Wednesday, May 18, 2011

The danger of Capitalism.

The Danger of Over Capital.
Few years back, I read some points of the book “Dass Capital” of Carl Marx. Since then I am very much aware about the dark side of “Capitalization”

The growth /development Mania is being admired everywhere but it contains needs of lot from people. Earlier, we had small businesses & small businessmen with their street-side shops. Now we have big malls, big retailers being run by big corporate, selling daily consumer items and killing business opportunities & new job opportunities.

So slowly we are entering in an economy of fewer businessmen & fewer entrepreneurs and more managers & more employees.

Where the danger is?

I remember an indicative case.

In Maharashtra, The municipal body of a town was not able to implement clean drinking water project for citizen to free them from clean water scarcity. The reason is that a mafia of that region was running business of water tank. Having turnover of some corers of rupees from his hundreds of water tank trucks running 24x7, He was actively lobbying for not to implement free flow of water to citizens from civic body. This is from single person!!!

Now imagine when corporate (the big size) companies in to picture to finalize the policies to safeguards their businesses, their wasted interest. So the picture would be like this,

The pharmaceutical company is more interested to sell more drugs than to promote good health.

The Auto companies are more interested to sell vehicles than to care for pollution & heavy traffic.

The banks are more interested to sell credit cards & undesirable loans than to care for financial freedom.

The media & entertainment industry is more interested in large number of readership than clear & next thoughtful society.

The schools & colleges wishes more pass outs to fill their seats than to provide educated literate output to the society.

The financial adviser, brokers, corporate banks etc. are more interested in selling revenue generated product than to provide value based financial literacy to investor.

The FMCG industry wishes to bulk more products in to the house of the buyer with free schemes ignoring what he really needs.

& this has no end…

A new wasted interest lobby is being developed. We call it as free economy where corporate growths are important. It comes from hard earned money of the citizens who does not have any vision for short or long term. He is helpless to needs & requirement of his own family members.

An individual cannot fight to this system individually. History says that it is a cycle of capitalism to communism to socialism and back to capitalism

An individual can keep himself away from all this hi-fi temptations and if possible he can jump in to this growth journey by participating / buying of equity faction. This can be possible for him by buying Equity Mutual Funds or starting monthly SIP in Equity MF. The only solution is to give time to investments and keep patience. One has to look for long term wealth creation rather than short term profit booking. Time cycle will turn thousands to lacs and crores in years to come.

Now, one has to decide whether to book profit short term for some thousand rupees or to wait and gain high returns of long term patience becoming some lacs or crores.

Tuesday, May 3, 2011

Young generation (Part 2), Cricket Mania and 80 / 20 principal.

In India, we have different fever at different time. Currently the cricket fever is on full moon mode back to back. First the world cup winning occasion and second is ongoing IPL season. There are 10 teams and no one is bothered if they win or loose. It is all advertisement game. The stake holders are getting millions from advertisement and sponsorship. And what is the target group of all these millions ruppes expenditure? The young generation.

The young generation wants something thrilling every day. Yahoo chatting box, MSN messenger, Orkut and lastly Facebook are the instruments used by the youths to improve “Social Networking”. Twitter is now on hot seat but who knows how much time it will last. The media is pouring fuel to all this thrill demand. But the sad part is nobody is aware that in all this thrill game the large part of the society is part of the game. As a spectator he is being USED. I am worried for all this wastage of human hours of this energetic young generation.

Recently I was talking to somebody on the 80/20 principal. This applies here also. 80% of the young generation is not aware of what they are doing in the best years of their life and remaining 20% doing something seriously which can help them to build a strong career.

In my investment advisory this is the same observation. This 80/20 principal exists in investment decisions. 80% of the investors are not aware about various factors like inflation, tax, liquidity, expenses, risk and growth potential of their investment. So, the outcome is wrong investment product in the hands of investors and missing best earning opportunities of the prospective time. I do not foresee any improvement in near future. The move by SEBI for certification for investment advisory in Mutual funds and insurance has brought new educated people in this field but they are running and pushing hard various products to complete their revenue targets. Ethics are hardly seen. The asset allocation funds are considered to be the basic to start any investment advice is missing in most discussions.

Why this important part is being ignored? The reply is people are more worried about the figures of their heroes. How many centuries and half centuries of a player, how many runs in how many balls and what is average run rates and what is the latest advertisement contracts etc. etc. But this poor lay man is ignorant of very important figures of his own. He does not know that what amount he needs for better retired life and what will be educational expenses for his kids and what is rate of return expected to meet his goals etc. etc.. Oh! I am shocked to know fact of a recent survey, 35% of a person’s income is spent for children’s education!!!
If you will see others, you will have hardly a time to see for yourself. So, I believe now the latest mantra should be “Jago bhai Jago aur kal ke liye socho”

“Games jarur Dekho magar socho apna game na hojaye”