Posted by: alok | February 20, 2006

Placement Season…..

These days we are having placement season. (Between winter and summer seasons, there is a placement season among B-Schools)

Post Day1, after the M’s and the B’s having selected the ‘super brahmins’, it is the turn for some lesser mortals like me 🙂

So what’s a typical interview day like
Wake up by 7 am, wear a suit, and be seen in breakfast room by 8am, as the interview will start from 8:30. However, some students had the audacity to take interviews at 6am in the morning also. Post breakfast, come to SV1 in hot sun, sweating and report for interview 1 15 minutes before time.

The co-ordinator there says “wait, you are in queue”, you wait for 1-2 hours and then receive a call (its a must to share your mobile number with all fellow students – if you want a job) from the co-ordinator of some other firm… “Where the heck have you been? Your interview is scheduled right now”.. You are wondering which firm to give priority to… in a confused state, you flip a coin and go for one of the interviews. After hoping from one room to other, you get a chance to be interview in one of the firms, and here’s the typical interview like:

Interviewer: So, how many interviews so far?
Me: (Thinking: Lost the count, but is forced to say): This is my first interview.
Interviewer: Why don’t you tell us something about yourself?
Me: (Thinking: Didn’t you read the resume, everything’s written there, what a silly questions), but I blabber a well rehearsed 1 minute monologue.
Interviewer: Why MBA?
Me: “Ever since I was born, I was intrigued by the vagaries of business; the kick that i get by solving complex business problem is uncomparable. So after working for 5 years in IT, I felt its a great time to understand business from a ‘HOLISTIC PERSPECTIVE’ and I think MBA has been of great help to me”..!!!! (What an impractical answer – the actual reason is purely monetary – in simple words better salary)

(If its a non IT company)
Interviweer: Why do you think you are fit for this role?
Me: (Thinking: You tell me what fit you found in my resume to shortlist me for interview) but i am constrained to say: I have this capability, that capability, I love the challenge that this role offers me, and blah blah…!
Interviewer: You have so much experience in IT, then why (this) company, or industry?
Me: (Thinking: Had I loved IT, why the heck would i have done MBA), but the answer is: “You know, I love (this) industry, is passionate about type of work, the work culture, the ‘learned’ people you work with…..
Interviewer: (Gives some gyan) You know what .. ‘at your age’ (as if I am 55+ and about to retire), You should not think about changing industry, you are already exposed to one domain, build a strong career in that, however if you are still keen on industry, contact our sister concern , and they will eagerly take you.

(Incidentally, the interview with the ‘sister concern’ was also the same 🙂

(If its an IT company)
Interviewer: Why (this) company, why not go back to Cognizant?
Me: I am indifferent between Infosys, Wipro, Cognizant, Satyam, TCS, and the likes… it will be very similar role, and similar compensation. All are same for me.
Interviewer: Thank You .. It was nice talking to you.
(So quick, concise and precise).

Go through this ordeal 7-8 times in a day. And on way back to room, contemplate.. what did I do wrong? I got chucked out for telling the truth, I got chucked out for ‘tailoring’ my responses.

Stare at the laptop, and wait for interview schedules for the next day. Mail comes… holy shit.. its again the same, so many companies, so many shortlists, so its going to be the same day tomorrow….!!!! The greatest hope is…” Once all the toppers, stud guys, are through, then I stand a very good chance”.
Go to sleep with these optimistic thoughts for the day ahead.

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Posted by: alok | February 11, 2006

A Speedier Superstore…

Enter WalMart, the largest retailer in the worls, and find atleast 100,000 SKUs, to meet all your needs. And then you have ‘We Sell For less’..!! Can you beat a retail store, where you get almost everything that you want, at the ‘cheapest’ price, huge parking space, a pizza counter, a bank, a drug store everything under one roof?

So whats the WalMarts biggest limitation? You have to get out of your car, and go into the store.

What about a drive-through hypermart, as big as walmart, providing all the SKUs, and everything that you find in WalMart. This is the idea of AutoCart, a high tech drive-through superstore set to debut next spring. AutoCart is planning to unviel first of its 130,000 square foot superstore. The company is trying out a pilot project in Las Cruces, New Mexico. The concept is the same as that of a drive through burger kings, but slightly better. You can order your goods over phone, or through the online website, the order is packed using some-automated mechanised system, and as you drive through is available to you. You can pay by credit-card, cash or checks at exit.

