Saturday, November 15, 2008
Monday, November 10, 2008
Recession... ! Really... !?
The US economy is in deep trouble.
The US government debt has increased.
The local consumers there are bankrupt.
The largest financial companies have gone bankrupt.
The largest auto manufacturers and airlines are on the verge of bankruptcy.
The US economy is probably already in recession - the statisticians will figure that out one of these days.
By the way - many people use the word "recession" without really knowing what it means. A rule of thumb is that a "recession" occurs when an economy slips backward. In reverse gear.
The US government debt has increased.
The local consumers there are bankrupt.
The largest financial companies have gone bankrupt.
The largest auto manufacturers and airlines are on the verge of bankruptcy.
The US economy is probably already in recession - the statisticians will figure that out one of these days.
By the way - many people use the word "recession" without really knowing what it means. A rule of thumb is that a "recession" occurs when an economy slips backward. In reverse gear.
For two successive quarters.
So, when India’s GDP declines from a +8% rate of growth to a +7% rate of growth - that is not a "recession". The growth rates are still positive. If India’s GDP slipped into a negative rate of growth at, say, -2% for the quarter ended December, 2008 and then again slipped by -1% for the quarter ended March 2009 - then one can say that India is in a "recession".
A slow down in GDP - but still a positive rate of growth is not a "recession". It is a slow down.
But people like to fool you - to show you how smart they are.
So they use the very serious word: "recession".
The Indian economy has grown by an average rate of 6.2% every year since 1980.
For 28 years.
From 2004, we grew at 8.4% per annum.
The recent economic turmoil in the world will see our growth slow to a 6% to 7% range.
If expected rates of growth in GDP were the sole reason to invest in a stock market, India would be one of the better markets in the world to invest in.
Sunday, November 9, 2008
10 commandments
- From Money Today
1. Thou shalt not use one bank account
Bank deposits are not 100% safe. Deposits of only up to Rs 1 lakh are insured by the government. If your bank fails, this is the maximum amount you will be entitled to. In the past, when there has been a rush of investors to withdraw deposits, some banks have been forced to stagger payment or limit withdrawals. So diversify your investments across banks and don’t park all your cash in one place.
2. Thou shalt not live on credit
Even in normal circumstances, cash is king. In times of a meltdown, as is the case now, this is doubly true. As defaults rise, stock brokers ask the clients for upfront payments before placing a buy order for securities. In such situations, only cash will allow you to tap the opportunities that a volatile stock market throws up.
3. Thou shalt not rely on debt
While equity markets are going through one of the roughest phases in recent years, fixed deposits and other debt options are offering very attractive returns. But don’t be tempted to go on a debt binge just because the interest being offered is very high. Though debt gives some stability to your portfolio, keep in mind that every investment carries an element of risk, including the so-called ‘safe’ investments. Some non-banking finance companies, in which debt funds and fixed maturity plans had invested, are defaulting in repayment commitments.
4. Thou shalt not be passive
You need to update your portfolio regularly and a bust offers an opportunity to do this. Keep an eye on market movements to weed out dead investments or take advantage of new avenues. For instance, did you know that some banks are allowing free upgrades to higher interest rate deposits without having to pay a penalty?
5. Thou shalt think globally
Global factors affect you; foreign names matter. When Lehman Brothers went bust, Unitech’s shares were hammered. So from now on, you need to look at how foreign companies, hedge funds, PE funds or FIIs are performing, since they invest in the companies that you invest in.
6. Thou shalt have a fixed time frame
If you don’t have a specific time frame for your investments or decide to ignore the one you had initially set, you could end up losing. Those who invested in real estate found this out to their disadvantage; they went into a panic mode and tried to offload their property even when prices were abysmal and there were few buyers.
7. Thou shalt ignore listing day gains
No longer can you rely on IPOs for assured profits. There was a time when investors could book spectacular profits of 100-150% and get out of an IPO the day it was listed. This is not true anymore.
8. Thou shalt not ignore equities
Don’t give up investing in the stock market just because the Sensex has fallen to below 10,000. Even if the uncertainty has forced you to scale down your investments, don’t stop putting in the money altogether. Regular investments help you bring down average costs.
9. Thou shalt not ignore bargains
A slowdown is a great time for the consumer. When everyone starts cutting down on investments and sales targets are consistently missed, it opens up the market for good deals. Houses, cars, gadgets, consumer durables… you’re likely to get great deals on all these if you keep your eyes and ears open.
