...of Money, Crazy notions and Emotions

GoDaddy and art of escaping commodity trap

Amitesh Jasrotia — 2012-01-23T17:39:30-08:00

I have always found it enthralling when a producer/maker of boring products/services fights off the stigma of commodity and blandness with some innovative advertising and astute brand positioning. GoDaddy - web's biggest domain name registrar is a case in point. Think about it. There is noting oh-so-exciting about a website offering you the registration of domain names. And when there are host of competitors providing the same services for the costs that barely escape your neighborhood, there is further no reason why you'd strongly prefer one service provider over another. This is where GoDaddy gets radical. GoDaddy knows with nothing discernible on the offer, the only way it can stand apart from its competitors is by leaving an indelible stamp on the visitors' minds. After all, when there is a sea of sameness around you, the only way to stand out is to be different and GoDaddy with its gang of GoDaddy girls has been quite successful in doing so. Check out this new SuperBowl commercial Ad promoting the new .co domain and you'd know what I am talking about

RE: Awesome-est Commercial of 2011

Nihag — 2012-01-11T14:23:58-08:00

This creative was done by Meridian Delhi (Ogilvy company). Great idea, a very witty ad indeed.

Awesome-est Commercial of 2011

Amitesh Jasrotia — 2011-12-19T20:10:43-08:00

I am not a great fan of TV Commercials. I believe most of the time, ads just kill the interest in a program and inadvertently, put the viewers off. Thank God, they invented Remote! I can't remember a lot many ads of late that truly captured viewers' imagination while pursuing the ultimate objective of selling them something. In a typical clutter-breaker fashion, the latest HTC Explorer creative truly stands out. It so deftly combines the sophistication of a smartphone with mushy tenderness. Add to that, a titillating yet brilliant background score. I find it hard, seriously, to switch over without sitting out this commercial every time.

Investment that wasn't!

Amitesh Jasrotia — 2011-11-19T04:13:44-08:00

Eight years ago, long before Myspace, Facebook, and Linkedin created waves, there was a start-up called www.mbaasociation.org aka www.MBAA.org - a community-oriented website primarily targeted at MBAs. I became a member in 2003 while I was still at my B-school. In addition to being a community site, what set MBAA apart from other sites of its ilk was that it offered members quality content, meaningful debates on various business issues, and most importantly, a sense of belonging - something that was not prevalent in online culture back then. Coming back to content, it was mostly user-generated and came in shape of discussion forums, blogs and articles. Promoters of MBAA were also in close touch with the members, sometimes, going as far as making changes to the site at the mere collective behest of its members. Consequently, there was a strong emotional connect between MBAA members and the site.

While everything was adequate at users' front, things were not as upbeat at promoters' front. Absence of a reliable revenue model was certainly a perturbing factor, especially, when contextual advertising was yet to come into its full being. MBAA's intentions - though never overtly divulged - like a host of online ventures in those days also seemed to border on positioning itself for a possible VC/early-stage investor funding.

In a desparate attempt to gain strength, MBAA switched to a new platform in year 2004. The new platform was brimming with radical features and was much swankier than its previous avatar. Clearly inspired by Rational Choice theory, MBAA promoters sneaked in incentives to make users to not only come back to the site but also generate quality content at the same time. It was explained that all active members would get dividends (real dollars) on the basis of their participation. For each post, blog or article submitted, dividends would marginally slide up. It was a great feeling watching my �easy money� go up bit by bit as I spent my weekends creating content for someone else. After a couple of months of heightened activity, things started to slow down, actually, they started to dwindle. Barring a few active members who were consistently generating content; traffic to the site at large was slowing down.

After sometime in August 2004, came an announcement too good to be true. All MBAA members were offered free personal web-pages of their own � an astonishing gimmick - to keep them hooked and attract new members. It was much like having a Facebook account of today with the facility of uploading pics and articles and at the same time, having your name as part of the URL. My webpage url was www.amiteshjas.com (dont click, it�s been long dysfunctional) Until then, the idea of googling my own name had never ever crossed me. But there i was!�.searchable on Google and top of the list, too.

