Tuesday, February 27, 2007

History Of My Reading Habits

Somewhere back in 1993:

A new entrant to Loyola School, Jamshedpur in the sixth grade the only things that I took a liking to was the Reading Class conducted by Mrs. Zareen Modi and the junior school library run by Mrs. Dhamodiwalla (besides of course the mathematics class by Mrs. Devi where I used to score highest in mental maths and she used to spread my fame in other classes, with a little exaggeration on my part). The Reading class had this colored books with lots of words and we had to do things with them. Each color was indicative of your grade of skill with english and even after joining a few weeks late I had almost caught up with the boy at the highest color level.

Anyways, without meandering and preening, what held my fascination most was the Junior School Library. The first day I entered the library my eyes must have popped out at seeing so many books and comics (you need that, right??) Started off with those Hardy Boys, Nancy Drew, Famous Five, Five Find-Outers by Enid Blyton, Three Investigators by Alfred Hitchcock and the related genre. Indulgent as my librarian was, she used to come early to school at 7:15am and school did not start till 7:40am. Imagine what I used to do. Go for the comics of course! Asterix, Tintin were the clear favourites (can't recall much else) and then again during the recess, while the other boys of my class devoured the snack that mom packed for me, I did the same to those books in the library.

Add to it I went to this big school to learn fine arts (painting for the uninitiated) where I met up with the Bobbsey Twins another Enid Blyton creation, although did not spend much time with them.

The Addiction Grows Towards Its Peak

Next year I graduated to high school and a larger library, and as if it was ordained that my addiction to books was to grow, so did my librarian. What more could I have asked for. For the first I laid my hands on Sidney Sheldon, Harold Robbins, Jeffery Archer, John Grisham, Robin Cook, Mario Puzo and more, not to forget Mills & Boons. So you see, my horizons kinda broadened and my eyesight kinda lessened. And the indulgence of my librarian kept growing likewise. Where others were allowed to take home only a single book per week during the "library class", I was especially privileged to take home another during the weekend. The affliction reached a cresendo in the 10th grade, when I still remember there was this one week when I read seven novels. Wow! I wish I could do that again. I generally used to start reading right after lunch. My favourite setting was the chair in the balcony on the first floor. And then in falling dusk and gently flowing warm breeze from the river nearby as I became oblivious to all my surroundings. Imagine the sight as I inch closer to the actual paper of the book in failing light to see better, when all I needed to do was get up and go inside my room, or better still stand up and put on the light in the balcony.

The Sad Decline

With the competitive landscape in India to do good in the field of study which allows for only rational and logical conclusions, I too got embroiled in the "rat race". Naive that I was, I hoped that giving up my reading habit would somehow help me in concentrating better. Anyways, during those two years reading came down to almost zero but due also to the senior school library where all the books were stale acads. The only book that I remember picking up during that time was Lolita.

During this time the only reading of any note that I did was Shakespeare (The Merchant Of Venice, Hamlet), the poems prescribed in the curriculum of which I remember the titles Byzantine, Good Fences Make Good Neighbours, La Belle Dame Sans Mercy, the short stories collection.

The Gradual Return and The Happy Maturity

Finally, as everybody does, I got through some undergraduate course and landed up where the library had non-existent sense of what a novel is. But thanks to this, I turned my attention to what was available. And the world of non-fiction, newspapers and magazines exploded in front of me. Spending hours on a daily dose of The Economic Times became the norm. Besides interaction with people from diverse location brought better perspectives. Long having outgrown the Sidney Sheldons and the Jackie Collins, I shifted to Arthur Hailey, JRR Tolkien, Ayn Rand, Bertrand Russell, Stephen Hawkings, John Gribbin, besides other couple of book wonders like Arundhati Roy, Chetan Bhagat, Jhumpa Lahiri not to mention the really good ones like Gregory David Roberts and the regular management guru speak. Yeah, I know I am dropping names but I did read all those. Ok. There are people like you who have read more, but then there are people like this one friend of mine. She had this huge trunk, mind you I did not say suitcase, full of books that she carried with her when she came to college. But then there were people who hadn't read a single thing their whole life.

