese could taste the difference between fresh and frozen fish. And they did not like the taste of frozen fish. The frozen fish brought a lower price. So, fishing companies installed fish tanks. They would catch the fish and stuff them in the tanks, fin to fin. After a little hashing around, the fish stopped moving. They were tired and dull, but alive.

Unfortunately, the Japanese could still taste the difference. Because the fish did not move for days, they lost their fresh-fish taste. The Japanese preferred the lively taste of fresh fish, not sluggish fish. The fishing industry faced an impending crisis! But today, it has got over that crisis and has emerged as one of the most important trades in that country! How did Japanese fishing companies solve this problem? How do they get fresh-tasting fish to Japan?

To keep the fish tasting fresh, the Japanese fishing companies still put the fish in the tanks. But now they add a small shark to each tank. The shark eats a few fish, but most of the fish arrive in a very lively state. The fish are challenged and hence are constantly on the move. And they survive and arrive in a healthy state!They command a higher price and are most sought-after.The challenge they face keeps them fresh!

Humans are no different. L.Ron Hubbard observed in the early 1950's: "Man thrives, oddly enough, only in the presence of a challenging environment." George Bernard Shaw said: " Satisfaction is death!"

If you are steadily conquering challenges, you are happy. Your challenges keep you energized. You are excited to try new solutions. You have fun. You are alive! Instead of avoiding challenges, jump into them. Do not postpone a task, simply because its challenging. Catch these challenges by their horns and vanquish them. Enjoy the game. If your challenges are too large or too numerous, do not give up. Giving up makes you tired. Instead, reorganize. Find more determination, more knowledge, more help. Don't create success and revel in it in a state of inertia. You have the resources, skills and abilities to make a difference.

Put a shark in your tank and see how far you can really go!

Blog on Finance & Business

Saturday, May 12, 2007

Production Management Made Easy and Interesting

I thought I was wasting my time with an course like Production Management since I'm a Financial services sector guy. Production Management , also called operations management, is planning and control of industrial processes to ensure that they move smoothly at the required level.

But wait, people like Steven Spielberg, Shekhar Kapoor or our own Karan Johar depend hugely on production managers who are responsible for realizing the visions of the Producer and the Director or the Choreographer. Interested now!!

I would think that the production manager is an important link and would answer directly to the director. This may involve dealing with matters ranging from the procurement of staff, materials and services, to freight, logistics, information technology, government liaison, venue booking, scheduling, operations management and workplace safety. And maybe liasioning with the heroines too! Interesting, no!?

Prof Bawa really made it interesting for us. We did some interesting case studies too and one of them was on Toyota where Prof Bawa told us about their Ten Commandments for competing in emerging global scenario. Worth listing it out here:
  1. Quality obsession
  2. Productivity through infrastructure
  3. Global orientation
  4. Investing in Human capital
  5. Improving supply chain management
  6. Product & process innovation
  7. Global branding and positioning
  8. Design & Research
  9. Better product at lower prices
  10. Access to low cost capital

Techniques of production management are employed in service as well as in manufacturing industries. It is a similar functional responsibility in level and scope to other specialties such as marketing or human resource and financial management. Any questions?

Blog on Finance & Business

Wednesday, May 9, 2007

How to be successful in finances and career

This is a bit crazy. Aptly, it's excerpted from Osho's The Madman's Guide to Enlightenment . Nevertheless, I couldn't stop myself from posting an excerpt. I've warned you, now read on!!

***********************************************************************************
How can one be successful in life in the areas of finance and career?


"Richness, wealth, treasure -- divine treasure -- is there and you have not claimed it yet -- and it is yours, just for the asking. You need not spread your hands anywhere before anybody. The treasure is hidden within your own heart.

And people go on searching everywhere else except in the heart. They can go to the moon and to mars; and that journey seems to be easy. Man seems somehow to be very stubborn about going into his own heart. Maybe he is afraid that he may find it there.

Psychologists say that there is a very deep-rooted fear of success in the human mind. It looks absurd when you hear for the first time that man is afraid of success, but when you ponder over it, slowly slowly it dawns on you that it has some deep relevance.

Man is afraid of success, because if he succeeds, then what? That is the fear: then what? So in a subtle way he tries to succeed and yet creates such obstacles that he cannot succeed.

On one hand he tries to succeed, on the other hand he disturbs his own success so the game can go on. Just think of a day when you have succeeded and all that you desired has been attained, all that you always longed for is in your hands. Then what? -- that is the fear. Then what will you do? -- because all doing is searching, all doing is desiring, all doing is possible because there are goals which we have not attained yet. One is occupied, happily busy.

Just think of it a moment and even in thinking you will start trembling inside: if all is fulfilled, then what? Would you like to succeed to that point? And when you think about that you will see the point of what psychologists mean when they say there is a deep-rooted fear of success.
And it does not happen only as far as the inner success is concerned: outer success also. It almost always happens that when a person is at the last rung of succeeding, something goes wrong. And he thinks something has gone wrong from the outside, no. He does something -- he takes a wrong step, he moves in an opposite direction. He blames god and he blames fate and he blames society and others, but if you search deep down you will find that people fail only when they were just going to succeed.

There seems to be that deep fear which at the last moment says to them 'What are you doing? Avoid it.' It is very unconscious. They fail, and then they are busy again. That's how people keep themselves busy; life in and life out they keep themselves busy. This is called the wheel, the samsara, in the East; this is the world. That's why people don't go into the heart, which is the closest point to go to. They go on great journeys and pilgrimages, but they don't search within.