Next step was to bring out expertise-specific sites. Essentially, MBAA became a mother site surrounded by almost a dozen more �domain-specific� sites - some catering to Marketing, some to technology, some to m-commerce. These new sites were up for grabs for anyone to buy and own permanently. But a tag of $250 was by no means cheap enough. Nevertheless, I was fully consumed with the specious vision MBAA promoters had been propagating, I, never for a moment thought things could ever go wrong (bounded rationality). Thus, animated with dreams of being a partner in the next Internet blockbuster, I decided to snap up the opportunity of buying one of the offered sites. I invested (yeah, I actually thought it was a great 'investment') $250 and reserved the marketing-dedicated site for myself. All these sites were half-baked; management had decided to leave it to members to create content and optimize them for traffic.

Unbeknownst to many at that time, the whole idea of introducing domain-specific sites was going to play a pivotal role in MBAA's undoing. The whole business model was now quite analogous to Navy's Flotilla model. But what works for Navy may not work for a business unit. In a sharp contrast to early days when all the discussions and content-sharing used to happen on MBAA � the mother site, users had options now. Many users including myself were busy creating content for their own sites. MBAA owner(s) were either quite oblivious to this trend or may be, deliberately chose to turn a blind eye as writing on the wall was becoming clearer by each passing day. Patrons, first diverted to the satellite websites and then, completely abandoned the mother ship which was www.mbaa.org. Consequently, traffic first plummeted and finally, vanished. I can safely assume at this juncture that lack of a clear direction bamboozled most of the registered members. MBAA, if it had existed today would have had Linkedin.com as its contemporary. Both sites started around 2002-03. One became the darling of Internet, the other fell way short and went down the tubes and along with it went my first hard-earned but ill-thought-of investment.

p.s. - www.mbaassociation.org still exists and is in a dormant state, I doubt it'll be fully functional ever again. Alias URL www.mbaa.org, however, is taken up by Mortgage Bankers Association.

RE: You will be missed, Steve!

Preeti Kapoor — 2011-10-12T08:41:45-07:00

Don't understand this sudden elevation to God-like status for Jobs. He passed away at an early age and that's a sad bit. He gave us Mac, iPod, iPad and I thank him for that. But look closely, he didn't create one product that could actually transform the lives of millions. Creating a jazzy looking PC (mac) and slapping a price tag that only a few can afford doesn't deserve all this canonization.

RE: You will be missed, Steve!

Rahul Sharma — 2011-10-06T21:23:47-07:00

It will be interesting to see how Apple fares after the death of Steve Jobs. Many companies lose their direction once the patriarch has left the scene.

You will be missed, Steve!

Amitesh Jasrotia — 2011-10-06T11:17:59-07:00

The world of technology will never be the same without Steve Jobs. The shocking news of Apple's iconic founder passing away was hard to absorb. At 56, Jobs still had a long way to go but death had its own plans. His long, well-guarded battle with a rare form of pancreatic cancer finally got better of him. I remember having noted down a quote from his interview to Fortune in 2008, Jobs had said. "You don't get a chance to do many things and everyone should be really excellent...Life is brief and then you die, you know?"

I can recollect having heard of iPod for the first time in year 2003. Net was abuzz about the talks of a minuscule device that could carry hundreds of songs in it and had a style quotient that Sony Walkman could ever play catch up with. What I didn't know was it was just the start of a revolution. A revolution which juxtaposed style and chic on hardware and software.

Apple - the brand became synonymous with Steve Jobs - the man, not just rhetorically but literally, too. Apple's rise to the cult brand status was all due to its charismatic founder. '70s saw Apple II and Mac revolutionize PC industry, '80s witnessed the horror moment of Jobs being thrown out of the company he once built, '90s witnessed Pixar and 'Toy Story' re-elevating Jobs to his previous status; '90s also saw the return of Jobs to Apple. It was all, however, yet to reach the crescendo pitch in 2002 when Jobs unveiled iPod - the smallest music player. The flurry of subsequent path-breaking innovations catapulted Apple's inimitable brand equity further into the stratosphere and from a niche PC maker, Apple became one of the most profitable companies in the US.

In my opinion, it was Steve Jobs - the visionary who foresaw the gaping link between hardware and software and did something about it:

Apple = Hardware + 'Style Quotient'' + Software

Apple aficionados may continue to hark back and wonder what Jobs could have achieved in a couple of more years in his life. World will definitely miss the first garage entrepreneur. Hope his legacy lives on...