10. Thou shalt not be afraid to quit
While recent job cuts in the high-profile aviation and financial services sectors might have scared you, not every industry is faced with the same uncertainty. All you need to do before you decide to change jobs is homework. Find out which sectors are suited to your skillsets and experience. For example, the professional requirements of aviation and hospitality sectors
Saturday, November 8, 2008
11 ways to be a happy employee
- From Rediff Get Ahead
Can you recollect a day where you woke up at 5:00 am, got ready quickly and waited to do something exciting? Was it your college annual day function? Or a competitive exam? Or maybe a first date? Maybe it was your wedding day. Is it Monday morning to work? If the answer is the last, surely you are a happy employee.
Though the above occasions may not have a lot in common, excitement and motivation can be attributed to almost all of them. However, at the workplace, it is almost impossible to find both or any one of these attributes daily. But, being happy or unhappy is always in our hands. That's the choice we make and we are the creators of the outcome by our actions. Let's look at what might make an employee unhappy.
Can you recollect a day where you woke up at 5:00 am, got ready quickly and waited to do something exciting? Was it your college annual day function? Or a competitive exam? Or maybe a first date? Maybe it was your wedding day. Is it Monday morning to work? If the answer is the last, surely you are a happy employee.
Though the above occasions may not have a lot in common, excitement and motivation can be attributed to almost all of them. However, at the workplace, it is almost impossible to find both or any one of these attributes daily. But, being happy or unhappy is always in our hands. That's the choice we make and we are the creators of the outcome by our actions. Let's look at what might make an employee unhappy.
- Unfair rewards and recognition
- Office politics
- Un-cooperative team
- Unreasonable boss
- Insufficient compensation
- Constant threat to job security
- Lack of responsibility in the current job
- No clear career path
- Seating location
- Lack of basic facilities at workplace
And the list goes on and on. Some of these things may not really propel an employee to quit, but it might lead to negative energy which leads to low productivity. When an employee is under-productive he or she will be the first target when companies look for opportunities to give pink slips.
As mentioned earlier, being happy is always in your hands. A happy employee is more productive and gives more than an unhappy employee. So let's look at some ways to up the happiness factor.
1. Plan your week on Sunday night
Look at your work calendar and plan your week on Sunday night or Monday morning. This would include important meetings, deliverables, a brief summary of things that are pending from last week and any tasks to be achieved during the week. Though this might look like a time management tip, at the end of the week, on Friday night when you re-visit what you have achieved over the last five days, the satisfaction is immense.
2. Undertake activities that you are passionate about even though it might not be in your job profile
Start an initiative that you would love to do irrespective of whether it is required for you to do or not.
- Send a daily newsletter to your team on the topics that most of them will be interested.
- Do a presentation on the topic that you are passionate about.
- Organise a small sports event for your team.
- Call everyone in your team for a team coffee, breakfast or lunch break
- Appreciate colleagues in your team or in a cross-functional team who did a great job
- Write a poem on your team's achievements
- Arrange a potluck lunch
3. Do not indulge in the blame game
If something goes wrong do not blame others blindly. If you commit a mistake, do not hesitate to accept it. As Gauthama Buddha said, there are three things we can't hide for long: the sun, earth and the truth. Accepting your mistake gracefully will only make you look like a true professional and also give you the satisfaction of not cheating.
4. Communicate more often in person
Utilise all the opportunities where you can speak to an individual in person rather than e-mail or phone. But be aware of the other person's time and availability. Listening to a positive answer from a person will give you more happiness than if it is done over the phone or via e-mail.
5. Know what is happening at your workplace
Will this make a person happy? Truly, yes! Imagine a cricket team that doesn't know how many runs to score to win a match? More than losing the game, the player will never be interested or motivated to play well.
Attend all meetings that are addressed by the CEO to your immediate manager to know what is going to happen around you. It could be the company's growth plan or your department's next big project. Jack Welch mentions in his book Winning "every employee, not just the senior people, should know how a company is doing."
You will also get an extra edge if you are in a position to answer queries raised by your peers or juniors. This is not just for the good reasons, but bad reasons as well. You do not want to be the last employee to know if your company is laying off employees (in the worst case, if you are the one who is on that list).
6. Participate in organisation-level activities
This could be as simple as spending one weekend for a corporate social responsibility activity or attending a recruitment drive to help your HR team or arranging a technical/sports event at the organisational level. Most of these events will be successful as people do come on their own to contribute.
