Indian Growth story - 2: Finance Trading Times

Indian Growth story - 2

This is part II of article Indian Growth story - 1. Please read this article from part I before continuing with this part

We take pride in claiming that we work for MNC. Senior citizens, hardly knowing anything about a computer, are willing to marry their daughters to software professionals. I remember very well - there was a news item on AajTak, in June 2001, citing some marriage bureaus in Hyderabad and Bangalore saying that the demand for software engineer grooms have come down substantially after the IT bubble burst.

As I was greedy, I went places – from Warangal to Hyderabad to London to Holland to US and may be I’ll continue this as long as the market permits me to do so. I do everything for myself, not for anyone else.

What do you think of MNC setting up shops and offices in other countries like India/China? Are they doing it for the benefit of these countrymen? You decide!

How many of you heard of the Bhopal Gas Tragedy? Entire city and its population collapsed because of a chemical factory accident. Victims are till today fighting for their rights. Forget about the monetary claims, they, and their next generations, are impaired and disabled. What did the chemical company and its officers do? After the incident, they just vanished back to their home country.

A company like Posco is setting up steel plants in Orissa. Every now and then we hear news about its officers being kidnapped by opposing outfits. Has Posco stopped building it’s plants and factories? No. They will continue to do so, as long as they believe that it is in their benefit and they can extract profits.

They will first build factories, then bring instruments, equipments, and finally employ people. If they start making losses, they will follow reverse order. They will first cut the head count. Then they will think of selling the equipments, and then finally they will decide about selling/renting/leasing the land to someone else. Atleast they invest so much in a foreign country like India, in terms of equipment, factory buildings, and so on. And they will have to think twice in case they have to close the plant.

How about a software job? All it takes for a software company to start is a floor area and a few computers with phone and data links. Usually, the buildings are granted on lease by the government. If they have to close down, they will simply dump the computers, and ask the people to leave. Purchase of computers, bills of data and phone links are also financed by the foreign company. Decision can be taken overnight, as they have nothing to loose on the investments part, as compared to a mechanical factory.

A mutual fund manager comes and invests in India. What is his intention? Is he here for the benefit of India? He only means profit for his fund and nothing else. If Indian markets collapse, he will happily move to China, Russia, Brazil, Argentina, and anywhere in the world. The citizens will be left with is the country and its present situation. They cannot go anywhere.

The fact is that all the hype created is for personal benefit. Everyone is here for his own vested interests. Keep on listening to the CEO’s opening offshore centers in India, keep on listening to the Mutual fund managers about the great Indian growth story, keep on trading and investments, keep on carrying your software jobs, BUT JUST BE CAUTIOUS. Understand that everyone is here for their personal interest – and so are you. In case you fail to pay the EMI of your house loan, after a few threats, the bank will simply overtake your house and auction it. If you fail on car loan repayment, your car will be picked up by the bank.

NIIT has already built up relations with Chinese University to train Chinese students for IT. Companies like Infosys, Wipro already have major presence in other emerging markets as well as other countries, and employ a significant no. of locals. A BPO like 24*7 operations in Bangalore has brought French speaking foreigners to India on work permit, so that they can handle French clients.

Just by saying that India has an English speaking workforce is no longer true. Things are changing fast. Look around in your own office. How many colleagues will you find who cannot even speak a single sentence in English with proper accuracy? They think 10 times while composing an email. All we have is a bunch of programmers sitting and coding for foreigners. The case is no good for BPO, it is worse. Either they do data processing like data entry, or do try to sell products to overseas customers. All this business is running for the sole purpose of cutting cost. How long can this offshore business continue, no one knows. $-Re exchange rate, where is it headed?

Use your head before getting into any financial liability. Reap the benefits of your job as long as it allows you to do so, but don’t close your eyes to reality and risk. World is changing quite fast.

Link to previous article Investing in Indian Market and Indian Growth story - 1

Have questions, please read the comments and post your views and queries in the comments section which helps in open discussion and avoids duplicity of questions.

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15 Comments: Post your Comments

Anonymous said...(on 29 October 2007 at 05:03 )  

Hi Shobhit,

Thanks for your articles.
You are absolutely right. We ignorant indians should stop living in a world of myths and open our eyes to reality.