RE: Conan the Barbarian - A 3D mess

Srinath — 2011-08-28T19:10:10-07:00

This was one bad movie! 80s sequel was much better in comparison. If you want to punish someone, suggest them this movie :-)

Conan the Barbarian - A 3D mess

Amitesh Jasrotia — 2011-08-28T19:04:29-07:00

What's the best thing about the remake of a hit movie? You don't need to set expectations, audience will come in with a preset level. Logically, if they like it the last time, they would like it this time, too. Only if the movie directors don't tamper with what they liked last time! In any case, it's a goddamn remake - the whole world knows it - and you aren't going to lose any moral high ground by copying the script frame to frame. Whosoever wrote the script for 'Conan the Barbarian' (2011) was never clear on what and how much he wanted to copy. I presume someone had held a gun to his head, even cocked the trigger a few times and made him manufacture this script. It has to be the second worst movie of all times, 'Battlefield Earth' will still top my list. Conan the Barbarian is the new gold standard in how bad a remake can get.

To begin with, the direction is horrible. The whole movie is perhaps shot in jungles of Siberia or may be, producers thought to save on budget of extra lighting equipment. If that's not much of a strain, you are made to witness mind-numbing blood-letting literally after every ten minutes in the first half. Actually, the gratuitous gore is justified as there is hardly any story or any dialogues to fill the 113 minutes with. If your movie hall is equipped with sophisticated Dolby sound sytems, then take my word, the slurping noise in gore scenes will drive you bonkers.

Jason Momoa tries his best to pull off an Arnold Schwarzenneger but fails miserably. His face is perhaps more suited for MHM and not for a barbarian character. There are dozens of other characters who just come and get slayed in a few minutes, sparing critics the valuable time. If you ever wanted to watch a movie with poor characterization, may be, for your research work, then, you don't have to look beyond Conan the Barbarian.

Lastly, 3D is just frills - it can act as a sweetener to a great script, but wishing that 3D alone would get audience to theaters is foolish thinking.

Dot-com d�j� vu

Amitesh Jasrotia — 2011-07-20T18:25:06-07:00

Ghosts from the past are back? May be, may be not. Writing on the wall, however, is becoming clearer with each passing day. Dot-com era madness is looking to stage a solid comeback. And it's not an isolated trend that I am talking about, recent valuations of dot-com companies all over the world have seen huge premiums being placed upon them. US Companies such as Linkedin, Pandora, Zillow with no visible future earnings have gone public and even doubled on the listing day, thus, reinforcing the worst thoughts of many doomsayers.

If the preposterous valuations of the US dot-coms are not a telltale sign of Frenzy-in-the-making for you, then consider this - 17 Chinese online firms are all set to jump on the IPO bandwagon this year. These businesses include an internet radio site, a children social network, a moms' social network, a mobile search engine, etc. Phew! If this doesn't set your alarm bells ringing, nothing, perhaps, will. Add to all this mix, the recent valuation of Indian deals-of-the-day company Snapdeal.com. Snapdeal was valued at INR 1000 crores - a ludicrous figure for a site that is hardly a year-and-a-half old and has no clear, durable competitive advantage either.

It is hard to judge whether we are in an IT bubble already. We may not be. But then, things are falling in place faster than we can imagine. According to Niall Ferguson, author of 'The Ascent of Money', every bubble has 3 recurring features: Asymmetric information, Cross border capital flows and Easy credit creation. With all respect to Mr. Ferguson, I would add a 4^thfeature here - increasing number of wise guys who say, "This time it's different!". Observe carefully, and you will find all four at work in dot-com arena. Nevertheless, it might still be long before we regress to the mean again. But one thing is certain - regression will have a price, surely! In wacky times like these, I remember Andy Grove's laconic one-liner - "Only the paranoid survive." Hope we all could practice it, too.

Crazy Organization Charts - Reality-based Fun

Amitesh Jasrotia — 2011-06-30T18:55:53-07:00

I just could not stop myself from posting this. Like a typical morning do, I was on a surfing spree and stumbled upon a collage of organizational charts on www.bonkersworld.net (a site by Manu Cornet) . I nearly spewed out my sip of green tea when I looked at this. Yes, these charts look absolutely funny and to a large extent, caricatural, too. The truth, however, is they represent reality. Apple chart, for example, clearly depicts Steve Jobs (glowing Red dart) as the lynchpin of the organization he once built and now runs with an iron fist. Google chart looks obnoxiously zany. Two owners and CEO, presumably, on the top and a perplexing hierarchy which looks as good as a fishing net. Microsoft, explains it all, though I can't present any corroborating piece of evidence here...Enjoy the work and do enlighten me, if you could, on any of the following

Back to Branding

Amitesh Jasrotia — 2011-04-03T01:16:26-07:00

Before I finished reading Pradip Chanda's 'A Requiem for a Brand', it had almost been five years when I last read a book on branding. After a point, I became so disenchanted with the subject of branding that I chose to skip past the 'branding' titles on the bookshelves and to overlook the brand management vertical in the online bookstores. The main reason for my disillusionment was the swelling indistinguishability in the content of most books not to mention the glut of branding literature out there.

