Three Dependence on Relationship

Three Dependence on Relationship

Each one of us are individual souls , have individual life but since we are living in family , society we are not totally isolated from others but interrelated or dependent on others . It affects our life , our happiness , sadness etc to the extent how we view and rely on dependence level . If we know how to detach from or minimise these dependence level our lives will be like heaven on this earth which most people have started equating as Hell ( Ghor Kalyug ) .

Lets evaluate each of the dependence level and how we can minimise them .

·         Physical dependence : a child is dependent on parents and in old age parents are dependent on their children . Its because physical condition is not such that both a kid, a child and a very old at times can manage their work . For young ones its natural up to an age but the earlier parents educate their kids to be self dependent its better . For old age dependence is not in anyones hand . No one knows till what age will live but have some idea when body starts becoming frail . By maintaining good health through balanced diet , regular physical exercise yoga etc one can ward off bad health to a large extent and can lessen physical dependence to some extent . The more good health one

  

·         Financial dependence : our financial need of essentials and education is taken care by our parents till we study . Its over once we start earning our own livelihood . Yes some parents out of love , affection keep giving money to their earning children . excessive financing can lead to unnecessary expenditure and make habits bad . Once parents not able to give money many resort to borrowing , live life on credit which can lead to debt trap .  children should also evaluate that do they really financial support if not really required ? Either work hard for more money for own extravagance need or limit your needs as per your earning . Fiscal discipline is a must in everyone life . Live within your means . The more financially independent one person is he is more happy and stress free . Every person should ensure that he should be financially independent post retirement till his last breath . Do proper retirement planning . If financially dependent on your children then you are adding your own unhappiness and that too at fag end of your life . If financially independent in old age you live happily , get respect from your children , not considered as burden . Decide yourself .

·         Emotional dependence : This is most complex dependence of the three . Very difficult to judge the extent as is not as visible and quantifiable like first two . Since it is most complex the least emotional dependence on others the best it is . People say that one should have EQ and empathy but the more someone shows toward you , the more weaker you become mentally and psychologically . Believe in yourself and God . We do get mental comfort if soothing words are expressed but does that solve the problem ? . It does give you confidence and support but do we need someone else to build confidence or remove fear in ourselves , can’t we do it for ourselves ? Meditation , connecting with your inner self , getting answers from your inner self can do best than words of any else human being . Spend quality time with your self , seek strength from your inner self and almighty .

Any person who is least dependent physically , financially and emotionally on others is one of the  happiest persons on this earth . Check yourself and you will find what I have stated is true or not . So now you must have realised happiness or unhappiness is all your own creation and it is due to these 3 dependence level on others .

Invest fearlessly and grow wealth through Equity MF

Invest fearlessly and grow wealth through Equity MF

Each one of us should understand why we invest and for whom we invest. We invest for ourselves and our family. If we are investing for ourselves it has to be the best. The Best is something which can be converted quickly and easily into cash (liquidity), must be safe i.e. it should be giving me a return beating inflation and since my money is going to be used in an economic system, I should be adequately compensated in terms of return.

We invest because there are many needs and requirements which will come in different stages of life and we require adequate amount of money for it. How much we will be requiring in future is very difficult to say but one thing is sure it will be much more than today’s cost.  Since apart from normal inflation there is bigger impact of lifestyle inflation due to increasing aspirations, needs and wants, I will require much more money than originally thought . We can look back into our own lives 5, 10, 15, 20…years back and would have never thought of new types of expenses we incur today.

The asset which is closely related with lifestyle products and takes care of lifestyle inflation is Equity. Equity is most closely related with economy vis a vis other asset.  if I am investing for myself and my family my definition for best investment should be one that gives me desired amount when I want and that I will get from equity investment. E.g. in 70s and 80s having scooter or motorcycle was a normal Indian dream. Today all dream to have car and that also premium one. If one had visualised that 20 years ahead his need will be car and if in line with change in lifestyle he had invested in Maruti or in stock of big car then by the time he wanted to buy a big car his investment would have also grown much more than the cost of that car. But this one can say in hindsight. For a normal person not easy to visualise his need or new product years ahead nor can he analyse the trend but he does not need to worry as there are professional to take care of this.

