Archive for the ‘market’ Category

As Adidas says 'impossible is nothing'

As Adidas says 'impossible is nothing'

The season with minimal festivals, June-July-August, is the season of discount sales. The thing about these sales is one would end up buying even if they don’t actually need it at the time of sale. Blame it on credit cards or yourself, it’s hard to resist when you’d see a good tees or shoes going at 50% of the price which you’d be spending at any other time. Few months back i bought a couple of tees at Nike, on discount, when i actually went there to buy a pair of shoes. I’ve also bought stuff at MRP, only to see the same thing going at a discount a couple of months later. Apparels, and shoes are the majority of stuff that sells best during sales.

There is a splurge of discount sales on all kinds of stuff in this season, newspapers on weekends carry more ads on these sales than news. I was contemplating on buying a pair of good running shoes for some time now, and i ventured out. The problem with these discount sales is that you either don’t get what you want or you don’t get them in the sizes you want, or the ones you like are the ‘regulars’ and don’t get discount on them. But, still one can manage to get good stuff at a discount if you have the endurance and patience to search.

I wish the shoes there were as good as this logo

I wish the shoes there were as good as this logo

In my first trip i went to Puma, Adidas, Reebok and Nike stores in Indiranagar. At Puma, i didn’t like any of the shoes but almost bought a pair of floaters. Adidas, Reebok and Nike in Indiranagar didn’t impress me much either.

Couple of weeks later, i learned that these sales would come to end in a few day. So, it was time to check out few more stores for good shoes at discounted price. On trip 2, Reebok, Woodland, and Adidas showrooms in Malleshwaram. Reebok had a lot of shoes, many of them outdated and i’ve been seeing them for few years now, unsold. Next stop Woodlands, ‘hmm.. not to my liking‘. Adidas had a couple of shoes which i liked but size 8 didn’t fit me fine. The sales guy took some 10mins to tell me he didn’t have the size i wanted in that model. Meanwhile, i almost bought a tees, and so did my cousin. :D Only to be stopped by no discount on that or no size.

Next stop, all the stores i had visited in Indiranagar earlier. Puma, again didn’t impress me. I liked a couple of shoes at Reebok, but they had sizes 11 and 6 only. I could neither shrink my feet nor expand it. Next stop, Nike on 100ft road. Wow.. they had lots of good shoes but no discount. I wasn’t willing to spend Rs.10,000 or more on a pair of shoes which would just add on to 4 other pairs at home. I liked a ‘regular’ shoe priced for my comfort but i wanted to check out other stores with discounts before i bought them. Adidas on 100ft road had few shoes that i liked but again not for my feet size. There again i almost bought a tees but stopped myself saying that the same one will be on sale in a few months.

This is what i bought finally - Reebok

This is what i bought finally - Reebok

Almost frustrated, i was willing to checkout the huge Adidas store near Infantry road. They have such a huge store, wouldn’t they have one good pair of shoes on discount sized 9? NO! Phew.. Since i was close to commercial street, i wanted to see Nike store there, but couldn’t locate it exactly. I was about to call my cousin when i spotted Reebok showroom, and walked in. Finally, there i found a shoe for my liking and size at 40% discount. :-)

The feel good factor in buying the shoes was more when i realized, the very same model of the shoe my team lead had bought it a couple of months back at full price. I saved Rs. 2600/- on this. The expression of his was hilarious. So, the moral of the story is, if you have the patience and endurance in searching what you want, you might get lucky.

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High price of crude oil, touching nearly $150 a barrel, has alarmed every nation across the world but the ones producing. Is it really the excess usage of non-renewable source of energy causing its depletion or a mere speculation using the threat of depleting resources for their ulterior motives? Really hard to say, but i tend to go with the latter.