A few books that have left an indelible impact on me and shaped my thinking on branding are - David Aaker's 'Managing Brand Equity' and 'Brand Leadership', Kevin Keller's 'Strategic Brand management' and Subroto Sengupta's 'Brand Positioning'. Trust me when I say this, I have read a whole lot more on brand management than just the aforementioned titles and I can personally certify that a big chunk of branding literature sitting on the shelves is just a waste of paper.

Read the full review of 'A Requiem for a Brand' here

That sinking feeling...

Amitesh Jasrotia — 2011-03-19T03:09:37-07:00

It's that time of the year again. With bated breath and collywobbles in my tummy, I await the verdict on my yearly performance appraisal. As I bite my nails in anticipation of what would be, I become cognizant of fragilities of employee valuation. To start with, I find it kind of grotesque to have a bunch of high-on-ego dudes who join forces once in a year to pin down a beleagured employee. The emphasis is invariably more on digging skeletons than on laying the roadmap for the future. A vertical may have grown manifold on your watch but unless you justify to the hunting party (one final time) how your presence in the frame has turned it around, it's simply a waste of energy.

What makes the entire appraisal process all the more farcical is that instead of being a means to cast the spotlight on employee's strengths, it has degenerated into a platform where weaknesses are underlined in an aggressive effort to justify paltry salary hikes. At the end of the day, appraisals are more or less an ass-kickin' contest where employees are in for an inevitable submission.

Nano's mega trouble

Amitesh Jasrotia — 2010-12-25T01:00:42-08:00

Ratan Tata's ambitious small car project now runs the risk of coming to a grinding halt. Nano's abysmal performance in November shines a fair spotlight on the mess it has dug itself into. A total sale of 509 units when other auto companies romped home is, by any yardstick, dispiriting. Ever since its launch Nano was plagued with manufacturing anomalies. The fire incidents further hurt the dithering brand image of Nano. What compounded management's trouble was that buyers never vouched for car's dependability.

In my opinion, however, Nano's manufacturing foibles are only a minor factor that has led the small wonder to its present plight. Nano started off on the wrong foot when it priced the car at Rs. 1 lakh. Yes, the price tag of 1 lakh did help Nano hog all the limelight at auto shows; yes, it did generate positive word-of-mouth but all that hoopla came at the expense of brand Nano. Let's face it. Nano was a PR child, to begin with and it had a dream start. PR mills worked overnight to create the hype. But like positioning gurus Jack Trout & Al Ries have mentioned in so many of their books - PR builds brands; advertising sustains them. After the gala launch, Nano also needed a sustained positioning effort. Sadly, Nano never received any advertising boost up until now. Apparently, management was supremely confident in price being the only consequential factor for buyers.

A car priced at 1 lakh is music to ears but the harsh reality of 'low price-low quality' association is hard to ignore. In more ways than one, Nano's problem is both perceptual and technical. In mindspace, Nano is a cheap alternative to Maruti 800 - the next cheapest car available on market with a price difference of 1 lakh rupees. But in stark contrast to Maruti 800 that in nearly 3 decades of its service has become an epitome of fuel-efficiency, dependability and value-for-money, Nano so far has failed to develop any steadfast credentials. Technically, a commitment to 1-lakh-rupee price tag is laden with certain restrictions. Media reports of Nano's catching fire only aggravated the situation since such incidents were bound to find an association with its meager-price-tag, thus, implying substandard production quotient of the car. In the nutshell, Nano is stuck in a damned-if-you-do and damned-if-you-don't situation. If it hikes the price, it'll be a major letdown for Ratan Tata whose emotional commitment towards Nano is well-documented; if it doesn't hike the price, it will be hard for Nano to find a departure from low-price, low-quality association.

