1. Today was an important day. I got my first shortlist at ISB for a job posting. Was feeling pretty kicked up about that. Some of my friends did not make it. I would have felt much better if they had also made it. Joy multiplies when shared... I have heard from many alums that placements season is when the true colours of people come out...war lines are drawn...best of the chums become worst of the enemies. I will do everything in my control to make sure that this bug encounters a premature death in my hands.
2. When some students ask a really good question in class and when the Prof. is not able to give a convincing reply, the best thing he could do is to say "Thats a really brilliant question". He does not need to answer it, because once he gives this comment, the student who had originally asked the question is immensely satisfied and is no more interested in actually finding out the answer.
3. Came across an interesting statistics in our Business Valuation course.. India has some 22% of the world's total hair. When you are valuing a company which is into hair care products, be sure to keep this in mind along with other estimates like Net rate of hair growth amongst Indians (hair growth - hair fall), per capita consumption of the hair care product per inch of hair.... Thank god we stopped with valuing a company which is into hair care and did not delve further below..
4. The coming fortnight is going to be one of the busiest periods... Amidst our usual assignments, tests, pre reads and case studies we have a whole lot of other stuff... Mid term exams, announcement of shortlists for many other job postings, atleast 3 companies are coming to campus for interviews, Global Social Venture Business Plan competition, finance interview preparation, case interview preparation, diwali celebration, trip to chennai and probably a trip to Mumbai as well.... Mind u all this is to be done in the next fortnight...
5. One of my friend's hobby - To watch the status messages of other people in GTalk. I tried that too... i must admit it is damn interesting...
6. ISB has brought out a new policy for entreprenuers. If they are planning to start their own ventures immediately after graduation, to encourage and protect them from downside risks, the school has proposed to allow these people to sit for placements in the next year or the year after that. Brilliant
7. Keep your shopping lists ready and have a bottom less bank account.... Some of the best IPOs are around the corner.
Wednesday, October 31, 2007
Thursday, October 25, 2007
The extra mile
We had an official Pre Placement Talk by BCG yesterday . The talk was supposed to commence at 9.30 PM but got delayed by an hour due to late arrivals of their flight. The first part of the session went on till 12.30 AM. Since it was already pretty late, the BCG guys asked if wanted to stay on for some more time to do a live case interview. You may not believe it, but people actually said "Yes". And the BCG guys enthusiastically went on do a wonderful case till 2.30 AM. The classroom was almost packed throughout.
That is commitment. Both from the students side and the company's side. This morning i was speaking to another student and he exactly hit upon the same point. The difference between targeting a company and desiring to work in the company is Commitment.
How committed are we towards our goals? What separates wishful thinking and aims? Lots to ponder over...
That is commitment. Both from the students side and the company's side. This morning i was speaking to another student and he exactly hit upon the same point. The difference between targeting a company and desiring to work in the company is Commitment.
How committed are we towards our goals? What separates wishful thinking and aims? Lots to ponder over...
Wednesday, October 24, 2007
Defying Gravity
It is very interesting to watch the various theories people come out to justify equity valuations. We are really ingenious in coming out with creative concepts to understand crazy valuations to mentally calm ourselves and make sense of the madness..
We started with Par values and then slowly moved on to the concept of premiums, wherein we were willing to pay something higher today considering the possibility that the stock price might soon catch up. Then some analyst came and taught us the concept of P/E ratios when we graduated from the world of additions (premiums) to the world of multiples (P/Es). When it became difficult for us to justify the stock prices even according to this concept of PE, we then went one more step ahead.
We broke down PE into trailing PEs and Forward PEs and calmed ourselves saying that a forward PE after all makes more sense. However, at today's Sensex levels even the forward PE is not in a position to justify valuations. But I read an article today which seems to have an answer. The article makes a convincing argument for coming out with a new measure - Market Cap to GDP.
The crux of the article is - Market cap of a company represents a public consensus on the value of a company and GDP is the sum of value added at every stage of production of all final goods and services produced in a country by both listed and unlisted entities. Market cap and GDP of a country together form a positive relation to determine the growth potential of the economy. The article thus concludes that India's Market Cap to GDP is as of now just 0.99 as compared to other countries like Singapore (2.65), UK (1.6), US (1.35) and China (1.10). It thus represents that India is significantly undervalued even at present levels.