Somewhere, hidden, they know perfectly well that if they search there they are bound to find it -- then what? But sannyas means dropping that fear of success. The goal is very near... and within everybody's grasp."

*******************************************************************************
What do you say?





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Tuesday, May 8, 2007

Personal Finance v/s Business Finance

We have a way of thinking in compartments. Me too. That's why I am always confused of putting personal finance and business finance together on this blog. I think I'm guilty of cramping too much in one blog and there should be two different blogs for each one of them. A third on government finance that includes Economics, Monetary poilcy, Budgets, etc.

But wait. Here's a post by Seth Godin which clears me of my guilt :) Read Marketer's guide to personal finance by Seth Godin.

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Business Planning by Story telling

The best presentations have a story telling style behind it. And if you want to become an entrepreneur you have to write the story of your business. Popularly known as a Business Plan.

The Business Plan tells you and your investors whether the business makes any sense. It also tells the audience about your thoughts and abilities and whether you can make it all happen.

We know about the various elements of the Business Plan which are:

  • Executive Summary, Company Description, Market Size, Technology description, Competetion, Sales Revenue generation, Finances, Management

There could be plans with slightly different headings but essentially they talk about as above. We might just focus on each of them separately but I'll start off where I most usually harp on: Finances

In this section of the plan you will try to explain how to set off your expenses with your revenues over a period of time. To me, this is very important. If you are not able to articulate that, it's time to rethink and maybe move away from the present idea to another one. Till you are able to build a model where you generate profits and build a sustainable enterprise.

One aspect of the Finances is deciding the right pricing. Head on to this article from Bnet for some insights. Determining the right pricing for your product/service


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Sunday, May 6, 2007

Entrepreneurship is a Jouney, not a Destination

15 years as an Entrepreneur is an inspiring read. Rajesh Jain is a serial entrepreneur who did his B Tech in Electrical Engineering from the Indian Institute of Technology, Bombay in 1988, and M.S. in Electrical Engineering from Columbia University, New York in 1989. He then worked at NYNEX Science and Technology for 2 years before returning to India in 1992. He created India's first Internet portal which was launched in 1995, which was acquired by Sify in November 1999 for USD 115 million.

For many like me, entrepreneurship appears glamorous and sexy . But the minute you get started with entrepreneurship, you realize that it will take so much of hard work.

This was what was working in my mind when I wrote to Rajesh Jain and here's what he replied.

Its always a tough ask becoming an entrepreneur. Fortunately for me, I have known no other life :-) Most days are what I call 'down' days -- things don't end up going according to plan. But then one gets used to it.

Starting off as an entrepreneur is the hardest part. Its the journey and not just the destination which one should enjoy.

Rajesh Jain has promised that he will write some more about entrepreneurship in India on his blog. So if you have any plans to become an Entrepreneur, head on to his blog

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Saturday, May 5, 2007

Trade on Financial Markets like a computer

Saw this interesting post which says, "Michael Kearns is trying to teach a computer to do something other machines can't: think like a Wall Street trader." Read the full post

Chess vs Markets

Take chess. Deep Blue, a chess-playing supercomputer developed by International Business Machines Corp., defeated world champion Garry Kasparov in 1997. The rules of chess never change, however. Players have one goal: to capture the opponent's king. There are only so many moves a player can make, and Deep Blue could evaluate 200 million such positions a second.

Financial markets, on the other hand, can be influenced by just about anything, from skirmishes in the Middle East to hurricanes in the Gulf of Mexico. In computerspeak, chess is a closed system and the market is an open one.

``AI is very effective when there's a specific solution,'' Hamilton says. ``The real challenge is where judgment is required, and that's where AI has largely failed.''

AI researchers have made progress over the years. Peek inside your Web browser or your car's cruise control, and you'll probably find AI at work.

Don't you think a computer will be able to overcome the greed and the fear that makes us fail in the markets? Or do you think that computer will not be able to understand the market fully?



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What does Tarot say to Saggittarians



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Friday, May 4, 2007

Power and Magic of Compounding

Simple maths tell us more about the power of starting early and investing regularly rather than any rants. Check out this simple calculator by Hugh where he gives an option to compare two savings/investing options.

Case 1: You start now with a yearly investment of Rs 1000 and stay invested for 40 years.

Case 2: You start after 20 years from now but invest Rs 2000 instead for 20 years.

In both the case, the amount invested is Rs 40,000. Assuming a common growth rate of 10% in both the cases, in case 1 , the accrued balance works out to Rs 442,593 . The accrued balance in case 2 is Rs 114,550.

Why don't you work it yourself and take away your learnings.

Blog on Finance & Business

Wednesday, May 2, 2007

Long Term Investing Always Wins


Image picked up from I Will Teach You To Be Rich .

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Financial Literacy Drive: Bookmark Post

This post links to a treasure trove of information on personal finance. Actually, April was National Financial Literacy Month in the US and JDR (GetRichSlowly) has the ultimate collection of posts covering everything on Personal Finance.

Other than the 20 posts linking to the literacy drive, he also links to his popular articles and the websites which provide such information. Maybe it's all dry information, but you can do well to bookmark that post and keep coming back to it. It's dry, but important for you. Why? Look at the following questions and then decide.

How much do you know about money? Have you learned about the power of compounding? Do you know how the stock market works? What is a bond? Can you tell the difference between an Income Statement, a Balance Sheet, and a Cash Flow Statement? Do you even know why you would want to?

Do you know how to keep a budget? Do you understand how your taxes are used and why we pay them? Do you know what it takes to purchase a house? How much insurance do you need?

Head on to this treasure trove. Even though some posts are US specific, the concepts are useful and important to learn.
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Tuesday, May 1, 2007