For now, Nano seems to have gotten back on the track. The latest commercial quite aptly positions the car as an inexpensive yet trustable option for a lower-middle income family. The moot question, however, is - can Nano regain the traction it lost due to initial flubbing of execution? All I know is one more fire incident will send Nano's brand image and sales rolling down the negative spiral.

This reality show is so disgusting that it's funny!

Amitesh Jasrotia — 2010-11-02T11:40:39-07:00

I have never been a huge fan of reality shows and at the same time, I haven't really abhorred them either. My reaction to most of the reality shows has been the same as a cricket fan who has less than a remote interest in soccer - Nonchalant. My indifference to the reality shows emanates from the fabulous dose of stupidity that most of them dish out and also, from the traces of inexplicability that they entail.

All said and done, until one week back, I wasn't really bothered why a reality show would need half-a-dozen script writers when, essentially, its main objective should be to capture reality as it unfolds. Admittedly, I still don't give a damn. I find it easier to slip into the state of suspension of disbelief while watching WWE than while watching reality shows. What has changed in the last one week , however, is my 'I-don't-watch-this-krap' status. The undisputed Queen of Cheap Rakhi Sawant's latest, grand spectacle 'Rakhi ka Insaaf' has solidified my perception about the reality shows, alright. They are all staged or scripted or made-believe. But unlike a majority of reality shows wherein finding loopholes involves a bit of a mental exercise, this particular show oozes with lunacy and nitwittedness. It's'crippled' with loopholes and laced with obscenities. In brief, it's disgusting ad nauseam. So excruciating and so torturous the content is that you, in all probability, might just end up watching it through. Until one week back, I wouldn't have watched anything that involved Rakhi (The Lacrimation Queen or the Queen of Cheap, both). And here am I now, writing about it, tweeting about it, spreading the word-of-mouth about it. I feel corrupted, willingly!

Coal India IPO

Amitesh Jasrotia — 2010-10-17T08:36:20-07:00

No public issue in the recent past has generated so much of buzz as Coal India and for all the right reasons. Just a glance at any of the research reports will tell you why this issue is going to change the IPO landscape in India. Following are the 5 reasons why Coal India might prove to be a darling of the primary market:

Coal India (CIL) is the world's largest coal company both in terms of proven reserves and production.
A majority of power plants in India are coal-fired. And CIL supplies over 75% of its output to power sector. Now with the Ultra Mega Power Projects (UMPPs) kicking in, there is a huge upside to the prospects of CIL.
Coal India accounts for 82% of coal production in India. According to an estimate, coal demand in India, in the coming times, is expected to outrun supply. Where the demand is expected to grow at 10%, supply is estimated to grow at only 7%. CIL clearly stands to be benefitted from this impending scenario.
CIL issue has been attractively priced at a multiple of 15.34 at the upper band of Rs. 245. In contrast to CIL, other Coal giants like US-based Peabody Energy (which is also the world's largest private coal producer) and China Shenhua Energy are trading at PEs of 22 and 17.9 respectively.

New IPL format: I needed a cryptographer to work this out

Amitesh Jasrotia — 2010-09-06T11:19:44-07:00

The new format for next 3 seasons of IPL has left me bamboozled. Couldn't they have kept things simple and easy to digest? What we have for IPL 4 is an incomprehensible mess. I assume most of you would have gone through the the agonizing exercise of sorting out the new format by now. For the uninitiated, let me break it down.

Due to the addition of 2 new teams this year, the total number of matches could have increased to 94 from 59 had the IPL stuck to its previous format. 94 matches would've meant serious player burnout issues (at least this is what they say). So, in order to reduce the burnout risk and keep the franchisees happy at the same time, IPL Governing council came up with a cryptic, new format (you seriously need a cryptographer to decipher this!). Let me put things in perspective here-

Earlier: 8 teams, each team plays each other twice (home & away). 56 league matches give away 4 top teams, which leads to 2 semis, 1 play-off and 1 final. SIMPLE!

Now: 10 teams, 2 groups of 5 teams each.

League Stage: All 5 teams in Group A and 5 in Group B will play each other within the group twice (20 matches in A, 20 in B - 40 matches in total).

Next, 5 teams from each group now play the 4 (mind you, 4!) teams from the other group (only once) (20 matches). And, finally, Each team from both groups plays '1' team twice (10 matches)

Knock out stage: Top 4 teams qualify for Knock-out stage. A>B>C>D (in strict rank order). A plays B, C plays D. Let's say, A wins and C wins. Ideally, u 'd assume at this stage that A would play C in the final. But that's not the case.