Sounds good…!! But what if you are driving home from work and felt the need to buy something… Don’t worry, you can do the same as you do in BurgerKing, drive to the counter, order, and get your stuff at exit. AutoCart, system can even hook on to your car-radio, and you can order and will be informed about the status over your car-radio, without the need for sliding the window-pane (a boon for a stormy chilling winter night).

The only thing that AutoCart does not provide – is a playground and toys for children accompanying the parents which WalMart provides. But then AutoCart has a good answer to that – let your children sleep peacefully in the backseat of your car..!!!!!

Posted by: alok | February 4, 2006

Money Money Money….

How much can an idle domain like http://www.cellphones.com get you? $100, $1000 or Millions?

Welcome to the world of domainers..!! If you thought that these mavericks disappeared with the dot com bust, then you are here for a big surprise.

Traditionally, the domainers used to come up with some names like http://www.billgates.com and sell it to someone on lookout for this domain name. The domainer made handsome money in this deal. With the advent of cyber laws this is not allowed, and then the dot com bust busted this easy money minting machine. But at the same time, when the world was panicking with falling shares of dot coms, garage companies disappearing, and no-buyers for domain names, there were few like Yun Ye who were buying these domain names, which were expiring everyday as the companies were going bust, or had no money to keep the name registered. These names were available at dirt-cheap price.. but why was Yun Ye buying those?

Circa 2005, the net-surfing habits of people haven’t changed much despite the advent of google and yahoo. If one is on lookout for cellphones, instead of using google, he uses http://www.cellphones.com. The web-page owned by Mr. Yun Ye contains nothing but ads of various cell phones providers. So what does the net-surfer do? Clicks on one of the ads to browse some cellphones, clicks here and there for sometime and closes the browser. Behind all this, the domainer directed the traffic to an aggregator, which creates page with links, google/yahoo serves up the ads, and when the user clicks on the ad, the click-through revenue is channelled to google (50%), aggregator (25%) and the domainer gets (25%).

In this whole episode if you thought, Mr. Yun Ye was a fictitious character and http://www.cellphones.com was a made-up name, then you are for an even bigger surprise…. Yun Ye is a real character in California, who owns thousands of domains like http://www.cellphones.com making an average $2Million a month, sitting at home. Yun Ye is considered the oracle of this industry, but there are many more like him owning 5000-7000 domains, piling enormous money, driving the Porshes, crowning Rolex, and living in the penthouses of Palo Alto. Needless to say, Private Equity firms never miss out on such deals. For instance, Stuart Rabin a private money manager of Marchex shelled out $164 Million for a single domainer’s portfolio.

Hats off to these Visionary people…!!!!

Money, get away.
Get a good job with good pay and you’re okay.
Money, it’s a gas. Grab that cash with both hands and make a stash.
New car, caviar, four star daydream,Think I’ll buy me a football team.

Money, get back.
I’m all right jack keep your hands off of my stack. Money, it’s a hit.
Don’t give me that do goody good bullshit.
I’m in the high-fidelity first class traveling set And I think I need a lear jet.

Money, it’s a crime.
Share it fairly but don’t take a slice of my pie.
Money, so they say Is the root of all evil today.
But if you ask for a raise it’s no surprise that they’re Giving none away.

This song is courtesy Pink Floyd – “Money”. I wonder how could ‘Roger Waters’ compose this lyrics when there were no domainers…!!!!!

Posted by: alok | February 4, 2006

Random Browsing through the Blogger’s world….

Internet is a really interesting thing – especially if you have unlimited high speed access to the same at no cost. So what does one do with this asset?

I for one, browsed through few blogs, which ultimately led to me to few interesting sites on Indian Economy, Blogs on Indian Stock Market, and New Economist Discussion forum. Found some real interesting stuff on these, and honoring the intellectual property of the writers, I hereby give a brief discription of what I found, and the links to those.

Reflections on Equity Research : The writer gives an emphatic discription of few of the intricacies of equity research, is also a technology enthusiast.

Ticker Sense : A blog by Biriyni Associates – give some gyan on wall street – lots of technical analysis, but the most interesting thing about them is here

Gala Time: One of the rarest blogs on Indian Equity Market. Gives lots of gyan on US market, Derivative segment and others. Interestingly, while reading the ‘about me’ section I found this guy to be a friend of Ram (my quadi here at ISB).

Rupya: This belongs to the same league as of GalaTime. But is purely focussed on Indian Market, and provides an interesting analysis of recent bull run in sugar stocks.

New Economist: Blog on Indian Economy, developments, laws its implications.. and what not..!!!

So happy browsing..!!

Posted by: alok | January 27, 2006

A punch line for resume….