There is a theory in marketing which states that once consumers have purchased a certain good/ service, they then look for reasons to justify their purchase behaviour. To me these things appear to exactly satisfy this concept. I dont know what measures will these guys come up in future to still justify that we are undervalued. Let me make their life simpler by suggesting a few things...
1. Earning Potential Vs. Market Cap - India's working population and their potential PPP adjusted average wages scaled up to developed economies compared with the market capitalization
2. Population to market cap - Assuming that the per capita market cap in US is XXXX, in India it should be atleast 3.5XXXX because we beat them black and blue as far as population is concerned.
3. Employees to Market cap - A US company produces so much revenues with X amount of employees. In India, we produce the same amount with 3X employees. So our market cap should be atleast 3x times that of US.
Dont laugh at these. The gravity defying Sensex might actually make all these ratios come true pretty soon.
We started with Par values and then slowly moved on to the concept of premiums, wherein we were willing to pay something higher today considering the possibility that the stock price might soon catch up. Then some analyst came and taught us the concept of P/E ratios when we graduated from the world of additions (premiums) to the world of multiples (P/Es). When it became difficult for us to justify the stock prices even according to this concept of PE, we then went one more step ahead.
We broke down PE into trailing PEs and Forward PEs and calmed ourselves saying that a forward PE after all makes more sense. However, at today's Sensex levels even the forward PE is not in a position to justify valuations. But I read an article today which seems to have an answer. The article makes a convincing argument for coming out with a new measure - Market Cap to GDP.
The crux of the article is - Market cap of a company represents a public consensus on the value of a company and GDP is the sum of value added at every stage of production of all final goods and services produced in a country by both listed and unlisted entities. Market cap and GDP of a country together form a positive relation to determine the growth potential of the economy. The article thus concludes that India's Market Cap to GDP is as of now just 0.99 as compared to other countries like Singapore (2.65), UK (1.6), US (1.35) and China (1.10). It thus represents that India is significantly undervalued even at present levels.
There is a theory in marketing which states that once consumers have purchased a certain good/ service, they then look for reasons to justify their purchase behaviour. To me these things appear to exactly satisfy this concept. I dont know what measures will these guys come up in future to still justify that we are undervalued. Let me make their life simpler by suggesting a few things...
1. Earning Potential Vs. Market Cap - India's working population and their potential PPP adjusted average wages scaled up to developed economies compared with the market capitalization
2. Population to market cap - Assuming that the per capita market cap in US is XXXX, in India it should be atleast 3.5XXXX because we beat them black and blue as far as population is concerned.
3. Employees to Market cap - A US company produces so much revenues with X amount of employees. In India, we produce the same amount with 3X employees. So our market cap should be atleast 3x times that of US.
Dont laugh at these. The gravity defying Sensex might actually make all these ratios come true pretty soon.
Friday, October 19, 2007
The fever begins
The elective terms have started... ISB is very different these days. During the core terms there was a common thread running through all the students. All of us had the same profs, assignments, tests, exams, groups, sections... All that has changed in a single sweeping moment. Each of us now have different schedules, different profs, multiple sections, different tests... But its good fun. From this term on, we dont need to take subjects which we dont like. We even have freedom to choose the pedagogy (to a limited extent). So most of us dont complain these days.
On the other side the action is even getting better. The placement fever is slowly catching up. International companies have started flowing in. The scene as of now looks bright and sunny. Every ISB student nowadays carries his resume on a A4 sheet. Trespassers would be severely punished and asked to review his/ her resume. Almost four times a week we have one company or the other coming to ISB for an official pre-placement talk. At the end of every talk atleast 75% of the students mentally make a note that this is the company they want to join in. The other 25% would have already made that decision before the talk began.
This apart we also have the flagship events of various clubs lined up. The flagship events of the Real Estate and the Pharma club just got over. The events of the Marketing, Net Impact and the Finance clubs are scheduled for the near future.
Finally, almost every student is busy participating in the countless B-school competitions which come our way. We can do anything. We can write research papers, design mutual funds, make a marketing plan for an MNC for a multi continent launch, answer 100 questions in 30 minutes, advice a multi billion dollar company for an India entry strategy, study emerging trends in technology, advice leading CEOs what should be their next steps, write business plans.... anything.