C will have to play B and the winner of this match will play the team A in the final (4 matches). Quite clearly, points gained from league phases are of immense significance. Team A with highest points can beat Team B and waltz off into the grand finale. If team B beats team A, then tean B jumps to finals which leaves team A to fight the winner of Team C vs. Team D clash.

In the nutshell, we'll have 1 semi-final followed by 1 quarter final followed by 1 semi final followed by the final.

Confusing? Yeah, it sure as hell is! What is really intriguing me right now is how IPL bosses are going to spoonfeed this format to the audience. It's not going to be easy, for sure. But then, time is on their side. There're still 7 months to go before IPL 4, which means ample time for heavy new-format indoctrination.

Read well

Amitesh Jasrotia — 2010-07-28T11:43:11-07:00

At the beginning of this year, I made a resolution to read at least 25 books this year. Admittedly, so far, I haven't worked towards my target with great vigor. Add to that, a lean month in May when I was really faced with a reader's block and hardly set my eyes on books. Now, July is almost over and I have read only 10 books.

This past sunday, I decided to do a bit of introspection and came out with the conclusion that when it comes to reading, how much you have read, perhaps, may not be as significant as how well you have read what you have read. As a result, I have decided to wring the most out of what I read and not focus on numbers yet. Incidentally, I am on the verge of finishing 'The Myth of the Rational Market' - it's a phenomenal book by journalist-cum-author Justin Fox about the history and evolution of finance. Anyone who wants to take more than a peek into world of economics and finance would love this book. Will soon publish the review in 'Book Review' section.

SEBI Chairman's outburst on Mutual Funds: Time for Introspection

Amitesh Jasrotia — 2010-06-24T11:53:27-07:00

After suffering an excruciating jolt through Government's mandate on ULIPs, fund houses got another shocker when SEBI chairman C.B. Bhave, quite contrary to expectations, gave MF representatives an earful in a mutual fund association conference. Apparently, Bhave questioned the inadequacy of fund houses in winning over customers even when they (mutual funds) are sure of the competitive edge they hold over their counterparts such as ULIPs and the fixed income instruments. Many are wondering what was behind this schoolmasterish outburst of SEBI chairman. Was he just preaching or was he venting his frustration about the MFs ineptitude? The debate about righteousness of C.B. Bhave's speech could go on for another couple of days. The moot issues, however, might get bogged down under all this hullabaloo. In my opinion, following issues, if properly addressed, could work to the advantage of MFs as well as MF investor community at large:

a) Thematic funds and Feeder funds (SBI One India, ING Latin America Equity fund, etc.) have never been high on the shopping-list of investors. Further, these funds are high on oomph factor than on substance, e.g. SBI One India fund, when launched, was pushed on the premise that it will invest your money in different parts of the country (basically meaning the top holdings of this fund would be the same as any other equity diversified funds). Even more so, despite the history being against the said funds, why do fund houses and fund managers continue to dish them out begs for an explanation.

b) Index funds (funds that track or mirror the index) continue to be downplayed by fund houses. One reason could be their low-cost, passive nature, thus, incurring relatively low expenses vis-a-vis other diversified funds. EMH (efficient market hypothesis) enthusiasts vouch for Index funds and not-so-surprisingly, these funds have also matched up to the expectations. The new breed of Exchange-traded-funds (ETFs) (index funds whose units can be bought and sold like stocks on an exchange) is also a grey area on the investing landscape of many investors, at least, till now.

c) NFOs (new fund offers) get extensive plugging from fund houses than the funds that have continuously outperformed or met the market average. Truth is NFOs are used as a bait to dupe many naive and unaware investors. They are coaxed into entering the fund at the face value of Rs.10 as if entering later would drastically diminish their chances of making money. Basically, the more the new investors (suckers!) the higher the chances of fund house meeting the marketing expenses of new fund offer.

d) Strong need of awareness among investors, especially, among retail investors. Lack of effort on this front would only lead to such outpourings as the one by Mr. Bhave yesterday. The onus for educating investors lies as much on fund houses as on SEBI. It shouldn't have been a surprise for Mr. Bhave and co., given a chunk of investors are as ignorant about their own MFs as an infant about its toys. How many retail investors do you think bother to check the change in holdings of their mutual fund? How many do you think are abreast of something called 'operating expenses' that they will have to shell out at the time of redemption? Questions are many but the way forward is simple - focus on investor education. Otherwise, fund houses will continue to maximize their profits at the expense of naive investors.

