Wednesday, January 30, 2008
Had fits of laughter reading this. I'll not comment on why should they single out Accenture for this treatment. She is right in deriding ppl who belt out jargons at the drop of a hat. Its true, Mr Foster could have summarized that memo in a sentence but for the embellishments that are implicit in any MBA curriculum.
A must read for all high flying execs who have traded the art of simple and direct communication for worthless euphemisms
Monday, January 28, 2008
- Prices have help up offsetting any panic situation.
- The maximum tenure in India for a housing loan is 20 years which got adjusted upwards upto 25 years easing Increase in EMI due to interest rate increase
- There are no teaser rates in India like in US that reset from 4% to 8% after couple of years. Combined with growing salaries, that ensures that every passing year ppl are financially better protected against EMI/interest rate hikes
- The down-payments are higher in India than in US. This gets higher commitment from the buyer
- Salaries in India are still growing by 15% or so every year, allowing ppl to adjust to higher EMI better than US where incomes are more or less static.
- Indians lead a less leveraged lives than US allowing them a better chance to adjust to vagaries of life.
In the end, its the conservatism of Banks when lending and growing economy that have ensured the situation has not gotten out of hand.
Did I miss anything?
Sunday, January 27, 2008
Friday, January 25, 2008
In fact during the last few weeks as I watched the Democratic and republican debates, I had wondered if US style democracy is more suitable for Indian diversity. Above article echos similar sentiments. Lets face it, India is a fractured, hetrogenous, region centric polity. We are more like confederation than a nation. This reflects in our government's composition. Our govt is fragile as it has to rely on support of regional parties and be subject to their whims and fancies. It has neither the will, nor the mandate to take bold decisions. Though I give Manmohan Singh due credit for swallowing his pride and strangling his conscience by suspending the nuclear deal in favor of political stability.
Having a president directly elected by the people might be a better bet than having a nominated PM. But if that was to happen and if Mayawati was to be the president, I shudder at the thought of it. I understand and appreciate the fact that its our current political system that has given us Manmohan Singh. It may have been impossible to have him as president in presidential system.
I just hope our political masters don't come in the way of our economic renaissance. We have progressed inspite of our political system and not because of it.
May be as Sashi said its time for a change...
Friday, January 18, 2008
After cleaning up, armed with GPS and traffic meter, we went back out to fight the zombies on the road. Trust me, in a place like LA there are no empty roads any time of the day. Traffic sensors, forecasters etc. are all worthless when the Zombies are flying in all directions. In the end we could see just 2 spots. The Hollywood sign and Kodak Theater. We'll try and cover other places on Sunday.
Sometimes it feels like a cluster of mosquitoes hovering over your head on a warm summer evening. They follow you whereever you go and they find you however hard you try to dodge them. LA traffic knew all about our plans and whichever route we took, they got there before us.
With a population of just 4 million(Mumbai is 5 times more populated) LA has managed to choke itself. Its convinced me of need for mass transport system for every city thats more than a million people. It just does not make sense to broaden the roads. I was driving on 10 lane highways( 5 lanes each side) and yet they were all chock-a-block.
Friday, January 11, 2008
I'm not so convinced. Sorry about raining on your parade. But Mr. Tata I'm not sold to your concept. I'm listing my reasons. Please convince me otherwise.
I'm comparing Nano to Maruti 800, a car my parents and I have driven for years. We bought it new it for Rs.100,000 in 1989 when I was in my teens. Same price, just about 20 years ago. And remember today its not the largest selling car in India. I think its being phased out by Maruti.
EMI vs Price Tag
In the world of financing ppl have stopped looking at the price tag. They rather look at monthly outgo. The way I look at it, financing a maruti 800 over 7 years makes my monthly outgo around Rs. 3473 assuming @15% interest and price of Rs. 200,000 loan. Downpayment requirements on maruti 800 are are also fairly relaxed. Maybe 10% should be enough.
Same can't be said of Nano. I'd be surprised if any Bank is going to allow more than 5 years of financing on Nano. Considering the same variables except Rs. 100,000 loan for 5 years instead of 7 the monthly outflow comes to Rs. 2379.
So for an incremental Rs.1,100 monthly I can upgrade to Maruti 800.
We solf our Maruti 800 @Rs. 30,000 after 17 years of service in 2006. It lost 70% value over 17 years. For cars, buying decisions are greatly influenced by resale value. Maruti 800 offers industry's best resale value. Can the same be said of Nano? I doubt. A car that can't go more than 70kmph, can't be driven on the highways, I do not think it can retain its value over lets say 7 years in same ratio as a maruti 800. While I can sell a maruti -800 for Rs 100,000 after 7 years, I may not get more than 25,000 for a Nano(I know I'm guessing here, hopefully I'm not sounding unreasonable).