Interested in Equity Research..? How about having the following as a punch line in your Resume/EOI…..

“My qualifications for the post of an Equity Research Analyst is unique because I do not analyze the economy, have little interest in corporate developments and fundamentals and do not use traditional, technical, quantitative or other market indicators. “

Sounds rediculous…?? Think over it again, may be this punch line can get you a job at ‘Birinyi Associates‘.

According to their website…
“Our approach is to understand the psychology and history of the market, and most importantly the actions of investors. Much of our effort involves money flows, or what has traditionally been called ticker tape analysis.”

Wondering, what the heck is this ‘ticker tape analysis’ ? As far as I know some researchers/enthusiasts use this method of analyzing money flows to predict the direction of stocks. It’s one indirect benefit of integrating research analysis with sales and trading..!!! But never thought that there are people who actually trust this method to put their money on it..

And by the way don’t miss Birnyi’s blog postings on ‘TickerSense‘…!! You may find some real interesting posts.

Posted by: alok | January 22, 2006

Microfinance

The first in the sequel of ‘Learnings from ISB’…!

Microfinance was introdued to us by Vijay Mulbagal in one of the perspective building sessions at ISB. Instanly i got hooked to the concept, and I had to literally tighten the reins of my random thoughts about opportunities that seem to exist in this arena.

Microfinance – as a concept is very simple – financing simple activities. These activities typically require very small amounts of money of the order of few hundreds, max – a couple of thousands. And the activities could be anything from selling vegetables to buying seeds.

Let me try to weave a story around a hypothetical character – ‘Shyam’. He is a vegetable seller, who buys vegetables in the morning from farmers, puts it on his cart and brings it to city and sells it door to door. If everything gets sold in a day great, otherwise he dumps it.
Shyam is an ideal candidate in need of microfinance. Traditionally, he goes to a moeny lender who lends him Rs. 100 to buy vegetables, which he sells in the cities and returns Rs. 110 to the evening. The remaining is Shyam’s earnings. The cycle repeats everyday, and on the days when Shyam is not able to make 110 bucks, the money lender writes some covenants, which poor Shyam is forced to sign. Shyam is just a representative of millions of Indians in similar situation. Imagine an interest rate of 10% per day.. or more than 4000% a year…!!! Which investment gives such high returns? But still none of the banks or private equity firms are in this business. Why?

The traditional financial institutions are not capable of micro-managing loans of Rs. 100 everyday; these banks operate from 8 am to 8 pm, but Shyam needs money before 6 am and can return only after 9pm; these banks ask for credit ratings or collatoral which Shyam can’t provide; banks can’t open their branches in every village; and they face countless regulations pertaining to Capital Adequecy Ratio, Cash Reserves etc. set by RBI.

So in a nutshell Shyam is helpless and has no choice other than the money lender, who typically happens to be the head of the village, knows Shyam, and knows that Shyam can be made a bonded labor for life time if he defaults on the loan.

Here comes microfinance – a concept which traces his history to Marshall Plan during World War 2, or in recent to 1971 to Al Whitkar. But the notable achievement can be attributed to Muhammad Yunus and his Gramin Bank in Bangladesh. Because of his efforts UNO declared year 2005 as a year of microcredit.

Let’s think Microfinance in a simple way – I can afford to take loans of few lakhs from bank may be with or without collatoral. I take this money and go to the village where Shyam lives. I call on villagers in groups of 4-5 (not all from same family) and give them a collective loan of Rs. 500 to pursuse their business of selling vegetables. They have to return me the money in the evening at say 2% interest. Much less than what Money Lender is giving, but still much higher than what i am giving to the bank.

Why collective loan – I can manage without a collatoral as it creates a peer pressure among the group members to oblige to the loan. I give an incentive to the group, that if all the members of the group repay their loan in time, all of them are eligible for a higher loan of say Rs. 110 each.

How do I manage the logistics of disbursing loans every morning and collecting every evening? I open an institute called ‘MicroFinance Institute’ – (technically I have to register it under non banking act of RBI or one weird act under Andhra Pradesh government, if the number of ‘self-help group’ exceeds a certain value). The MFI appoints one person in each village who can be trusted by the villagers and has some legal papers to authenticate his identity. The MFI operates 2 hours in the morning (7-9am) in the evening 5-7pm, when the guy collects the money for the village, but distrbutes it in a choupal like setting at 6 am in the morning, and collects the interest from previous day, and deposits it in the MFI before going for his normal work.