Also here, I must thank somebody for that quirk of fate due to which I spend six years in undergraduate college, which essentially gave me more time for reading and realisation of what to read. I uphold this habit of mine amongst the achievements of my life. People define their aim in life through lots of things, I define it through this: "If at any point of life I want to buy a book to read, I should not fall short of resource and not fall short of time to read it." Amen to that!

Today I am happy to be in a position where I can and do buy books on my whim and fancy. As a matter of fact I have bought without having finished the ealier ones bought.

Also my two-pence recommendation for anyone who wants to start reading, not having read before at all and fascinated by the world of books that a bibliophile seems to descend into. If you don't have patience, read "The Love Story" by Eric Segal. If you think you have patience, read "The Client" by John Grisham. And if you like reading also read the other one.

Update: Loss Of Memory

In all this that I have said above, I forgot to mention where the addiction actually started. It all started with the genre of Raj Comics (Nagraj, Super Commando Druv, Doga,...), Diamond Comics (Chacha Chaudhary, Billu, Pinki, ...), Manoj Comics (Bhokal, Inspector Manoj, Hawaldar Bahadur...) along with tinkle, wisdom... Phew!!! Can't even recall half the stuff that I used to read at that time in junior school as a kid.

This loss of memory: mea maxima culpa.

Monday, February 26, 2007

How Much Dividend Did You Get??

110% dividend, SBI MAGNUM TAX SAVING FUND. Last date 02.03.2007. Invest Rs. 11000 & take back Rs. 5500 immediately.

This was the text message sent to me by a friend of mine, who has been investing in the capital markets since over a year. I called him to verify that he knew what he was talking about. As happens with most of us, we just talk to some finance agent and take his advice without proper research as to what all that finance jargon means. As a matter of fact the more industrious of us put some effort into selecting a fund house but hardly any research as to which option within the fund to take. In this post I will try to answer the most basic questions about mutual funds that I had when I was new to investing.

Dividend payout is not some extra money.

Let's say a fund has a Net Asset Value (NAV) of Rs. 100 and it declares a dividend of 25%. You as the investor get Rs. 25 for every unit of the fund that you own. But what happens to the NAV. The NAV for the fund now reduces by 25%, i.e. it becomes Rs. 75 (Rs. 100 - Rs.25). In essence you have not made any profit. Rather, the fund management capabilities of the fund manager is in question. Why do you ask?? Because there is no fixed dividend declaration date for any fund. It is upon the whim of the fund manager that a dividend is paid to you, and one of the reasons why a fund manager may do that is because s/he could not see any viable investment opportunities.

Change the whim of your fund manager into your fancy.

When the fund gives out dividend, the NAV of the fund falls but the total number of units you own remains the same. Adding up the dividend payout and the current value of your investment, i.e. (NAV x no. of units), the value of your money remains the same. Now considering the current tax scenario in India, there is no capital gains tax for income incurred after a year. So how do you leverage this?? Simple. Sell some of units that you own in the fund. While the NAV of the fund remains the same, the number of units fall down. But you have the money you got by selling part of the fund with you. So it is upon your fancy that you get money out of the fund.

Where else am I losing money??

I loose money every time I invest in a dividend paying fund. Because most of the times such a fund will make a big effort through advertisements to preen about the amount of dividend that is being paid. And such extra costs will be added to the fund management costs, which eventually will lower the earnings. While in the growth option, at least such extraneous costs will be saved.

Any other avenues where it can be saved??

Yes. The full scenario is big and out of scope of this blog. But something that can be understood easily is this. When a fund pays out dividend, it is most likely to lie in my bank account for some period of time before I can re-invest it again. During such period not only I loose the earnings that might have incurred, I also need to pay the entry load, which in the current market scenario is anywhere between 2.25% - 2.5%. I think the picture is clear.

Surprises galore!!!