If leading a prosperous life means having luxury products at one end then he has to have enough money to purchase those things when desired and that can happen without much of stress by investment in right asset (equity) and right product (Equity Mutual Fund).

Rather than investing directly on own in equity, investment through a proven fund is always better because stock selection is research based, diversification is based on risk-return optimisation, decision on logics rather than emotions.    

Fear of losing in Equity looms on the mind of many investors but if he has this conviction that it is aspiration / need of the individuals / household that leads to creation of products by different companies then there is nothing to fear. The pattern, trend is analysed by research and money is invested by fund manager in those companies where there is sustainable positive growth.

The risk which has to be managed by investor in Equity Mutual fund is selection and time. Selection risk is managed by investing through a proven fund having a sound and methodical investment process, consistent good performer across all market cycles. Time risk is managed by having a long-term horizon (above 5 years) and not timing the market and investing regularly. Yes, in short term there will be volatility in stock market and fund NAV can go up or down but investor should understand volatility is an opportunity for fund manager. Volatility is an interplay of movement of money in stock market among stocks on account of mismatch of prices vis a vis performance. This is due to changing investment behaviour moderating variable expectation of different investors. It is also due to sentiment due to changing economic conditions. In first case money will find its way to better performing companies as investors want profit and they will recognise and reward performance in long term. Regarding economic situation there could be temporary factors which are to be ignored as it is short lived or it could be slowdown or recession which can extend from few months to some years (like in 2008-09) but if as an investor my conviction on economy is strong i.e. growth is all what all human being wants then ultimately the long-term trend is positive only. There is no loss in long term as neither individual nor economy wants to remain in bad or negative situation. There is always a natural trend of normalising and move towards betterment i.e. growth.

Invest in Equity Mutual Funds fearlessly but taking care of selection and time risk . Grow rich . be wealthy .  

Learnings from Johari Window

Learnings from Johari Window:

In our management books we have all learnt about Johari window. It is about how much I or others know / don’t know about me.  It is basically 4 parts

1         -- Open Area -- Everyone including me know about myself

2         – Blind Area -- others know about me but I am ignorant about it

3         – Hidden Area -- no one knows about me but only I know about it

4         – Unknown Area – Neither I nor others know about me

If we look at the above picture we find the biggest area is UNKNOWN to all living beings on earth ( approx. 60%) , followed by next biggest area HIDDEN , the area which is known to me only and unknown to others which may be approx. 24% ) , followed by OPEN and BLIND area which could be 8 % each .

So how much I do not know about myself ? Its 68 % ( 60+8 ) .

So how much I know about myself ? Its 32 % ( 24+8 ) .

So how much others do not know about myself ? Its 84 % ( 60+24 ) .

So how much others know about myself ? Its 16 % ( 8+8 ) .

Without getting into any argument about the percentage part stated above we can easily say we do not know ourselves fully. Do we not try to find what we are? , who we are? , what strengths we have? etc. The fact we know is mostly bodily and worldly related but what about soul part?  Do we know what we have done in our past lives if we at all believe in next birth? We know much lesser about ourselves than what we don’t know about ourselves still we feel as if we know everything. Meditation is a process that has helped many to know the UNKNOWN and BLIND aspects of our life. That has helped people to know what actually they are, what they are supposed to do, what good virtues they carry which has been overshadowed by this worldly temptations. There is a great need of exploring oneself.

Again if we look how much others know about me, it is more baffling.  It is much lesser than what they do not know about me. We take pride if someone appreciates, give compliment but if I don’t know anyone fully does not this appreciation a bit shallow? Are we not appreciating again on bodily, physical, worldly aspects of that individual? Have we ever tried to find how good a soul is that person? Should we not know the real person and value accordingly rather than just valuing the person of external visible aspects? Today trust, love, affection etc. is decreasing and broad reason is neither we know our self fully nor the other person.  Everything is superficial.  