Given I'm loosing only Rs. 25,000(100,000 for maruti and 75,000 for Nano) more over 7 years, to me, tilts the balance in favor of Maruti
Maybe I'm repeating myself here. I have driven Maruti 800 from MP to Mumbai. I have driven it @100kmph without breaking sweat. It held up pretty nicely. Can Nano achieve this feat? I t can't go beyond 70kmph without wearing out its bearings. It does not have the power needed to overtake on a highway without which its actually hazardous to drive on a highway. To me Nano is for city use. Driving to office and back home.
Nano is a cheap second car rather than worthy first car. The first time car owners are unlikely to buy it for above limitations.
My verdict, Nano is unlikely to be a success. But then its important to define success before measuring it. I would define success as doubling the car market (volume) and taking 50% of it.
So Nano has to sell about a million cars a year in India to be successful.
Am I being unreasonable? I do not think so. I'm pegging 2007 mkt at around 1.4 million conservatively. Nano, should be able to create a market for itself. Adding another 1 million to 1.5 million other cars that would be sold in 2008. A million in 2009 would also be fine.
Will it make it? I vote a big NO!
Over the next 3 years my laptop served me fairly well. I installed a bunch of useful and not so useful programs. As time went by I started finding the performance deteriorating. The boot up times starting crawling upto a point where it became excruciatingly long. The time to load any application started stretching to minutes. My hard disk kept working harder and harder but to no avail. Tethering at the brink of my patience, I decided to take my chances. I was not ready to accept that the same programs, IE6, MS excel etc. should take longer on the same machine where it took just seconds to open.
The results were surprisingly pleasing. Here is what I did and its relative success.
- Defragment the disk. Marginal success. I gained just a few seconds improvement over my boot up and application load times but nothing worth elaborating.
- Uninstall some applications I did not need. That improved the bootup time a bit.
Then I realized, if I needed to improve my bootup timings, I need to manage start up programs. The way to do it is
- Press Windows+R and key in "msconfig, and hit enter. System Configuration Utility will open up.
- Go straight to Start Up Tab and you will find a list of all the programs that kick start every time you bootup your system.
- Google each name you think is critical to booting and proper running of computer. I searched and disable a bunch of stuff such as Yahoo Messenger, Google tool bar and so on.
- AFter I had saved the changes I was asked to restart the computer and Viola! My startup time reduced from about 4 minutes to less than 3 minutes
Enthused with my success I went a step further and clicked on services tab. just next to Startup and unchecked every service that I did not need. I realized that MY-SQL db, Apache Server etc. a lot of applications were being started as service and I really did not need them now.
Unchecking them and restarting the server did the trick. The start up times got down to less than a 60 sec from 3 min. Wow! I said This is cool. One added benefit was my start up memory also reduced and that allowed me to load applications faster. Earlier I used to run out of 512 MB in just 1 browser session. Now, I could open multiple sessions together.
Now what ever I dish out, my laptop handles with ease. I think I just added a couple of years of life to my computer without spending any moolah!
Sunday, January 06, 2008
Well I started with a little introspection. What are the odds that I'd not live to see the next millennium. Pretty much 100% I guess. Living to be 80 is perhaps closer to reality, though still pretty far from where I am.
Obvious part of perpetual cashflow is that it requires higher initial base. When I plan for a more realistic life expectancy, anything less than infinite, one new variable springs up. Time.
Adding time to the equation made it a little more challenging. I had to brush up my class XI maths. Sum of Geometric Progression and Finding nth term of a series was something I had not done for a long time. After a rusty start and scribbling on sheets of paper for some time here is what I got
i = Rate of return on your investment (post tax)
if = Inflation
P0 = Initial Savings
B = Annual expenses (burn rate)
R = (1 + if )/(1+ i)
n = Time in years
Money remaining at the end of nth year
Pn = P0 X (1+i)n – B X (1+i)n-1 X (Rn-1)/(R-1)
That’s kind of lengthy equation. To solve this I needed excel. I’ll see if I can upload the excel so that anyone can try this out.
If I wanted to know how much do I need to last 50 years I could use above equation.
Lets complete the example. Please notice that all the values are the same as previous example except a new variable “n”
i = 8%
if = 3%
B = $30,000
n = 50 years
I’m now solving for P50 = 0 (as I plan to spend my booty in 50 years)
P0 X (1+i)n = B X (1+i)n-1 X (Rn-1)/(R-1)
Solving for P0 we get
P0 = $543,918
This is interesting. Comparing between perpetual cashflow (P0 = $600,000) and one lasting just 50 years I find the "Initial Savings" differ by just about $56,000. Less than 10% of perpetual cashflow requirements.