Reading ten books once or one book ten times?

Amitesh Jasrotia — 2010-06-21T11:07:18-07:00

A rough assessment says you remember only 18% of the book you have just finished reading. And as the days go by, that 18% figure further fizzles out to a negligible, decimal-like figure. In the nutshell, if you were asked to take a trip down the memory lane and exhume ten salient points of the book you read last christmas, the likelihood of your coming out tops is as good as a nightclub deploying crowd control force at breakfast time. This is about retention. What about your own perspective on the topic of the book or on the author's viewpoint? Do you think you can get it right in one stab?

A couple of years back, I came across the following piece of advice in an article: "You get more out of reading a book ten times than out of reading ten books once each." A little exaggerated? Yes, it is. Let's face it. Unless you are on an island, marooned. without even a scrooge puppet to talk to, you can't expect anyone to expect you to read a book ten times. Levity apart, the moot question here is whether this theory of reading a book more than once to gain more out of it has some degree of significance or not. The answer is an emphatic yes. Reason: Reading has its own periods of peaks and troughs. It's difficult, if not impossible to read something with 100% concentration all the time. Going back and reading a book or a chapter can help you iron out the inaccuracies and pitfalls in your perspective the first time. Not to mention the slip in concentration that made you attribute the 'unintended consequence' theory to Robert C. Merton (Financial Economist Son) instead of Robert K. Merton (Sociologist Dad).

A footnote: Isn't it a little disconcerting how people write reviews about a book by reading it just once? The same book that perhaps went through dozens of manuscript overhauls before materializing into its present form. Food for thought!

From a bibliophile to a bibiliomaniac

Amitesh Jasrotia — 2010-05-27T12:06:18-07:00

One of my resolutions for this year is to read 25 books. And so far, I have done well towards achieving my goal. The only thing that has started to disturb me even as I am pretty content with my reading goal is the ever increasing pile of unread books (I call it the backlog) on my bookshelf. As a part of the habit, I always tend to have 2-3 surplus books other than the one I am reading. This, I feel, gives me a decent maneuvering space besides allowing me to go about my habit in a FIFO (First in, first out) fashion.

I always take pride in being called a bibliophile (a much milder word meaning a collector of books). Of late, however, my backlog has grown to 17 from an average 3. And, a lot of it has to do with this almost psychotic urge to buy more even when I don't need to. I almost condoned this trend until yesterday when I finished a book and sat down to picking up the next one. All of a sudden, it struck me that my unflinching passion has gone a bit overboard. Instead of just being a collector, not to mention an avid reader, of business/non-fiction books, I have transformed into something else. A bibliomaniac, perhaps! Since in the last couple of months, more than just reading, I have only been obsessed with ownership and acquisition of books.

This madness of sorts made me oblivious to the fact that with each new book I buy, my catching up goes up proportionately. As I write this post, I am not sure how I am going to handle this problem. RIght now, I am busy reworking the order of my long reading list.

India VIX - a useful indicator of volatility

Amitesh Jasrotia — 2010-05-25T11:37:29-07:00

PIGS bloc has certainly got the fear indices worldwide in jitters. India's fear index, also popularly known as India VIX (short for Volatiliy Index) has shot up from the levels of 15%-16% a couple of weeks ago to mid 30s. For the starters, NSE has borrowed the trademark VIX from CBOE (Chicago Board Options Exchange) to come up with India VIX. Basically, India VIX has the Nifty 50 index options as the underlying. VIX rises when traders/investors on sensing trouble, take the plunge and start hedging their risks. Traders usually buy more options when they sense higher risks ahead � similar to people buying insurance.

Approximately, VIX hovering in sub-20 zone is an indication of proverbial calm seas whereas it hurtling into 20s and above is usually a red flag with 'volatile market' written all over it.

For more information on how Volatility figure is calculated, click here

Adversity is the best teacher

Amitesh Jasrotia — 2010-05-24T10:52:32-07:00

The prevailing market chaos has got everyone bamboozled. Just a couple of days until the biggest intraday fall this year (i guess it was May 6th), I was quite sure about selling a couple of my equity investments. Just when I was all set to push the button, all hell broke loose and I had to crawl back into my shell. As I write this piece, I am just biding my time and hoping that markets get back on track.