7. Have a hobby that keeps you busy and happy
Many people say their hobby is watching TV or listening to music or reading the newspaper. These aren't hobbies, they are just ways of passing the time. Some hobbies are evergreen and will keep you evergreen as well: dancing, painting, writing short stories, poems, blogs and sharing your experiences.
8. Take up a sport
While choosing a sport make sure that there is physical activity. There is the danger of becoming addicted to sports where there is less physical activity (like computer games, chess, cards etc). Physical activity keeps a person healthy and happy. If you pick up one sport well, you can represent your organisation in corporate sports event too.
9. Keep yourself away from office politics
Politics, as a practice, whatever its profession, has always been the systematic organization of hatreds. -- Henry Brooks Adams
Politics is everywhere and the office is no exception. Playing politics might be beneficial but only for the short term. So the best thing to do is play fair.
10. Wish and smile
More often than not, there are fair chances that the other person will smile back. This could be your security guard at the gate, your receptionist, your office boy, your CEO or your manager -- never forget to wish them and smile.
11. Volunteer for some activity
"The value of a man resides in what he gives and not in what he is capable of receiving." - Albert Einstein
Do at least one activity without expecting anything in return. There is no set frequency for this. This could be once in a day or once in a week or thrice in a week. It could be as simple as making tea at the office for your colleague, helping a colleague who is working in another department by using your skills, dropping your colleague at his door step in your car, going to your manager or colleague to ask if there is any help you can extend, contributing to technical or knowledge management communities in your organisation etc.
Friday, November 7, 2008
Why stock market crashes are good for you
- From ValueResearch
A 22-year old wrote in asking us whether or not he should even consider investing in equity. Looking at the carnage in the markets across the globe, he wanted to know if he was better off putting his money in a fixed deposit or buying a National Savings Certificate (NSC).
Of course, this young man had two great aspects in his favour. He was serious about investing right from his very first job and he was willing stay in for the long haul -- at least 5 to 6 years.
If he invested in fixed return investments like fixed deposits, he would be assured of a rate of return. And he would be assured of his principal being returned. But, a fixed deposit is not a very tax efficient investment (the returns are taxed). Secondly, since he does not need the money in the short-run, there is no need to go for a fixed return investment. What stock market investors need is time on their side to ride the ups and downs of the market. And, in the long run, the returns from equity do outweigh debt. Stocks are dangerous short-term bets but excellent long-term investments. So by all indications, he should move into equity.
Of course, this young man had two great aspects in his favour. He was serious about investing right from his very first job and he was willing stay in for the long haul -- at least 5 to 6 years.
If he invested in fixed return investments like fixed deposits, he would be assured of a rate of return. And he would be assured of his principal being returned. But, a fixed deposit is not a very tax efficient investment (the returns are taxed). Secondly, since he does not need the money in the short-run, there is no need to go for a fixed return investment. What stock market investors need is time on their side to ride the ups and downs of the market. And, in the long run, the returns from equity do outweigh debt. Stocks are dangerous short-term bets but excellent long-term investments. So by all indications, he should move into equity.
But what scared him was the current market crash. What every stock market investor must realise is that in the equity market, you make money not despite the crashes but because of them. Let's look at the tech boom. The Sensex touched around 5,900 in February 2000 before sinking to 2,600 in September 2001. It touched 6,000 only in January 2004.Now let's assume that the crash never happened and the Sensex reached 5,600 in March 2000 and stayed at that level till October 2004.
If you had started investing Rs 20,000 per month in a Sensex-based index fund in early 1997 and continued all through, your investments would have been worth Rs 55 lakh (without the crash) instead of Rs 66 lakh (with the crash). The reason?The crash enabled the investor to buy cheap and thus eventually raise total returns on their investments.
If you are investing steadily for the long term, then intermittent crashes help you make more money, not less. Because when bubbles correct, they usually overcorrect so that the market is selling well below fair value. So that's the time to go buying, not selling.
And right now, the risk of losing money at 10,000 is certainly much less than when the Sensex was at 20,000.
So as you can see, we advised this young investor to opt for a Systematic Investment Plan (SIP) in a diversified equity mutual fund. In this way, he consistently invests a fixed amount every single month, irrespective of the state of the market. When the market is down, he gets more units for his investment. When it goes up, he gets less. But over the next five years, he would have saved a tidy sum.
Brief on NetApp
NetApp, Inc. formerly Network Appliance, Inc., is a proprietary computer storage and data management company headquartered in Sunnyvale, California. It is a member of the NASDAQ-100 and ranks on the Fortune 1000. NetApp is credited with the widespread adoption of network-attached storage (NAS) architecture, as opposed to more costly storage area network (SAN), and is currently under attack from popular open source offerings (such as Sun Microsystems' ZFS).
