The very needed attitude of verifying

In today's fast paced and ruthless world, people usually tend to agree with the stated without any questioning of the fact. When the sales guy in the saree shop shows a 9 yards saree and says it is 9 yards, you trust his word and choose the design and colour to buy. When the investment deposit form says Rs.25000 invested at 13.32% p.a. gets you Rs. 41650 in 5 years, you trust the calculation. When shop sales guy says the table I am interested in is 4 by 3 feet, one tends to strike a match with our requirements in mind and move to other factors.

But, in days of ignorance, marketing and plain lies, you should not trust what you hear on the face of it. In the first instance, when my mom came home and tried the saree, it was 8 yards, not the nine the shopkeeper confirmed it was. His defence on returning, everything we sell is 8 yards as 9 yards. Do look at the below picture: a part of the deposit form from Shriram Transport Finance Company Ltd.: 

Turns out the actual rate of interest in the cumulative option of 5 years is 10.75% p.a.compounded annually, not the high 13.34% p.a. by which I was actually attracted to the scheme (13.34% is simple interest and why would any sane person look for simple interest in a cumulative scheme?). In the third case, the table shown to be was actually 4 by 2.5ft and not 4 by 3 ft. It looked suspicious measuring it by my eye and I asked for a tape to measure it. It was only 2.5 ft by width. The sales guy only had a sheepish smile to respond with.

Such are the various cases of buying in today's world. It usually was in finance, a phrase called "Buyers beware", but in today's case, almost every single fellow is up to tricks fooling customers.

The concept of trust cannot be blindly held. A more sane logic of he is the expert of things and we should trust him also does not find meaning nowadays. The shopkeeper knows that the worst case for him is that he will have to reverse the sale or better, exchange it when they complain. There is a perverse upside to the seller at the cost of the buyer. There are not many ways to get over it as of now, except to be aware and verify things, however untrustworthy you may seem to be.

A mandatory pain in their arse sanity check is necessary before buying to prevent a pain in your arse at a later point in time.

The wise men

Once upon a time, some time ago, there were a group of men who were very very rich and owned around 40% of the world's resources. They had land, industries, gold and what not. They were wise and understood how to maintain and grow their wealth throughout time. They very well knew that value is in the thought of the beholder. If the thought of value in something vanishes, the value in the product is zero. To further help themselves, they thought upon an idea to globalise the world to make use and exploit the best of everything. Further, they spread the benefits of globalisation and free market access. At this point of time, they realised that with free markets, value is being interfered by the exchange rates. The group of wise men, decided that they will have to be proactive and move as a group to maintain order and control of the maintenance and growth of their precious valuables in the world. Since they own a substantial part of the world, and markets are never deep enough for them, they could influence the markets with ease. Moreover, they realise the people's psychology and the various govt.'s response to the situations they would create. They start buying into an 'item' initially and start spreading the word how that would be the next 'big' thing in the world. The high risk takers and loyalists start buying it immediately. As the value of the 'item' increases, more people start believing the prophecy and start buying it while all the while the wise men's value increases. After a few years, the wise men believe that they have milked the 'item' to its limit and their value has stopped growing at a fast rate. Further, before someone else calls that the 'item' is overvalued, they start selling the 'item' and buying into another 'item'. And the next prophecy of how this item is undervalued and how it is the next 'big' thing, starts to grow. This cycle keeps repeating over periods of time and the only people who are always in the green are the wise men and the loyalists, while the general public is bled and slaughtered each time when they start buying at the height of the cycle and when the wise men are selling it to the blind public. These "items" could be various currencies, gold, silver, commodities, bonds, houses, land and what not. The frequency with which these wise men are interchanging the 'items' has increased in the recent years. It is not clear whether another set of 'wise men' are on the street trying to call shots on an item which is different from the first set of wise men. This fight between the two sets of wise men having contradictory ideas on some 'items' is probably being seen in the high volatility of the markets. E.g: Crude oil falling by around 6% in a week, INR moving by 1% in a day, gold falling by over 9% in 5 days.

Moral of the story: Besides the all the financial porn being thrown by the media at us and all the talk of finding value, in the end it seems you just have to stick to the side of the 'wise men' if you want to make money/store value. If only, we could easily pinpoint who are these 'wise men' and know their next move.

P.S: This is just one of the hypothesis I have to show that most people have know idea of how the market could be working against you all the time. At times, I feel like one of the little guys who feel like they are born to just get exploited by the 'wise men'.

London riots - Proof of Deindividuation - "Civil society": An oxymoron phrase

http://youarenotsosmart.com/2011/02/10/deindividuation/

The London riots just prove that the innermost bad desires are inherent in every person irrespective of whether they are in the developed world or in the developing world, whether in a civil society or not. As a matter of fact, the phrase "civil society" seems to be an oxymoron phrase now. People are civil by intimidation or by force, it just doesn't seem normal. Greed, action, thrill, survival instincts are all part of true human nature. It is only by continuously conditioning that we stop doing it and think twice before burning down other's properties and looting others' things.

P.S: written long ago, but forgot to post it.