This is my fourth year of investing in pure equities (yes, I am a newbie!). And, I have already faced the doomsday scenario (I would love to call it '2012' scenario) quite a few times now. The protracted crisis of 2008, which was stigmatized as the worst crisis after the great depression ruffled my feathers pretty good. Like umpteen retail nvestors out there, I was battered and bruised. And, by the time the dust settled, I had learnt many important lessons that would come in handy in the future crisis:

Outperforming the market is a toilsome task and should be left to geniuses like Warren Buffet and co.
In stock-market, everybody knows nothing. The financial markets always humble those who think they can predict it.
Avoid kneejerk responses. Don't sell or buy because everyone else is. Sleep over your financial decisions.
Always remember the hackneyed cliche that equity outperforms other forms of investments only in the long run.
Avoid the temptation to peek into your portfolio everyday. Checking your investments everyday is not just bad addiction but a recipe for doom, too. This could induce the urge to buy more when markets are headed north and sell like crazy when they are headed south.
Don't invest on tips. Always do your homework.
Don't invest under the influence of temporary sways. Just an 'indication' of Ambani brothers burying the hatchet should be no reason for a conservative investor to jump on the 'Reliance' bandwagon.

Oil spill brings in Externality Tax

Amitesh Jasrotia — 2010-05-16T12:29:42-07:00

Latest Oil spill in the Gulf of Mexico may not have done any good to America's image of being the epicenter of Capitalism. One thing that it has done, however, is that it has pushed the US administration to consider slapping an 'externality' tax on the Oil companies active in the Gulf.

According to Tim Harford, author of the bestseller 'The Undercover Economist', externalities are the off-shoots of economic decisions that have side effects on bystanders. To borrow Harford's example, each time you pull out your car, you indirectly cause a negative externality since your car is emitting Carbon monoxide and people on the walks are inhaling it. Negative externalities like driving and Oil spill don't often result in any compensation offered for the costs they inflict on other people.

In order to counter the anti-offshore drilling lobby and the public sentiments that support it, President Obama has decided to pass a bill which, if passed, will see a penny tax being levied on the Oil companies like BP, Transocean, Haliburton. Yes, some might say that this is President Obama's desperate attempt to shore up the clean-up efforts in the gulf (some estimates peg the clean-up costs in the neighbourhood of $20 billion) while others might put a spin of 'Socialism' on Obam'a's move. At a certain cerebral level, however, it's a valid attempt of making the Oil moneybags payback for the damage they cause to the environment, albeit, inadvertently. I guess taxing the externalities in this case is the only way to keep the unbridled capitalism on a leash.

Party or not to party?

Amitesh Jasrotia — 2010-05-14T07:09:40-07:00

Dhoni's bewildering statement in the post-match conference and the subsequent eruption of outrage over IPL parties have thrown open the can of worms. Dhoni now finds himself on a sticky wicket after that uncalled-for statement-cum-excuse. On one hand is the BCCI who has unmatched ability of making scapegoats of people and on the other hand is the media which, these days, generally acts as a duct to unleash the kneejerk, emotional reactions of people. Amidst all this chaos, the moot question still stands - is IPL to be blamed for Indian team's debacle in T20 world cup?

It's quite easy to take sides on this issue. Those who aren't happy - and they are in majority - with Dhoni and co. would simply bring up last year's performance and the fact that it was again after a protracted bout of IPL that Indian team went into the world cup and lost, consequently. It's a pattern, afterall. And, people love theories based on patterns. Those who are on the other side of the barricade - a fringe side - will simply accept the unflinching nature of the T20 beast. Even a heavily armoured side like South Africa also couldn't make it to the semis. Pakistan, whose players were conspicuous absentees in the IPL3, made it to the final 4. The argument that IPL parties spoiled Team India's party at the world cup is perhaps as baseless as the argument that Pakistan won the last world cup because they didn't play in the IPL. And if Pakistan wins this year, then rest assured, all hell is going to break loose. Media's inherent tendency to see patterns even when none exist is going to shake up a lot of players.

BCCI needs to plug the genuine chinks in Indian cricket's armour rather than going on a witchhunt expedition every now and then. Players' fitness is one key issue. Also, their inability to play the short-pitched deliveries. The need here is to eliminate the real problems plaguing team India; acting on or reacting to what is said, shown or written in media will only lead to self-created chaos.