NetApp was founded in 1992 by David Hitz, James Lau, and Michael Malcolm. The line of NetApp filers was the company's flagship since the very beginning.
Major acquisitions
1997 - Internet Middleware (IMC). IMC's web proxy caching software became the NetCache product line (which was resold in 2006).
2004 - Spinnaker Networks, Inc. The technology Spinnaker brought to NetApp was integrated into Data ONTAP GX and first released in 2006.
2005 - Alacritus The tape virtualization technology Alacritus brought to NetApp was integrated into the NetApp NearStore Virtual Tape Library (VTL) product line, introduced in 2006.
2005 - Decru. Decru continues to operate as a separate business for data encryption appliances.
2006 - Topio. Software that helps replicate, recover, and protect data over any distance regardless of the underlying server or storage infrastructure. This technology became known as ReplicatorX.
2008 - Onaro. Storage service management software which helps customers manage storage more efficiently with guaranteed service levels for availability and performance.
Competition
NetApp competes in the Data Storage Devices industry. NetApp ranks third in market capitalization in its industry, behind EMC Corporation and Seagate Technology, and ahead of Western Digital, Brocade, Data Domain, Imation, Quantum, and Isilon . In total revenue, NetApp ranks fourth behind EMC, Seagate, Western Digital, and ahead of Imation, Brocade, Xyratex, and Hutchinson Technology. Note that these lists of competitors do not include companies with significant storage businesses, such as Hewlett Packard, IBM, Hitachi Data Systems, Dell, and Sun Microsystems.
Work environment
NetApp also has a long history of making "Best Places to Work" lists. In 2008 the company ranked 14th on Fortune's 100 Best Companies to Work For. This is the sixth consecutive year NetApp has earned a spot on the list, placing in the top 50 each time. NetApp also earned top honors in the "Best Companies to Work for in Research Triangle Park" competition in 2006. Other previous distinctions include making ComputerWorld's "Top 100 Places to Work in IT 2005", "Best Places to Work" in the Greater Bay Area in 2006 by the San Francisco Business Times and the Silicon Valley/San Jose Business Journal, and the 8th spot on the 2006 list of "Best Workplaces in Germany" by Capital Magazine.
NetApp was founded in 1992 by David Hitz, James Lau, and Michael Malcolm. The line of NetApp filers was the company's flagship since the very beginning.
Major acquisitions
1997 - Internet Middleware (IMC). IMC's web proxy caching software became the NetCache product line (which was resold in 2006).
2004 - Spinnaker Networks, Inc. The technology Spinnaker brought to NetApp was integrated into Data ONTAP GX and first released in 2006.
2005 - Alacritus The tape virtualization technology Alacritus brought to NetApp was integrated into the NetApp NearStore Virtual Tape Library (VTL) product line, introduced in 2006.
2005 - Decru. Decru continues to operate as a separate business for data encryption appliances.
2006 - Topio. Software that helps replicate, recover, and protect data over any distance regardless of the underlying server or storage infrastructure. This technology became known as ReplicatorX.
2008 - Onaro. Storage service management software which helps customers manage storage more efficiently with guaranteed service levels for availability and performance.
Competition
NetApp competes in the Data Storage Devices industry. NetApp ranks third in market capitalization in its industry, behind EMC Corporation and Seagate Technology, and ahead of Western Digital, Brocade, Data Domain, Imation, Quantum, and Isilon . In total revenue, NetApp ranks fourth behind EMC, Seagate, Western Digital, and ahead of Imation, Brocade, Xyratex, and Hutchinson Technology. Note that these lists of competitors do not include companies with significant storage businesses, such as Hewlett Packard, IBM, Hitachi Data Systems, Dell, and Sun Microsystems.
Work environment
NetApp also has a long history of making "Best Places to Work" lists. In 2008 the company ranked 14th on Fortune's 100 Best Companies to Work For. This is the sixth consecutive year NetApp has earned a spot on the list, placing in the top 50 each time. NetApp also earned top honors in the "Best Companies to Work for in Research Triangle Park" competition in 2006. Other previous distinctions include making ComputerWorld's "Top 100 Places to Work in IT 2005", "Best Places to Work" in the Greater Bay Area in 2006 by the San Francisco Business Times and the Silicon Valley/San Jose Business Journal, and the 8th spot on the 2006 list of "Best Workplaces in Germany" by Capital Magazine.
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