Derivatives - What we have missed ?

Derivatives, mathematically means change in one thing by the change in other. In economy this factor is traded for money and is a business.
If we look at history, we had a progressive vision of growth of India by our erstwhile political leaders. The changes made by some of the policies were great investment opportunities in the form of derivatives. But all those opportunities have been wasted by financial corporations and industry. They had a myopic vision of change and it will not be wrong to say that this short sightedness has resulted in today's sorry state.
I am absolutely right when I say that Nehru's vision of India was welcomed by even foreigners. Maybe the concern of foreigners had been whether India can take it. Whether the poor will be benefitted. Whether everyone will get food.
A chain is as strong as the individual strength of each of its links. And it is weak at the weakest link. Derivatives based economy is for strengthening the country and not for finding weakness as the present economic vision is heading for.

Banking Finance - humour !!

I was keen to learn about banking finance. No, not from books. But from newspaper and analysis and application of thinking abilities.
I have a method for this complex system. And I shall share it with you.
Can banks do without IT? No, it cannot. So I thought let me look at banking from the IT angle.

1)IT can do complex calculations.
2)IT follows logical steps.
3)IT has hierarchy in permissions.
4)IT can connect to the whole world.

1)
If a wise guy says,  "Don't you know XYZ Bank offers higher interest and that too with more flexibility and more facilities?". Then do not be awed by his knowledge. You can satisfy yourself with the thought that maybe XYZ Bank has better methods for more complex calculations.

2)
If the wise guy says, "Don't you know GHI Finance Ltd. needs lesser documents for verification and quicker processing for loans?". You can satisfy yourself with the thought that maybe GHI Finance is using overloaded functions with lesser parameters though all the steps are followed.

3)
If your boss says, "Go and submit this bank guarantee.". You must go one step ahead and after submitting the bank guarantee to clerk, you contact the super user (bank manager) to ask whether he has approved receipt of bank guarantee.

4)
If the wise guy says, "What? You got only 78 rupees to an english pound? I managed to get 79 rupees." You can satisfy yourself with the thought that today the world is connected by Internet and maybe the wise guy managed to log on to a better site.

Beware of Bullish Bubble Bursting

The Bull (Stock Exchanges) charges and runs amock. It sees red everywhere. Be a move by RBI. Be a step by the government. It charges with speed and carries the sensex with it, making it rise.
Those who are not experienced with working with shares are well advised to invest in the mutual funds domain and keep the risks low. The fund manager of the mutual funds is committed to see that your interests are considered. It is his job you see. It is my hunch that a mutual fund's fund manager is more interested in financial challenges and less in making money for himself. So play safe. Buy mutual funds.
The Indian market is unique in its own way and the bubbles do not burst easily. And if it does it causes explosion. Not just a burst. But an explosion.
Harshad Mehta is a recent past. He siphoned off 4000 crores from the system. He not only bought shares but also created a shortage of funds in the market. The result shares were sold. The sensex were seriously affected and only some made money at the loss of general public.
Use your thinking and invest wisely. Do not day dream about high returns. Contribute to national growth. Invest in post office schemes. Make the nation grow. Believe that India is superior to individuals and India is not a coterie of successful individuals. Your money can do wonders for you. You deserve it. But your money is needed by country. Contribute for the welfare of nation and reap the benefit.

Commodities

Cotton growers are unhappy with central government on putting restriction on export of cotton bales.
It is high time we brand cotton bales and central government deals with brands and not with commodities. Because a normal person is more affected by brands. And lesser by commodities.
Consider coffee. People will be affected only when Nescafe raises prices and not when coffee growers raise prices.
So it is high time that a joint empowered working committee be formed to advise the government on brand policy and actions thereof as and when required.

Personal Investment Benchmarks

There is an interesting middle page in Economic Times Wealth.
I also have a benchmark for my finance.

My benchmarks are :-
1) How much to have for emergency?
The emergency amount should be maximum withdrawal from ATM.
It was Rs.15,000 earlier.

2) How much to save for retirement?
No saving. Remember you are a Hindu and shall become a sanyasi on retirement.
You may cheat if you want.

3) How much insurance do you need?
The monthly expenses on roti, kapda and maybe makaan for your family.
So invest enough in insurance so that you get monthly returns equivalent to above.

Disinvestment

Government tried to disinvest ONGC yesterday. But none of the big brokers showed interest in ONGC shares. Can you imagine? ONGC did not get response. Disinvestment of other PSUs will be more difficult. Of course certain companies like BHEL may fetch good response. Cannot deny that. But still the big brokers are not interested in PSUs in general. They do not have the drive because of lack of FII support.
Government has forced LIC to use its huge financial backup for saving its face.
Why doesn't the government take up a consultant and directly disinvest to public? There will be tremendous response.  Why cause embarassment to itself and LIC? The answer is who will bell the cat. The ball rolls in government from here to there like a hockey match heading towards a tie.