Ok. So two fund houses come out with competing NFO's (New Fund Offering) with approximately the same investment objective. So what's the deciding criteria for selection?? The NAV!!! Wrong. From a biased perspective, it would be the size of the fund house and the performance of other funds being handled by the fund manager. Why not the NAV?? Because if the fund were to buy just shares of some company say X which is currently priced at say Y rupees, then it will have to shell out the same amount of money irrespective of what its NAV is. So while the fund with lesser NAV will use a larger number of your units to buy the shares, the fund will higher NAV will use a smaller number of your units to buy the shares.

Sources (and more detailed explanations):

Don't fall for the dividend bait!
Growth or Dividend - How to make the right choice?
Demystifying NAV myths
Dividend Reinvestment v/s Growth - Let your taxes decide

As for me particularly, I wish I could save some money to actually invest. I console myself that I earn more intangible assets than tangible assets.

By the way, this post is highly biased towards investing through the growth option or at least the dividend reinvestment option. For a more convincingly biased approach, you must read the above mentioned sources. Happy investing!!!


Correction: Thanks to Gautam Satpathy for pointing out an error in the above post.

The dividend percent that is declared is on the face value of the fund unit, not on the prevailing NAV. So if the fund was issued at Rs. 10 per unit, but currently is at Rs. 80, 25% dividend would be Rs 2.5 and not Rs. 20. Correspondingly, the fund value would drop by Rs. 2.5 to Rs. 77.5 and not by Rs. 20 to Rs. 60.

There are others he has mentioned but I will get to them once I have investigated them.

Sunday, February 25, 2007

Do You Drink??

Sometime after I goto sleep on Saturday night:

I get up a bit drowsy, open the door to find a flatmate of mine asking to come in. The look on his face was shy(?),... intriguing to say the least. That sleep filled mind chased away any thoughts of rational logical thinking to conclude or ask questions about his whereabouts.
Within seconds, I was in the aagosh(hug) of nidra-devi(the goddess of sleep, don't ask me who...)


G (my flatmate): "I have a banging head hangover!"
Me : "There's some scotch in my cupboard. 2 pegs and everything will be alright."
G (ignoring my valuable suggestion): "Ohk! I really want this to get over."
Me : "Shell out some buck man! We'll walk down to Barista and order a large Espresso."
G (now looking at me, exasperated, $#@*): "... I am in no state to move out of the house... "
Me : "Go take a cold water bath. Have some food. Go back to sleep."

Finding this more reasonable, G does as instructed.

Some hours later:

G : "Can you drop me to ...(someplace) ??"
Me : "Why?? What happened to your bike?? "
G : "Left it there."
Me : "How do you mean, left it there?? So who dropped you home?? And what time did you come in??"
G (a bit sheepishly): "Around 4 in the morning. Actually our company MD had thrown a party and I got drunk a bit... (looking at me)... ok... somewhat over... ok ok... I properly puked..."
Me : "In your company MD's bash??"
G : "Yeah! See, I actually had some vodka to start with, but then I found that the wine tasted good so tasted some of it... but then somebody found that the whiskey was better, so I kind of verified it. And things got a bit out of hand... People kinda helped me back to home."
Me : "Wow! and you were complaining/ touting that you never lost your senses, never puked... blah! blah! blah!"

Anyways, why I wanted to bring this up is that many a times when I initially started drinking I had this same problem but have overcome it since sometime ago. Simple things matter actually.
  • Eat before or when you are drinking, not after. Food slows the absorption of alcohol
  • Drink lots of water. The body gets dehydrated when you are drinking for sometime.
  • Have a glass of water before going to bed after a drinking session.
  • Don't sleep soon as the booze runs out. Besides missing the fun, hangover is given if sleep takes you.
  • Avoid the cheaper varieties of alcohol. Besides lowering the over all experience of the evening, it leads to worse hangovers.
  • And the best for the last : STOP DRINKING. There are other things to get high on!!!