Keep up your good work. You are doign and excellent job.

Thank You,

Anonymous said...(on 29 October 2007 at 05:04 )  

It is just amazing to see how your description of your own real life example fits so well into our careers.

Point00 said...(on 29 October 2007 at 06:16 )  

Hmmm nice one again!!

You are right! No one is here for anyones benefit. Companies come here for booking profits. They heir ppl and ppl book profit as well...

If company start loosing profits - employees have to face the same!

Greed is what makes everyone hop the job and try to settle in so called "good" company (ever going process) And keep on praying that one will never see a "pink envelope" on his/her desk when he/she goes to office.... I hope the same :)

Anonymous said...(on 29 October 2007 at 22:26 )  

Good article, honest insights.

One question, though, Shobhit. You say you do everything for yourself. Why do you write this blog, then?

I do find your blog interesting, sometimes informative, sometimes entertaining. But then, surely you don't suddenly overturn your philosophy of life, and spend hours and hours of your time simply for the benefit of readers like me. So my question: Why do you write this blog at all?

Awaiting your reply with interest,

Shobhit said...(on 29 October 2007 at 23:38 )  

Hi Siddartha,

Thanks for your comments.
I was expecting this question since the time I published my previous article. :-)

I DONT spend hours in writing blogs. Hardly 30-45 minutes that too not everyday. If your read my articles, you will observe that they are not well organised, there may be grammatical mistakes - because I dont really spend time in organizing stuff. I keep on typing what comes to my mind.

Ppl have hobbies - some collect coins, stamps, play games. Over the last few months, I've developed this hobby of expressing my thoughts through blog. Presentation and expression is somehting that I really learnt at my b-school, this blog is an expression of the same. All my articles are off-the-track which are not easily digestable by all. I dont care how many readers are reading my blog, how many ppl are leaving what kind of comments. I do logging for my personal interest and satisfaction.

Ppl have nasty habits - some smoke, some drink, some waste time in talking about politics and other individuals. I prefer to express my thoughts through blogging.

I make a maximum of a dollar each day IF & ONLY IF there are a minimum of 10 genuine clicks on the ads on my blog. Rs. 39 is sufficient for me to buy a coffee in the evening :-)
If I had to make money from blog, I would have taken a different stream - like writing what ppl want to read - BUy this MF, Buy this Insurance, have referral links for insurance policies. However, I prefer to write my own thoughts - all for my own interest and satisfaction.

Hope this answers your question. :-)

Bhupesh said...(on 30 October 2007 at 02:20 )  

After reading your blog only I realised one can also earn from their hobbies instead of spending on them.
Always wondered how much you must be making from Google .. used to look your hit counter .. 55k .. 65k .. :) :)

Yah! there is no big reward then appreciative comments on one' blog you deserve them.

Shobhit said...(on 30 October 2007 at 03:46 )  


If you have to earn money from blogging, then mine is not the blog to visit :-)

There are hundreds of blogs and websites available on the internet, which tell you how to make money from blogs.

Bhupesh said...(on 30 October 2007 at 05:14 )  

Sure your blog is not about how to earn money from Blog.

As I am frequent visitor of your blog (usually I do not follow more then few blog), your blog is the first major exposure to me in blog space. I can see you are not simply blogging, but you give thought on other aspect of blogging like page design, key word selection, adwords placement etc.

yes, I looked through different web sited who teach how to earn from Blog to get insight of this aspect of blogging, also started one of my own to express my self. I am not good in writing, a tough and time consuming task for me so not much happening there.

For a blogger writing on India related contents there is not much earning to expect from blogging.

Aniruddha said...(on 31 October 2007 at 00:23 )  
This comment has been removed by the author.
Shobhit said...(on 31 October 2007 at 00:56 )  

Thanks a lot Andy, for the complements as well as for the coffee :-)

Hope this blog benefits you!