If the world has to change for good, the age old Johari window has to be proven wrong by all of us. Meditation is one way where we get in touch with our real self. If all of us start knowing our -self more than what we actually know today , if all of us start connecting with super soul through meditation, the ignorance , hatred etc. existing between humans , religion will get wiped off from this planet . Even from the career perspective meditation will not only make one understand his strength but also give him better wisdom to understand rights and wrongs of the world in much better manner .

I look forward for a day when OPEN area of Johari window expand like anything and UNKNOWN gets reduced to the minimal. That will be the day when we can say this is true world and true life . 

Why and When people lose money in Stock Market

Why and When people lose money in Stock Market

If you ask 100 people their perception about stock market from gain or loss most of the people ( 80% to 90 % ) are of this opinion that most people lose in stock market than gain and hence very very risky . If you look at the penetration of equity investment in India it is less than 5 % .One obvious question comes to my mind that if only 5% people have invested how come 80-90% people can make a judgment that it is a loss making venture ? Are they right or wrong?  The person who have negative opinion have they really invested in equities through stock market route and had any experience or are they giving opinion just out of ignorance or sharing someone else opinion .

Yes investment in stock market is risky. You can end up making losses more than gains. Reason for this is your investment decision is influenced more by temptations – greed (earn more) or fear (not ready to digest any loss). If you go by this you will end up taking irrational decisions at times. Whenever you buy anything you pay a price. Two things you always evaluate. First the benefit or value you get from that product and second is even if you get the benefit and value the price which you are paying to acquire that is it worth paying that price ? We are a nation where many people are more price conscious than value conscious. This psychology gets carried in when making stock market investment as well.

What is the value for which we are buying a particular stock or share of a company? It is the net profit or earning per share ( EPS ). Are we aware what earnings we are going to get for the price which we are paying? Suppose there is a stock which was bought at a price of Rs.125 and gave a EPS of say 20. Now the moments participants in the market realises that the share has given a good profit and expected to continue that trend they are willing to pay a higher price now.. So may be now the price rises to 170. With more and better experience from earning front, more and more people start going for that stock and more and more money start chasing the price of that stock. So a situation comes when the price at which an investor buys that stock may be much higher than the price that the stocks actually deserve. Most of the investors enter buying when the stock price is already overvalued ( i.e. more than what it actually should be ) as they are just looking what has been the return based on price last different time duration forgetting it is ultimately the value for which you are paying the price and even if the company is good not necessarily the price at which you are buying is worth going for .Since such investors have been chasing price and not value it is obvious they are not looking for long term gain but short terms gain.

You should know that there are two type of market – cash and derivative market . In cash market transaction is settled within 2 days whereas derivative is something a bit longer and also at times the participants might not be having the stock to sell. Derivative market is dominated by speculators mostly . The volume of trade in derivative market is more than cash market .So if I consider all participants in stock market I see there is a dominance of those who are speculators ( trading on price differentials ) and also willing to take and bear the risk . If that is the case how can a naive investor compete with such participants?

Also just look from other perspective if everyone wants to gain and that too in short term is it practically possible? Yes it can happen for some time but when there are better informed investors also who know what is over-priced stock and  will they buy or sell ? If they sell then will there be fall in price or will there be correction in price or not ? Also volume wise they hold and trade more than what a normal retail investor can do . In other word they dictate and direct the movement of stock price and stock indices .

In the BSE there are more than 7000 stocks trading. How many of those companies you know? When I am saying knowing it does not mean you have just heard the name. It means you know the valid reasons why it is worth investing and at what price. We all have heard the name and also have a perception that large cap companies ( 50 to 100 ) are good ones . Can you say same about mid cap companies ( 500 to 1000 ) and small cap companies  ( 2500 - 3000) ? When you hardly know or heard about any companies in mid and small cap segment you can definitely not comment its good or bad company or whether worth investing or not? But what mistake many people do?