Now what benefit does Shyam gets – lets say he earns Rs. 40 everyday, of which he used to give 10 to the money lender as interest and 10 as the rent for cart, spends 20. Now with this scheme, he still continues to earn 40 but is able to keep 28, his living standard improves, or he saves more. His savings can be channelled back to the MFI, which can act as a collatoral in case he defaults in future. As he develops a credit line with MFI, we can finance his cart of Rs.1000. He is now in a capcity to save 38, his living std. improves further and so does his savings. Where does he spend his additional earnings – probably on educating his child or buying some goods from other villagers (who would also have financed by MFI), improving their livelihood in turn. So this perpertual cycle continues and creates a win-win situation for all.
What risk is MFI exposed to? – Pilferage in the hands of middleman, money kept in his house overnight, or worst case a combined default by the members of the group – something goes wrong and the entire group says – “nahi de rahey paisa – kar lo jo karna hai”. Some elegant ways of managing these risks can be developed.

What is the size of microfinance market – there are no full proof mechanism as of now to gauge the market size, but the recent estimates stands at $4 trillion worlwide of which $600 Billion is the figure for India…!!!
Still not convinced if this approach will really work – refer to wikipedia – Microfinance or just google – ‘microfinance in india’. A starkling example is the case of a lady (forgot her name), who was able to mobilise around 6 Lakh people under her MFI. It was such a huge market that she could force even HLL for huge discounts on day to day goods in the village, and even influence a leading insurance company for group insurance of the villagers…!! Success of ‘Gramin Bank’ in Bangladesh is another success story.

Now some failure stories – huge amount of microfinance had been disbursed to villagers in Indonesia and one Tsunami wiped everything – entire village was dead or those alive had nothing to pay back. Many MFI’s went bankrupt. Few entered the market after the scene in a hope to improve the condition of the village as well as to make money – but what can you extract from someone who is in wretched condition. But occassions like these are a rarity.
Microfinance is not philanthropy, its not an unfair practice, but still improves lifes of many at the same time earning huge revenue for the MFI, banks and all parties involved.

Posted by: alok | January 3, 2006

Resurrection of an Idle Mind

What does an idle mind at ISB do? Watch movies, play AoE (Age of Empires), NFS, Mortal Combat, booze, date, sweat on treadmills or basketball courts, is busy on phone, watch all sorts of interesting things that internet has to offer, read other’s blogs, or worst still just browse net. I belong to the last category 🙂

Infact, this is what i was doing the whole night today. Started with exploring some stocks to invest in, scanned few pages from wikipedia and somehow landed upon ‘Right Brain- Left Brain’ dichotomy…!!! Now don’t ask me how does stock valuation sites led me to psychology. But having landed there once, started exploring the pluses and minues of left brain and right brain manager. Out of curiousity took an online test and to my surprise, found myself to be 74% right brain and 26% left brain…!! Shocked beyond imagination. I knew myself to be skewed, but to this extent…… weird…. Crosschecked it on two other sites, one says “Out of 18 questions you answered 13 as right brained and 5 as left brained”, other one says “You are more right brained than 91% of human beings”….!!!! What it essentially means is i don’t think sequentially, do not care about details, rather give more emphasis on broader picture, jump from one thing to other in purely random fashion, or worst still never keep my belongings organised. Quite true.. but all these are too bad for a manager in a standard brick and mortar firm 😦

Some psychological theory claims…
“The left brain works more with logic and analysis, the right works more with emotions and imagination.

As we apply brain dominance theory to the three essential roles of organizations, we see that the manager’s role primarily would be left brain and the leader’s role right brain. The producer’s role would depend upon the nature of the work. If it’s verbal, logical, analytical work, that would be essentially left brain; if it’s more intuitive, emotional, or creative work, it would be right brain. People who are excellent managers but poor leaders may be extremely well organized and run a tight ship with superior systems and procedures and detailed job descriptions. But unless they are internally motivated, little gets done because there is no feeling, no heart; everything is too mechanical, too formal, too tight, too protective.”

So i am going to be a poor manager, but probably a good leader… 🙂 Only time will (dis)prove the theory.

Posted by: alok | December 30, 2005

Benefits of internet …!!!

What can be the greatest benefit of internet to an unemployed? If you are wondering i am going to write about sites like ‘naukri.com’ or ‘monster.com’, then you are wrong. I am going to write about the actual exam papers that you can get from internet. May sound funny to some, to others it will come as a surprise, to rest a feeling of disgust on the recruiting policies of some of the best firms.

Was browsing through wikipedia for infosys foundation, when i came across a discussion forum for infosys. (click here to access the forum), and in one of the discussion threads came across placement papers. Click here to access the previous years placement papers from some of the leading Indian Companies…!!