Aniruddha said...(on 31 October 2007 at 01:08 )  

Thanks Shobhit
Actually i learned how to look at an investment or a trade or anyting that involves money. both way Optimistic and pessimistic way. And every time i took decision was optimistic way, Shobhit, i read your article about Investing in IPO and i tried it actually by putting 100k for Power grid ipo, calculated returns, bank returns..fortunately being a company like power grid, i managed to get handsome returns but i got to know how to think about an investment. earlier i was a short term trader 1-2 week holding max. now i am sitting on a 2 month old portfolio with 40% simple returns(not the DCF way).
I hope in future we will share many more such coffees, or who knows Lunches as well..

thanks again

Unknown said...(on 31 October 2007 at 01:46 )  

Hi Shobhit,

I have been a regular reader of your blog for quite sometime. You have been publishing informative articles with ways(proper) of looking at investments. I really appreciate your efforts.

I came across an article which i think highlights the future happenings in the financial world.
The title of the article is "The Con That Turned the World Against America"

Here is the link



Unknown said...(on 31 October 2007 at 05:36 )  

Just few queries.
1) As far as I have observed for few years, Finance jobs are considered as great value compared to IT jobs. Why so?
Asking this since I have seen many guys in IT going for management and then moving into consulting or financial(investment banking etc) domain. Why does it happen? Any major reason other than so called uncertainity of IT jobs? or is it the only reason? I guess,that in most of the cases, IT professional (offcourse, including onsite travel)
would be able to earn more than the finance guys. Then why do many guys switch the IT carrers to go to finance or other areas?
2) If finance jobs are considered so much meaningful or hign level or "upper the value chain" (whereas IT professionals are considered "coders", people doing low level job, but still earning unreasonably high salaries. Not just finance professionals, but IT managers also most of the times consider prgrammers as somebody who do LOW LEVEL jobs).
Are finance jobs not uncertain? After subprime crisis, almost all global financial giants simply shut their offices in many global cities leaving thousands of finance geeks jobless. I guess, investment bankers were among those hitted hard. So isn't finace also as uncertain profession as IT is?
4) Is being business/finance consultant one of the respectful jobs? if yes, why so?
Why do people need to leave IT field and join management colleges to become business/finance consultant?
If one is already working in finance domain in IT firm, isn't that sufficeient to become business/finance consultant?

Just to clarify, I am not against finance professionals. I work in IT field in banking domain. I love finance minus the numbers ;-)
I do like Shobit's blog.

Shobhit said...(on 31 October 2007 at 22:25 )  

Here are responses for your questions:
1) People going for finance job- it's more of psychology. People like to play around with money - loads of money. Especially if it is other people's money (like that in a mutual fund). Ppl (talented ppl) want to prove that they are the best stock pickers and can work well with money.

2)Finance jobs are highly uncertain. Read my previous post titled "Individuals, Traders and Market Makers". If finance industry is hit, then there are massive shutdowns.

4)It's not sufficient to work in banking/finance domain in IT to know real world of finance. IT ppl (including me) live under this false impression that we understnad finance because we work on finance softwares. It can only be realized after u learn finance.

Sanathana Dharma said...(on 3 November 2007 at 02:07 )  

As usual, you have hit the nail on its head - very insightful. Just wanted to share a few of my thoughts here:

1. About calling your motive and other people's motive as "greed" - that may sound a little extreme !! Rational self-interest is my favourite. Ever read Ayn Rand's book "The Virtue of Selfishness"? It is a book worth reading. Gives a lot of clarity on matters ethical and philosophical, at least from the perspective of day-to-day life. There is nothing wrong in being greedy as long as (a) you do not trample on other people's rights and do not resort to cheating and illegal means and (b) as long as you do not allow it to shadow/cloud your sense of judgement.

2. Coming to the volatility of the market, the transient nature of the hype and the bubble etc., I am reminded of our traditional view of this world - "Jagan Mithyaa" - this world is an illusion. We Indians have known this truth (at least our ancient Gurus have drummed this into our ears) for several thousand years but most of us present day Indians prefer not to take cognizance of this !! Because, it presents an existential dilemma - I need to eat, I need to clothe myself, I need to do this, do that etc. so if all this is an illusion, how and why should I do it? How can I give up all this? It is a very heavy and complicated question that can not be answered by ordinary people. So, we make some simplistic assumptions and carry on with our daily routine.

3. One practical way of handling this "bubble" and "hype" phenomenon is to have a Plan B and a Plan C in case our plan A fails. And most importantly, have a lot of courage and determination to fight adversities when things go wrong.

Wish you all happy and fruitful trading and investing activities with safety! = = = Post a Comment

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