First they do not invest out of fear of losing. Then when they see and hear positive news about economy, stock indices showing appreciation, some people making gain out of equity investment they start investing. Now even if most want to buy large company and famous company stocks they will be able to buy only when someone is willing to sell . As most people are positive why someone will sell Infosys, HDFC Bank, Hindustan Lever etc stock unless he requires money or want to book profits . Those who have purchased it earlier because they know these are large good stable profit generating company , will rarely sell it and for go lesser known , less profitable company stock . Most knowledgeable and wise investors will buy and hold good company stock with long term horizon.

So now as one is positive , wants to invest his next attention gets drawn toward readily available and tradable stock ( mid and small cap ) . Also since more interest moves toward stocks the price start reaching newer heights with every successive day and so does translates into profit for investors and thereby invoking more interest and more participation and the cycle continues . If you see the reason for this upside is more to do with sentiment and less to do with earning ( EPS ) gain . Also for many investors a stock worth Rs 1000 is more costly than a stock worth Rs 50 as they feel for the same Rs 10000 he will get more share in 2^nd case and lesser shares in 1^st case . Its not the price level but scope of further appreciation due to future earning which can make the stock cheap or costly .  

Since the psychology of many investor for making quick buck there will be lateral movement of money moving from one stock to another even on the small news and views basis ( positive or negative ) . This euphoria continues with the economic cycle in general way but within that also there are more informed investors who know what is overvalued and they will book profit before you can act and may be you see a correction in pricing happening . So even in positive scenario also the timely action and inaction can lead to gain or loss to investors . Now it is for the investor to honestly evaluate that are they really better informed on right valuation level at any point of time ?

So ultimately you have to realise that there are price risk, information risk and knowledge risk apart from temptation risk ( greed ) when you are investing on your own . The clever, the wise , the more knowledgeable , the more informed will win most of the times and those lacking on these qualities will lose most of times rather than gain. After all stock market investment is a zero sum game – one person’s loss is another person’s gain . Solution to invest and gain  is invest in business ( quality product leading to better sales leading to more profit and earning ) and not merely of price movement . Can you do the research to know all these ? You might think so but its not possible always . You can just search in internet , read research report etc ( if you have ample time but again of how many companies ) but please remember market is very dynamic and news and views get incorporated in prices on real time basis . So by the time you decide to buy/sell a stock market has already corrected itself . So as an individual not possible for you to time the market on regular basis . Yes few times you might succeed but not always and regularly.

So why to do something which will lead you to failure more than success . Yes if research is the key to investment why not invest through a professional research based institution which is Mutual Fund . Mutual fund manages all types of risk in best possible manner as they are more informed than any of the retail investors .

Are Companies managing their human resources well ?

Are Companies managing their human resources well ?

Most companies run after all sorts of resources – capital , infrastructure , technology, products etc but are they giving importance to the scarcest of resources i.e employees ?    Now a days most businesses have outsourced their thinking to client . Simply put look the needs and demands of clients . Ideas of new product or service now mostly taken from inputs from clients . It is now a days believed by most of the companies that to be competitive the companies have to move from product centric to customer centric . Yes true till its working fine . What if the customer suddenly losses interest in the particular product or company ? Also since now everyone is looking at the same customer to provide some new idea then where is the difference creation .

Companies apart from taking inputs from customer should also create and nurture difference creator amongst employees . More than the stake of customer it is the stake of employees associated with the growth of the company . The more percentage of employee are there as difference creator the more competitive advantage the company has . How many companies in India really support ,nurture and reward difference creator . Every one consider a productive employee who meets the target , adds revenue to the balance sheet or works in synergy with his senior as best employees .