We know, for ages, that western countries have higher energy usage per person. USA consumed 340.5 million Btu of primary energy per capita in 2005, which was roughly the same in 1980 (343 mBtu). Interesting to note is the rise in per capita energy consumption of Saudi Arabia, U.A.E., and China. The middle eastern countries have a very high per capita consumption, probably needed for the continuously running air conditioners. Saudi Arabia’s consumption has increased from 166.3 mBtu in 1980 to 252 mBtu in 2005, an 85% increase. U.A.E has increased its consumption from 267.2 to 563.6 mBtu, a whooping 110% increase!

In South-East Asia, China has topped India by a significant margin. From 17.8 mBtu to 51.4 mBtu in China as against 5.9mBtu to 14.8 mBtu in India. Though the percentage increase of India is high, the per capita consumption is minuscule when compared to western, middle eastern or Chinese counter parts. Per capita consumption of oil, barrel per person per year is 2.18 for India, one of the lowest in the world (world avg: 12.52) whereas it is 78 in Saudi Arabia.

Oil consumption per capita across the world

Oil consumption per capita across the world.

These are the stats in 2005. The increase by 2010 or 2015 would be phenomenally more for reasons obvious below. Why has the consumption in middle eastern countries increased so much over the years? I’d say because of whimsical spending.

Al Burj, Dubai

Al Burj, Dubai is growing on what you pay for fuel

Nearly 25% of the construction cranes in the world are in Dubai. Wonder why? Two of the world’s largest sky scrapers, one under construction, Burj Dubai, and other, Al Burj, in proposal, are coming up in Dubai along with numerous other multi-billion dollar infrastructure projects. Artificial Palm islands, three man-made islands in Dubai, is the largest land reclamation projects in the world, and would be the world’s largest artificial islands. Besides this, there are several other highly ambitious projects to shell out billions of dollars like Hydropolis – world’s first underwater luxury resort, The World islands – artificial islands shaped like world map, and Dubailand – under-construction entertainment complex bettering Orlando’s Disney world. There are several high rise super luxury residential properties, and malls coming up along with Dubai Metro system, and world’s largest international airport.

The construction of transportation network, good shopping malls, and residential properties are, no doubt, ‘necessities’ of prosperous nations but projects like Ski Dubai, to ski in desert, is a whimsical idea, i would say, to splurge money made by selling oil to other countries. So are the projects like Al Burj, Palm islands, and Hydropolis. I remember another project to grow corals in the unnatural corrosive habitat in the coast of gulf by modifying the sea to assist coral growth. What next? May be they want to have Alps or Mount Everest artificially made!

About 80% of the world’s readily accessible reserves are located in the Middle East with 62.5% coming from 5 Arab countries: Saudi Arabia (12.5%), UAE, Iraq, Qatar and Kuwait. Such huge spending can result in ever increasing price of oil as they have no other source of income. The concept of income tax does not exist as they are already making too much money by selling oil.

Supposedly there are more construction workers than citizens in UAE! What will happen to these people once these projects are completed in, say, another 10 years? Thousands of civil engineers, electrical engineers, and laborers would be jobless. Some of them might settle with hospitality sector for running and maintenance of these super luxury palaces of the rich, but the fate of rest is scary. Most of the workers are from developing countries like India. They would promptly be sent back home, and the unemployment would be rampant along with sky-rocketing fuel price.

The current increase of fuel price is funding these crazy spending spree of some of the oil rich countries. The effects of the completion of these projects would be felt all over the world, the cost of maintenance of these would sky-rocket the already high oil prices. Global warming might not reduce if the non-producing nations limit their usage when these oil rich nations are blowing up non-renewable energy sources for maintaining snow in desert or having underwater resort!

Source: EIA (Energy Information Administration) – Official energy statistics from the U.S. government for statistics on per capita primary energy consumption.

P.S.: I’m back!

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This last month or so, inflation seems to be sky rocketing without any bound. The dollar is again touching 43 rupees just when i shortlisted a DSLR to buy. Nearly 4 rupee rise per dollar would increase the cost of owning the DSLR by 12%. Though the rising dollar would be a good sign for small and medium scale exporters, the effects of this would not be seen immediately. IT companies have already announced their single digit hikes for the top performers, and fired the non-performers. The crash of the markets has gripped the nation along with the increase in fuel prices. Also, there’s this food shortage crisis looming.