Given this, I’d rather work another couple of years to save an additional $56K than run the risk of running out of money just in case… What do you prefer?
So here I was, Friday night, fretting over my retirement and planning my life beyond, tinkering with excel, projecting my future finances blah, blah.
As I did "What If" toying with the spreadsheet, I observed something amusing. It was a simple equation. When put on paper it looked something like this.
i = Rate of return on your investment (post tax)
if = Inflation
p = Savings
b = Annual expenses (burn rate)
∆ = Difference in invest rate and Inflation (i - if)
Money you need to support yourself for ever without running out of it ever
p = b / ∆
i = 0.08 (8% returns on your investment)
if = 0.03 (3% based on last 20 years)
b = $ 30,000 (excluding house, all other expenses or $2,500 monthly)
∆ = 0.05 (i - if)
p = $600,000 ($30,000 / 0.05)
The secret here is to keep beating the inflation by 5 points, year on year. I'd bet that shouldn't be any tougher than breaking 128 bit encryption or hacking into NASA on your dell laptop. Hollywood does it every other Friday.
If I had $600,000 invested @ 5% better than inflation, I will never ever run out of money, no matter how long I live. I could be the longest living blogger @1000 years and like "Baba Moze" (In Hindi version of Phantom, he used to tell stories of 5th to 15th generation Phantom. He was only 400 yrs old though) read out this blog to my Android Generation-X.
If anything, the thought of never running out of money did make me feel lighter. Needless to say, I slept better that night.
The next to-do items are to get $600,000 and to find an investment opportunity that gives a stable 8% return.
You can try this out to your hearts content. Let me figure out if I can upload the excel so that all you lazy bums out there can retire tomorrow betting on my path breaking discovery to bring home the bacon. I'm sure when I'm 547 years old they will offer me a Nobel for my contribution to the lazy planet in 2008.
If you figure out that this theorm was proved 1300 years ago by Aryabhatta in his crib, pls keep it to yourself. I live in my cacoon and light of wisdom can't penetrate it.
Aaaaahhh!! This is the same as Annuities with growing cash flow. How Dumb of me!
Tuesday, January 01, 2008
To that end I got myself an amp and two decent speakers and hooked them to my DVD /music player. Once I had the basic set up I started looking at building a collection. There was a great deal on Yahoo Music and I ended up subscribing to it. The music was good and in a matter of hours I got hooked. I heard all the songs I grew up with and then I heard them again. Over a period of time I got introduced to new ones and got to like them.
It was all great but I was constrained by the fact that I could listen to my (Yahoo Music) songs only on my laptop. If I connected the laptop to my amp I could not work on the laptop as the Y connector required that I keep the laptop close to the system. And so I started looking around for alternatives.
I was looking for following
- To be able to store all my songs in one place instead of managing the CDs. Being lazy I did not want to go and change the CD every time I wanted to listen to something
- I wanted to be able to play Yahoo Music on my Amp without having to give up my laptop in the bargain
After some researching I figured these devices called Network Music/Media players that offer that freedom. There are several such boxes available D-Link has a few, Slim devices has one. For Apple worshippers there is Airport Express. I personally bought Roku. It allowed me to play DRM protected WMA songs which Airport Express does not. But then Airport Express is cheaper by $50 too.
Roku M1001 came with a display and a remote that allowed me to browse the song collection on my Laptop through the remote. I placed it right over my Amp and connected it to Amps input. I then configured Roku to talk to my Wireless network and I was good to go.
Last week I bought an external drive to store my personal CDs and connected it to my laptop. I ripped my CDs in WMA lossless format and created a 10 GB repository of songs. I arranged them and created playlists and now I'm able to browse, search and play songs from my Laptop wirelessly on my Amp through Roku and feeling ecstatic about it.
Another great feature Roku has is Internet Radio. It has thousands of preconfigured stations that I can browse and play. Great thing is I do not need to keep my laptop on. Roku connects directly to the Internet and plays stations. I can browse through the stations with my remote and play them just I would for any FM Tuner. Great thing is I can tune in to all the Bollywood stations just as I would in India :)
I'm also loving Winamp 5.5 It allows me to browse and play my songs on the web. Its like having my music library available to me anywhere anytime. I can also share my songs with others. My friends can stream music from my PC without owning my mp3. I hope thats legal though :) as they do not have a copy of the song, its just a stream.
Anyhow, I'm amazed how things have changed over the years. I still remember playing tapes, recording and re-recording them. Having boxes of Tapes and CDs under my bed and almost no radio as FM wasn't available at that time(Only Vividh Bharathi ). Its cool how tech has shaped our lives and enriched it.
There was a post I wrote on how Internet Music will replace satellite radio about 2 years ago. How prophetic ;)