Friday, February 23, 2007

Dr. Vinton Cerf at Hyderabad

For the uninitiated Vinton Cerf, along with Robert E. Kahn, is the person essentially elemental in allowing me to write this and you to read this. For the more technologically minded, he invented the open protocol for tcp/ip, which is essentially a set of rules which a computer must follow to "talk" to another computer, which is where it all begins. These two gave us the Internet, invented the wheel far as I could draw an analogy.

Well, this Vint Cerf is currently the Chief Internet Evangelist for Google, on whose invitation he had come down to Hyderabad to illuminate us mere mortals. Amongst the other things that he chose to enlighten us with, a couple of things caught my attention.

The Fridge and The Doctor

Imagine, star trek and the future that it portrays. So in this dream future of yours, you have this refrigerator, which is connected to the Internet. Also every piece of food item that you put into that is marked with RFID, or something similar that they use at your nearest supermarket to read the prices (oh! the devices of man to save manual labor... nobody even wants to write jot the prices of a simple list of items!!! neways...). So you have this fridge of yours knows what you have stored in it. And at the end of the day, when you come back it suggests you recipes that you can prepare based on what you have in the fridge. Kewl, ain't it??? More -- the fridge can actually send you and sms, "Don't forget the yogurt when you pick up stuff for the dinner tonight!".

Similarly, you have this weighing machine which is connected to the Internet as well as your clothes which monitor your vital signs. What happens?? All your medical data goes to your doctor, the virtual one of course (suitably encrypted, for those that are technologically minded). Then one fine day on a note of preemptive strike (as our dear Mr. Bush, Jr. would say) against such diseases such as diabetes, high blood pressure and the others, your virtual doctor wakes ups and decides "enough is enough". So it prescribes a "diet" diet. And how does he enforce it upon you?? Through your fridge of course. Did you forget the fridge?? It is intelligent and now is fed with instructions for your well being. So what does it do?? Suggest you diet recipes!!! Better still, one day it finds that you are trying to cheat it by sneaking out things that you are not supposed to take in your diet and shuts its door tight. There you go! what better than a fasting diet!!!

The other scenarios I leave to your imagination... :)

Interplanetary Internet

3min and 30sec: Time it takes light to reach from Mars to Earth
Spirit, Opportunity: 2 robotic rovers exploring the surface of Mars, since 2003

The rovers initially were programmed to relay the signals directly to Earth, but could not due to interconnectivity problems. Then the signals were relayed through the orbiting satellites. Here they introduced the concept of store and forward of the messages from the rovers to the earth base station, which is essentially the way the internet works and where Vinton Cerf figures in. But there are considerable difficulties in this approach even since the store time when we consider internet on earth is just some hundreds of milliseconds. But the same will grow to minutes in the case of communication from Mars, since the signals from the orbiting satellite is relayed when it is in direct line with earth. And add to that the delay caused by the actual astronomical interplanetary distance

Certain delay tolerant networks are also being developed. And to test such networks, scientists actually travel to places like the northernmost point on Sweden, implant networks in laptops fitted in vehicles (snowbuggies, snowcats) and run experiments. In places like these the curve of the earth becomes really low.

For those wanting more information, click on the link above.

Moot point: Even before actual interplanetary travel is discovered, the scientists will make sure that we are able to talk to our friends staying in another planet! And people say scientists are romantic! It is something like abstract algebra.


Why did I move my blog here??? Since I was making a new beginning anyways, so thought might as well shed as much baggage as possible. Simple, ain't it!

Well there are a few other things, besides those that I mentioned in Metamorphosis. Essentially more realization. I think I am antithetical to blogging as such. According to Google, the word blog means an online diary of thoughts and ideas and lotsa bitching about the world in general and people in particular.

But with my recent status of having become free from such human emotions, I am experiencing a more general wave of life passing over me with not much pondering and much less philosophizing, something that I was given to a lot. These days it's more of hearing, reading, absorbing what pearls of wit and wisdom that the most uncouth and unlearned might have to disburse.

Ergo, the endless hours spent on the internet, blogs, news, other social bookmarking sites, wiki's especially wikipedia. So this blog will become more of an information site for myself and those voyeurs interested in what helps in cooking my thought.