One has to understand that products have life cycle and also customers loyalty can not be taken as everlasting things . One parameter where the growth of employees in their career should also be how much difference creator they are . Difference creator means being innovative , thoughtful, creating impact , bringing change for good etc. Do companies have an effective mechanism of checking human skill , talents and competence or it is just the based on the feedback from seniors ? Training is one of the most less emphasised by many companies . Yes some have their calendar or training units but again its focussed more on product knowledge , soft skills , sales oriented etc . Have we seen any training of emphasising on creation and nurturing of  difference creators amongst employees .

The organisation should develop a culture , system , atmosphere where employees are motivated to be difference creator . There has been so many countries which are much smaller in population than India but we find them technogicaly advanced , producing better products and we just try to ape them or bring them to India.  Are Indians less intelligent than any other nationality in the world ? Why a nation of 130 crore can be a pioneer in industries , product etc . Reason is very simple there is hardly any culture , atmosphere or incentive for being a difference creator . The more as a company , as a Industry , as a nation we start recognising such individuals who want to create difference i.e rather than banking on the thought and demand process of client they are putting their brain ,mind, soul , heart ,knowledge , skills and thinking of bringing something new India will be also producing lots of new products and goods .

If we are the most populous nation then we should also think of leading the world w.r.t innovation in product , process etc . The Indian Engineers , Doctors , Scientist have prospered in USA but why not in India ? Time has now come that every company now look to groom and motivate such difference creator and who knows next coming decades can be all of India .  

Emotional Intelligence in Investment Advisory

Emotional Intelligence in Investment Advisory

Emotional Intelligence is to know your own emotions as well as those of others, self motivate and know how to monitor the emotions of others.

In India emotion plays a very important role in the life of most of the people and in their decision making. Investment products or financial products are not tangible where look, feel and touch can impact ones decision making. It is the belief, experience, faith and trust which influences the decision more. Ideally it should be the knowledge and logic that should be the core of investment decision making but that is not the case.

Do we treat our client as a revenue generator for our company or someone whose existence itself is must for my own better career and life? If we think client as a revenue generator then our approach is totally product centric, our own company centric and we try our best to convince him and get the business. But in this process have we for once really tried to understand what client really needs or wants? Every investment product is good but not suitable for all. Most investment product sellers are so much impressed with the feature of the product that they anyhow make it suitable for anyone.

If any investment advisor thinks that this client is useful for my own career, he will not do hard selling but soft selling. I will think him not as a mere revenue generator but a very much part of my team. He is no more an outsider for me but a very much part of my own success and growth. Here emotional intelligence plays a very active role.

We need to understand the components of emotional intelligence

Personal Competence – self awareness and self management

Social Competence – Social Awareness and Relationship Management.

Self Awareness is the ability to understand your own mood, emotions, drives and their impact on others.

Self Management – to control disruptive or impulsive moods and to think before acting

Social Awareness –ability to understand emotional characteristics of others and having skills to treat people according to their emotional reactions- empathy)

Relationship Management – proficiency in managing relationship and building network. The ability to find common ground and building rapport.

In investment advisory when we are interacting with client we should be cheerful, cool, calm and composed first. Pressure of meeting sales targets or revenue playing on your mind, your emotion may not be in your control and wrong communication can come out ending up in no business or miss-selling. Even if I am not in total control of my own emotions still I should not hasten with my recommendation and force decision on my client if it has some element of biasness. I am expected to be fair to my client. I should know what makes my client happy. Is it excess return or it is safe consistent return? Is he comfortable taking risk i.e. able to bear short term volatility or that short term volatility affects him psychologically?  If short term volatility affects him then have I explained him why it happens and how it benefits also if there is patience and long term investment horizon. Have you ever once explained him all possible risks in detail and how you can help to manage the risk or you have just marketed on the basis of return. In India the fear of losing looms so much in the mind of investors that they lose opportunity of good gain also. As an investment advisor also many refrain to explain risk for the fear of losing the client as it creates negative emotion. A right advice with total benefit for client develops a very solid everlasting lifelong relationship and also a network of such long trusted relationships which will eventually lead to client faith in advice and ultimately help an investment advisor meet his business targets, earn profitability for client (first) then company and finally earn reward for him. We all know client acquisition is very difficult but if client is retained following emotional intelligence way then business growth is always exponential.