Albeit all these price rises, one thing seems to be decreasing. That is the cost for telecomm services. The tariff for STD and other services are being slashed every other day. First it was Vodafone and Airtel, and now it is BSNL. Though it seems like this is the result of Telecom Regulatory Authority of India’s (Trai) decision to remove the access deficit charge (ADC), i feel that they would already be running these services at a very high price and this small cuts would be insignificant as their customer base increases.

What is the major cost for running a telecom service once they have their network up and running?

Preity zinta, BSNL best hai mere liye?

Advertisements, with big superstars and not-so-big superstars endorsing to call up your sister irrespective of whether she’s in Dehradun or somewhere nearby or the pug running behind you to help you. Yes, this is the only major cost apart from the salaries for their staff who take only a part of the top brass’ pay. So as these companies capture more market, they could afford to run the network efficiently and optimally without incurring more expenditure. This would maximize their profits. This is an ideal situation for them to get aggressive and capture more market. So, How do they do this?

Vodafone pug

By slashing the already high tariffs. This would make the customers to make calls more often, there by making higher utilization of the network, raking in more turnover and hence more profits.

The already over-priced telecom service is the only entity to be slashing prices in this near double digit inflation struck India, and i continue to wait for the D-Day.

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Copying happens all the time in the creative industry, be it in flicking the music tunes or the movie concept (and mentioning it as an inspiration or not even mentioning it if not for the critics to figure out) or in the technology or fashion or manufacturing if not in mining and oil exploration industries. :) I was wondering if it happens only in India or all over the world. Putting my little knowledge in a more quantitatively in this post.

Yes, movies and music has highest copying in India, ‘remake’ of good Hollywood movies by Bollywood and in turn by some regional Indian film industry. Most of the Music composers are copycats, with exceptions of the genius AR Rahman and few others. Pritam beats the copycat-king Anu Malik in recent times, with tunes of his hit numbers like Ya Ali, Kya Mujhe Pyaar Hai and many other tracks being copied shamelessly, and not even mentioning about it. Maine Pyaar kiya had some of the best songs of last decade, with most of its tracks had been ‘inspired’ from other good music of 80s. You could have a look here for more on copying in Indian music industry.

Copying of the manufacturing and consumer electronic goods happens no where better than China. They come up with almost all kinds of consumer electronics, and manufacturing goods as a fake of the exorbitantly overpriced original goods of American or European branded companies. Of course manufacturing of the original goods also happen in China, thanks to their cheap labor, giving them better knowledge to make the fake. The design of cars comes at no cost for many Chinese car manufacturers as they would have the exact same design of a Toyota or Ford or even a Maruti. There would be plethora of watches of Tag Heuer and Rolex selling on the Chinese streets, and in grey markets of India and other places in south-east Asia.

Wonderful thing about this is they also export these goods around south-east Asia, where there is a huge market for these fake stuff. The fake apparel manufacturing seems to be a big industry in Thailand, and China. The fakes of Nike, Adidas, Umbro, and others are mostly imported in India from these places. Anyone who has paid a visit to National market area in Bangalore would get these fakes of international brand watches, shoes and apparels at much much cheaper price than the originals.

Copy of software technologies, UIs among other things too happen, and this is more prevalent in other parts of the world than India. The legal hassles of these are evident in numerous cases. Huawei and Cisco feud is widely known, and the concept of Windows was originally from Xerox, isn’t it?

Books, i don’t need to mention. Be it plagiarism, or making e-books or pirated copies and selling it on streets, easiest of the things to copy.

Finally, we have a whole world of people who are looking to get the best idea or technology or any form of material for no price (or very low price), if not conceived by themselves they’d rather get it by snooping somewhere else. The protection of IPs is well defined in the technology space, but the fashion, book, and music industry do not get their dues.

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The decline in the US dollars in the past few months, and increase in the cost of a barrel of crude oil to nearly $100 has given glimpses of the US dollar decline on it’s stronghold.