Reminds me of the engineering college days, when 3rd year students would be waiting outside exam halls of 4th yearites to know what was asked in the placement papers, or use contacts in other colleges where the company had already visited. But now the students do not have to run pillar to post for papers. The collection is available to them at the site.

Not sure to what extent these questions are correct, but this puts a question mark on the recruitment policies of these firms. Are they really recruiting the best of the breed from engineering campuses or are they recruiting the person with the best networking or web-surfing skills..??

Sometimes the internet makes life really tough for students without much access to web resources. You have to write a term paper, an article, essays for admissions to MS or MBA, and now exam papers for companies, you just need to know how to browse the net. Imagine the plight of a student without internet access, the efforts that (s)he has to put in to write a paper comparable to those written by professionals. I pray that the evaluator would be able to distinguish an essay written from some internet resource and someone’s own creativity.

My best wishes to the students without internet access.

Posted by: alok | December 30, 2005

Perspective – The latest fad in campus

Suddenly everyone is talking about ‘perspective’…!!! But what the hell is this perspective all about? It all started with Pramat Sinha, Principal McKinsey and the first Dean of ISB giving a talk about interviewing skills. His message was that all of us need to have some ‘perspective’ on day to day news, and be able to give an informed critique on recent happenings like – ‘soaring oil prices’, ‘Rashtriya Nirman Yojna’, ‘Bull Market’ etc.

So why this sudden hoopla about ‘perspective building’? We are having ‘perspective building sessions’, ‘group discussions in campus, atrium and dining table’. If you see more than 2 students at any place together, chances are pretty high that they would be talking about ‘perspectives’. To me its great to have ‘perspectives’, but not just for name sake. Comes placement season and suddenly everyone is reading newspaper, discussing editorials, attending ‘KSS’ (knowledge sharing sessions) from peers. It will be interesting to know how many of us continue post placement season.

Posted by: alok | December 2, 2005

Beating the Street…..

“One up on Wall Street”, “Beating the Street”, “Outperform Market”, and many many more…. You must have heard of these phrases a lot. And these get prominance when the likes of Peter Lynch, George Soros author books with these names…!!

And Rakesh Jhunjhunwala, Ramesh Damani and many more barrons of our very own Dalal Street, give their views and suggestions on the market, people do listen…. and why not, these gentlemen have made huge money on dalal street, and more often than not their suggestions end up in creating bullish sentiments for their stock. Then next in line are other brokering houses who give tips and then there are ‘Your friendly brokers’ who usually give you a ‘Hot Tip’ and you are caught in the frenzy.

Then you read success stories of small-caps who became multiple-baggers in just few weeks. If you are a patient investor, you read and get awed by success stories of Shoppers Stop, Infosys etc. Then you do ‘back of the envelop calculation’ (one of the cliche at B-Schools) and find your money would have grown 7-8 times if you invested in so-and-so company on s0-and-so date. Your face droops, and you grim, give a punch on a concrete wall for having missed the opportunity..!!!! Stock market is really crazy….

So what does it actually mean to ‘beat the street’? In simple words it means get returns higher than that what the general market is giving. But what is this ‘general market’ – is it ‘BSE 30′, Nifty’, BSE-MidCap’, and across Atlantic ‘S&P 500’, and to your east ‘Nikkei’? Now we all know investing in penny stocks is risky and heard or read people loosing on these bets. So lets take the best on Indian Wall Street – aka Dalal Street, the BSE-30. Its an index of 30 ‘most valuable companies’ (Are they really that valuable or not– a question to be discussed later on).

So if you try not ‘beating the street’ but just ‘replicating the street’ – what would have happened? Your ‘friends’ or your ‘trust-worthy brokers’ would have told you ‘You are foolish – so and so company was a multibagger and beat street 4-times)’. My 2-cents “If you just replicated the street the so-called ‘slow moving elephant the BSE-30′ you would have grown your money 9 times in just 15 years…!!!!! (Sensex was 1000 on July’15 1990 and 9000 on 28th November’ 2005) An compounded yearly return of more than 20%…!!! And don’t forget this is after so many scandals – the ‘Harshad Mehta’, ‘Ketan Parekh’, and general downtime of ‘global slowdown on 2000-2003’ and ‘the Black Monday’ when BJP’s India Shinning campaign went bust.

A message to all… even if you are not the ‘hep-type’, ‘dalal street – sycophant’, and just be a patient ‘buy-and-hold’ strategist… you would have made more money than your ‘stock advisor’…!!!!

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