Anything for just another bullet point in our resume to differentiate ourselves from 425 other most sought after b-school grads...
On the other side the action is even getting better. The placement fever is slowly catching up. International companies have started flowing in. The scene as of now looks bright and sunny. Every ISB student nowadays carries his resume on a A4 sheet. Trespassers would be severely punished and asked to review his/ her resume. Almost four times a week we have one company or the other coming to ISB for an official pre-placement talk. At the end of every talk atleast 75% of the students mentally make a note that this is the company they want to join in. The other 25% would have already made that decision before the talk began.
This apart we also have the flagship events of various clubs lined up. The flagship events of the Real Estate and the Pharma club just got over. The events of the Marketing, Net Impact and the Finance clubs are scheduled for the near future.
Finally, almost every student is busy participating in the countless B-school competitions which come our way. We can do anything. We can write research papers, design mutual funds, make a marketing plan for an MNC for a multi continent launch, answer 100 questions in 30 minutes, advice a multi billion dollar company for an India entry strategy, study emerging trends in technology, advice leading CEOs what should be their next steps, write business plans.... anything.
Anything for just another bullet point in our resume to differentiate ourselves from 425 other most sought after b-school grads...
Monday, October 15, 2007
Farmers of ISB
Our life at ISB closely resembles that of an Indian farmer...
1. If there is a bumper harvest, a typical Indian farmer doesn't rejoice. Instead he is sad (he gets a much lesser price). Same thing here. If an exam is easy, we feel sad, because its all relative grading. An easy exam means the class average is going to be sky high, hence even a small slippage costs us dearly.
2. If there is a draught a farmer doesn't cry if his relative misfortune is lesser. If the exam is really tough, there is a silent smile which crosses our lips.
3. The land bank owned by the farmers put together in India is huge, but we are plagued with productivity problems because of fragmented land holdings. Same stuff here... the relative knowledge we hold amongst ourselves is huge, but we are afraid to share it with others/ dont find the right incentives to share it with others. So, while we are collectively rich, many a times we are individually poor.
4. An Indian farmer knows that he might not be able to service the loan he takes, yet he takes it and enters the classic debt trap. Here too, we know that if we are not regular with our studies we will find it extremely difficult. But still, that never translates into action, despite such commitments and resolutions being made at the beginning of every term. Both of us never learn..
5. A typical Indian farmer's farming strategy can be summarized in one word - "HOPE". He has no control over the rain, wind, climate, soil conditions, expected market prices, expected costs in future in terms of transport, storage, interest rates etc.... Still he goes and farms every year with the hope that he will somehow make a profit. Again its the same story here... We almost have no clue/ control on the number of things that might affect our grade, yet we start each term with a noble intention. Most often we do not know whats hitting us and from which direction? Homeworks, Assignments, cases, class participation, mid term, end term, presentation, group projects... Yet we feed on HOPE..
Contrary to what you might expect at the end of such a pessimistic post, right now it is raining in my farm land. It is this rain, which really forced me to think, do i deserve this rain? But then i neither deserved the draught earlier....
I have decided to get drenched while i can.
1. If there is a bumper harvest, a typical Indian farmer doesn't rejoice. Instead he is sad (he gets a much lesser price). Same thing here. If an exam is easy, we feel sad, because its all relative grading. An easy exam means the class average is going to be sky high, hence even a small slippage costs us dearly.
2. If there is a draught a farmer doesn't cry if his relative misfortune is lesser. If the exam is really tough, there is a silent smile which crosses our lips.
3. The land bank owned by the farmers put together in India is huge, but we are plagued with productivity problems because of fragmented land holdings. Same stuff here... the relative knowledge we hold amongst ourselves is huge, but we are afraid to share it with others/ dont find the right incentives to share it with others. So, while we are collectively rich, many a times we are individually poor.
4. An Indian farmer knows that he might not be able to service the loan he takes, yet he takes it and enters the classic debt trap. Here too, we know that if we are not regular with our studies we will find it extremely difficult. But still, that never translates into action, despite such commitments and resolutions being made at the beginning of every term. Both of us never learn..