Dollar and euro

It is not just the Indian rupee that has gained in the recent past, but the currencies of many Asian countries including China, Indonesia, and Philippines. The exporters in India are struggling to keep up with the profit margins, the suffers are mostly the small scale exporters. The bigger IT companies are somehow keeping it up, and are trying to diversify their markets and also planning of making future deals in other currencies like Euro.

Oil is the key, with dollar declining the reserves of billions of dollars in the oil rich countries of the Gulf are feeling the heat, not just due to the desert temperature. Their billions of dollars reserves are losing their value. So they are in a way pushing towards neutral currency, you can say, Euro. The biggest fear could be Chinese converting their trillions of dollars reserve to Euro. That could propel the Euro to exchange rates as that of pound sterling. Good news for the ones waiting with forex reserves of Euro, here i’m talking about the retail investors. The ones would have gone to EU for an on-site trip, and have some Euros saved from their trip.

The rise in Rupee or decline of dollar is affecting Indian IT companies, which earlier had the edge over US Multinationals with cost effective solutions. Now, IBM and Accenture are giving stiff competition to the likes of Infy, Wipro, TCS and others. How are these tackling the dollar debacle?

Near-shore offices instead of on-site travel, more freshers, and hiring from relatively less explored or untouched regions like Czech, Bulgaria, Argentina and Mexico. The Indian IT companies stock prices are declining like never before, and the IT Mutual funds have -38% growth in the last one year.

The fall in dollar is affecting the lives of millions in a variety of ways, eroding stock prices, lower profits, depreciating forex reserves and in many uncomprehensible ways. The weaker-dollar has a few positives as well, for importers. Buying Bose QC3 at a cheaper price was possible due to a dollar at 39.8 rupees. My plans of buying a DSLR also seems viable. But the negative impact comes in the form of a lesser hike i get the next year as the business in dollars gets lesser rupees for my company. Effectively buying my QC3 would be at the same rate, isn’t it? But the psychological factor helps.

Another positive aspect of the stronger rupee is for someone planning to do masters in the US. Obviously their reserves in rupees would be worth more than it was a year ago. Hence the tuition fees and other expenses would cost cheaper for them. There is also a flip side to this, after they graduate, if they work in US, the spending capacity in rupees would not be the same if dollars were worth more for a rupee.

In the short term, though it has more negative impact on India, i’m sure Indian IT companies have gained enough expertise in the domain to take on the giant multinationals like Accenture, IBM and others not just in IT services at low-cost but also in consultancy to take advantage in the long term. The India story is still good, as they say. :)

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The launch of Tata’s one lakh car has got more publicity and global attention than any other Indian product ever. A revolutionary step in the automobile sector, with many companies saying it can’t be made. Ratan Tata, the man behind this small wonder, said this has been achieved despite rising steel, tyres and other item prices, and ‘despite Mamta’ to keep up the promise he made four years ago.

Why only Tatas could make the 1-lakh car?

Suzuki and few other car manufacturers still maintain that a one-lakh car cannot be made by having a reasonable profit margin. Few others are interested in knowing the cost cutting techniques which made Tatas achieve this. Have Tatas done what Suzukis, Hyundais, and Bajajs couldn’t or have they compromised on the profit margin to make up in the bulk sales which the Nano could rake in? A business strategy with a risk only the Tatas could take.

Tata, having the Corus steel with them and being the 5th largest steel producer in the world, could get steel cheaper than any other automobile manufacturer in the world. This could keep the profit margin for Tatas higher than that for other automobile manufacturers. With almost every kind of product in offering, from watches, tea, luxury hotels, IT services to telecomm they know the Indian market, presumably the largest market for 1-lakh car, better than anyone else in the world. The nearest competitor for Tata’s Nano is in neighboring China a $3600 car, Chery QQ.