Panch Tatva of Human life and Relationship

Panch Tatva of Human life and Relationship

We are made of pancha tatva – prithvi, aakash , vayu , agni and jal (earth , sky , air, fire and water ).  Apart from what God has created (nature, sun, moon, stars, river, mountains etc) whatever human beings have created for which they feel very proud of is all from this panch tatva . You can not imagine a single thing made by mankind which is not from this panch tatva. So one can easily say even the inventions and creation by human beings have happened because nature / God wanted so. Nothing exists on this earth without the approval of Almighty .

I have tried to visualise the panch tatva even in our personal life, in our relationship. For any human being 5 relationships are most important. We get the birth from the womb of mother. We lay in her laps when small kid. Mother is equivalent to earth. Earth only gives you but takes nothing in return. Agriculture products helps us survive , tall buildings where we live and work have their base on earth only , cars , roads on which we move from one place to another in on earth only . Role of our mother is same in our life: makes food for us, gives us with full love and affection.  When we are in any discomfort or pain we put our head in her lap.

Second tatva is aakash ( sky ) . Aakash covers us, how long and how high it exists cannot be  measured . We feel protected in the lap of earth under sky. Aakash in our life is our father. In our life father is one to whom we seek protection if we feel insecure from outside. He is always there to protect from any external risk. In the same sky we find hot sun in day and also cool moon at night. our father corrects us by being tough  when we are wrong but will show mildness when seek forgiveness. Father always represents two extreme  behaviour but both beneficial for us , same as sun and moon in sky .

Third important tatva is Vayu . From the time we are born till death we breath. Vayu is must for our health. A partner throughout our life . Who is our partner throughout life in all situation. It is wife  . She is called ardhangini or better half . She is a constant companion in every stage and situation of life same as vayu . You change a place, do anything but vayu is always your silent companion always to make you alive . Similar is wife . If there is breathlessness or air pollution how uneasy we feel. Similarly a right wife like right vayu makes you feel healthy. Vayu is not polluted on its own, our mistake has made it polluted . Similarly we should not find fault in wife but find whether  we have taken her care properly for a proper relationship to exist .

Fourth important tatva is Agni. Agni is energy in our life. It is in the form of heat which helps in digestion , maintain right body temperature . Any imbalance in our health gets reflected by fever. Excess of agni (sun in summer ) creates discomfort and shortage of it in winter also creates discomfort . So agni is must for us but has to be in balance else problem.   In our life Son represent Agni . We see ourself protected in an able son . His good deeds bring happiness and pride in our life but his misadventure , wrong deeds can even bring pain in our life .

Fifth important tatva is Jal . Jal like earth and moon brings coolness , must for us like vayu .Can we live without water? Water in our body is must to control excess of agni. Shortage of water in our body makes us weak and can be life threatening as well. In our life Daughter plays the role of jal . Her coolness , calmness brings peace and joy . She also plays a very active role in soothing ,guiding her brother and bring balance in life just as water does to agni inside our body . Both agni and jal equally important in our life to maintain balance. similarly both son and daughter are equally important . Both have been designated by nature to play a specific role. I don’t know why people do not give equal importance to both son and daughter and crave only for son when nature has clearly displayed both as equally beneficial .

Lets live the way nature has made the universe, our body, our life and also relationship in our life . Now we should know why family is important? If we understand fully well that we are made of panch tatva , our life is also governed by panch tatva and God also created them in human form in our life as – mother ,father ,wife, daughter   and son . we as individual should respect each of the 5 relationship we have in our life . Yes each of the panch tatva has its own importance but it’s not that we can say one is more important than others and so take care of that only. If that happens, imbalance will happen to our body and then we will have diseases, agony, health problem etc. Similarly in life also each relationship is important. Can’t ignore or should not disregard one relationship for other, else there will be  imbalance and unhappiness in life.