5. A typical Indian farmer's farming strategy can be summarized in one word - "HOPE". He has no control over the rain, wind, climate, soil conditions, expected market prices, expected costs in future in terms of transport, storage, interest rates etc.... Still he goes and farms every year with the hope that he will somehow make a profit. Again its the same story here... We almost have no clue/ control on the number of things that might affect our grade, yet we start each term with a noble intention. Most often we do not know whats hitting us and from which direction? Homeworks, Assignments, cases, class participation, mid term, end term, presentation, group projects... Yet we feed on HOPE..
Contrary to what you might expect at the end of such a pessimistic post, right now it is raining in my farm land. It is this rain, which really forced me to think, do i deserve this rain? But then i neither deserved the draught earlier....
I have decided to get drenched while i can.
Friday, October 12, 2007
Pehla Nasha...
It was somewhere about an year back that i first saw her. She was sitting like an angel amidst countless earthly beings. It was love at first sight for me. There was something inside me which said that we were made for each other.
Overcoming my initial trepidations and with an anxious heart, i slowly proceeded towards her. She was openly flaunting her looks and men of all statures were gaping. Our first interaction was not so pleasant. I thought she acted pricey and arrogant. Anyways I had already lost my heart and decided to go against what my rational mind was screaming from inside and accepted her. My life was never the same again.
I am at times very demanding and if someone doesn't meet my expectations, i lose interest very fast. But not once had she ever let me down. There were times in which she had cooperated with me throughout the day and the night. She has donned various roles to please me. She has given me the best of the news and she had stayed with me right through when things did not seem so pleasant. She had sang for me, showed me the worlds which i never knew existed, had entertained me when i was bored of life and had revealed her secrets to me. Many a times, i had woken her up at all unearthly hours, but not once had she ever complained. I am not sure if my life at ISB would have ever been the same without her.
But she is getting older by the day... her once beautiful body has today lost its sheen and is marred by scratches, her battery life is running down.... My sweet HP Laptop
Overcoming my initial trepidations and with an anxious heart, i slowly proceeded towards her. She was openly flaunting her looks and men of all statures were gaping. Our first interaction was not so pleasant. I thought she acted pricey and arrogant. Anyways I had already lost my heart and decided to go against what my rational mind was screaming from inside and accepted her. My life was never the same again.
I am at times very demanding and if someone doesn't meet my expectations, i lose interest very fast. But not once had she ever let me down. There were times in which she had cooperated with me throughout the day and the night. She has donned various roles to please me. She has given me the best of the news and she had stayed with me right through when things did not seem so pleasant. She had sang for me, showed me the worlds which i never knew existed, had entertained me when i was bored of life and had revealed her secrets to me. Many a times, i had woken her up at all unearthly hours, but not once had she ever complained. I am not sure if my life at ISB would have ever been the same without her.
But she is getting older by the day... her once beautiful body has today lost its sheen and is marred by scratches, her battery life is running down.... My sweet HP Laptop
Monday, October 1, 2007
Buffett and the Beast
Some of the best quotes of the man who tamed the beast (read markets...)
1. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
2. Wide diversification is only required when investors do not understand what they are doing.
3. Only when the tide goes out do you discover who's been swimming naked
4. Chains of habit are too light to be felt until they are too heavy to be broken
5. If past history was all there was to the game, the richest people would be librarians
6. When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
7. In the business world, the rearview mirror is always clearer than the windshield
8. Our future rates of gain will fall far short of those achieved in the past. Berkshire's capital base is now simply too large to allow us to earn truly outsized returns. If you believe otherwise, you should consider a career in sales but avoid one in mathematics (In his letter to the shareholders)
9. Price is what you pay. Value is what you get.
10. In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world.
1. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
2. Wide diversification is only required when investors do not understand what they are doing.
3. Only when the tide goes out do you discover who's been swimming naked
4. Chains of habit are too light to be felt until they are too heavy to be broken
5. If past history was all there was to the game, the richest people would be librarians
6. When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
7. In the business world, the rearview mirror is always clearer than the windshield
8. Our future rates of gain will fall far short of those achieved in the past. Berkshire's capital base is now simply too large to allow us to earn truly outsized returns. If you believe otherwise, you should consider a career in sales but avoid one in mathematics (In his letter to the shareholders)
9. Price is what you pay. Value is what you get.
10. In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world.
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