Hamara Bajaj, not anymore

Ratan Tata’s one-lakh idea came when he couldn’t help but notice a family on their scooter with Man riding, a kid standing in the front, woman holding a kid on her lap in the pillion. He wanted to make a safer scooter. Knowing about the failure of BMW’s safe scooter with seat belts and safety bars, which BMW had withdrawn, Tata wanted to make a full fledged small car at very low price. Thoughts of making the four wheel vehicle from two wheeler parts to modifying auto rickshaw making it a four wheel vehicle, they came up with some ingenious cost cutting and designs to keep up his promise.

Those were the days in late 1980s and 1990s when you’d see families riding on their Bajaj Chetak and Bajaj Super scooters. Bajaj’s ‘Hamara Bajaj‘ campaign being most popular and drew the attention of every middle class Indian. The coming decade could be Tata’s Nano, ‘Hamara Nano’ or ‘Hamara Tata‘.

Hamara Bajaj 1989 advert:

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A lot of speculation, and some hype. Stories of bankruptcy, and riches. A relatively not-my-cuppa-tea (kareem’s quote) venture. Seems to be promising, very bullish. Darn, did i miss out any? Well, how does this work? How do i learn more, quick, and better? As they say, the best way to learn something is by ‘doing it’.

Well, i didn’t wanna burn my fingers, at least after my dad quoting a few times from his knowledge ‘Horse racing gives immediate results, stock trading does so a little slower’. Come on, times have changed, isn’t it? See the way market has gone in the last few years.

Social networking got me to first hands on experience of the market, not on Sensex but on NYSE and Nasdaq. FSX had a pretty good interface, with real index quotes live from NYSE and Nasdaq, and provided 10 million dollar virtual money to start off. Soon i started on Equity challenge by ET for trading on Sensex. Cool huh, starting off virtually on a real wave!

FSXThe image on the left shows a screenshot of the FSX page.

Initially, i started off investing based on the performance of the share on that day, a week, 6 month, and 1 year prior to that. Slowly i started gaining insight into the companies i was investing, reading info from experts. The first few stocks i bought were GOOG(Google), GYMB(The Gymboree corp), and SHI(Sinopec Shanghai Petrochemic). I sold them soon. Today, the they gain i would have made from these stocks (if i held since i bought) are about 25% from Google, -8% from Gymboree, and a whooping 48% from Sinopec! From August to October, in mere two to three months, gaining 65% is something unthinkable.

Stock trading is a lot of fun, just like gambling. May be one could take a little more calculated risk in this, if you know how to calculate that is. It draws you towards it, makes you put in more, and more. You got to be careful in the game to win. Over these few months i have learnt a few things about it, and here i put them down.

Few lessons i learnt:

1. Never trade on very short term.

This is true especially for rookies like me. Invest and wait, have patience. It sure will pay to play in long term.

2. Information is wealth.

Get to know the company well, present targets, strategy, initiatives etc as much as possible. Building a strategic investment plan is the key.

3. If something can go wrong, it surely will.

If you buy a share at 52-week low there is no guarantee that it will not go further down. More likely that it does so. So wait, average it out if it goes too low.

The converse is also true. That is, if a share is at 52-week high don’t hesitate to invest, it can go further up.

4. The above lesson gives a lemma. Markets are sooooo unpredictable, the more time you spend there the better you will realize this.

5. You win some times, you lose at others.

6. Have a risk appetite, know it well. Don’t get carried away.

7. Diversify. It works for your best, averaging your losses, and of course profits as well.

8. More importantly, you don’t get 10lacs or 10million when you trade in reality, and you cannot reset if you make huge losses. So, invest cautiously.

9. Indian market in a way follows the American market, though not always and not exactly.

10. Read all the lessons one more time. :P

Well, these are a few points i wished to write, there are more lessons to learn i am sure. One interesting thing i have observed in this stint is that,

‘लहेरों के साथ थो कोई भी तेहर लेता ह,ै मगर असली इंसान वोह है झो लहेरों को चीर कर आगे भाद्ता है’

Anyone can make money when the market is going up, it’s more challenging to make money when the market is going down. I have not been able to do this successfully. Hopefully i get better at this, soon.

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