Creating value

Story 1:

How to sell off a dead donkey

A city boy, Kenny, moved to the country and bought a donkey from an old farmer for $100.00. The farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died last night."

Kenny replied: "Well then, just give me my money back."

The farmer said: "Can't do that. I went and spent it already."

Kenny said: "OK then, just unload the donkey.."

The farmer asked: "What ya gonna do with him?"

Kenny: "I'm going to raffle him off." (Note: To raffle is to sell a thing by lottery - draw lot - to a group of people each paying the same amount for a ticket)

Farmer: "You can't raffle off a dead donkey!"

Kenny: "Sure I can. Watch me. I just won't tell anybody he's dead."

A month later the farmer met up with Kenny and asked, "What happened with that dead donkey?" Kenny: "I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00."

Farmer: "Didn't anyone complain?"

Kenny: "Just the guy who won. So I gave him back his two dollars."

*********************************************************************

Story 2:

A company has a debt of say 100 units and equity of 100. It splits up the company into 5 companies: 4 are debtless and the other takes all the debt. The one with excess debt shuts down and the other 4 companies take on more debt, do an IPO and prosper. Result: Tremendous value created for shareholders!

Moral: How many of you guys participated in things (eg:smsed to tv serials) thinking things are straight forward and were ignorant?

How come fooling people seems to be a very sustainable source of value creation?

I leave it to you to think it over...

The best excuse

One of the best non-arguable excuses ever for anything anyone asks you is "work". The various versions are "I am caught/stuck up with work", "work yaar", "I have some work", "have some work at home", "busy with something", "busy with work".

The all time motherhood statement with no explanation of what possible work that could be. If they say it, there is a chance that we may for heavens sake find out a way for their "work" problems. Now that shouldn't happen, can it?

I honestly have come to believe that people saying they are busy with work with no explanations whatever; or without a description of how that work is affecting so many other things too and how they are making other sacrifices; or without a statement that they will make up for the request surely some other time is basically a lie to avoid the request and/or to stop getting a guilty feeling.

Investment advice

Check out this video about investment advice. I am not trying to say that all the investment managers out there are trying to rip you off, but there are quite a few of them out there. Most of the insurance and mutual fund agents who always tell you to buy the latest products from them without explaining or comparing all the characteristics of the products are the ones trying to rip you off. After they are done with you, you will R.I.P(rest in peace)
http://financialrounds.blogspot.com/2008/06/investment-advice.html

The Truth

"The truth" is that we cannot handle the truth. If u do not agree to this statement, then the statement is proved right. The easiest way to handle the truth is to look the other side and just think that this did not happen. The more "mature" way is to ignore it totally. The right way is to accept the reality and address the issue. How many of us have had the guts to sit through and see a half hour program on BBC world about the miseries of people on a distant continent called Africa ? Very few. This is not because we don’t have time to see it or we don’t get the channel but because it pains us in more than one way. It pains us to see the stark reality in itself. The other reason is that we are incapable to do anything to help even after knowing that atrocities are happening there. We would any day rather watch a movie with fake beautiful/gorgeous actors with a happy ending. I don’t know if this is the Indian behaviour or is it human behaviour. But we definitely find it very hard if not impossible to accept the truth. Why else do we find it tough to accept the facts when there are losses staring at our faces? Leave Africa. Take examples even closer to home. We have been conditioned with the fact that watching violence in movies can affect children's thinking and that it is so bad that many adults don’t like violent movies. The truth is we all love violence and preach it knowingly or unknowingly, but the fact is that we don’t know how to handle the effects of violence. Because we feel we may cry thinking about the damage the violence has caused and no one wants to be seen as a crying sissy.

We give a rupee to the small kid on the road who is begging and he immediately moves away and we think we have in effect choosen to ignore the problem in the most effiecient way. I am not telling you that this is right or wrong. It is what your concience says to you. People say that violence, sex on tv desensitises us about all these and make us want to do it. True, but without this desensitivity, how are we suppose it address the issue objectively? Being emotional only adds to the problem. But isn't being non-emotional a real characteristic of machines? Do these emotions make us humans indecisive unlike machines who can decide without the emotion part affecting the decision? Or is it only too human to think with emotions? Or is it the two ways of thinking - with and without emotions that make us human? Or is it thinking itself make us human ? I was at my dentist's place and seeing a photo album of some of his operations(Maxilo-facial). It looked gruesome to say the least. Last fortnight my brother was explaining a surgery for removing a tumour from a nose. The way it was done. The way to reach to the tumour region. Both these had some common features like breaking open the nose bone, jaw bone, etc and that too on an anesthesised living human. Sounds too nasty,huh? But the desensitisation of all these so called gruesome scenes is what makes doctors pursue their goal objectively.

It is very hard to see, hear or watch atrocities, violence, bad experiences. But if we don’t desensitise these things to ourleves and learn it, life is going to throw these at us at some time or another and we may be incapable to handle the truth. The parents, teachers and the society in India does not allow us to get direct information as we may not be able to handle the truth. If only had we learnt to take the harsh realities in the right perspectives. If we are not going to learn it, life has it own hard ways to throw it at us and will handle it poorly to say the least.

P.S: Comments, appreciation and brickbats are most welcome.