Money Mantras….(8)

As always, I’m glad to share with you the new set of money mantras. This article contains some very beautiful quotes from Sage of Omaha, Warren Buffett. Also included are money quotes from father of modern Psychology and father of modern Economics!!. Please do read and enjoy the quotes and keep posting your feedback.  Your words of appreciation are tremendous source of inspiration for me.

 

1)The  capital market without loss is like Christianity without hell – Warren  Buffett

 

2) I like sharing my ideas but don’t like imposing my ideas on anybody. It doesn’t make sense and is a waste of time. If somebody has decided that they know everything that is there to know, nobody can help them. The best way to learn and succeed is to know that we know nothing. There is an entire universe out there and still some of us think we can know everything. – Warren Buffett

 

3) In the world of investing a few people after making some money tend to imagine they are invincible and great. This is the worst thing that could happen to any investor, because it surely means that the investor will end up taking unnecessary risks and end up losing everything – arrogance, ego and overconfidence are very lethal.- Warren Buffett

 

4) Personally I don’t feel too comfortable with too much extravagance, because I always think like an investor. My thought process doesn’t see a lot of value in a fancy car or a designer suit. Thinking like an investor always is very important to bring in a sense of discipline and focus. Before reading balance sheets and investing you need to make sure your outlook and mindset is that of an investor.- Warren Buffett

 

5) Never let ego, arrogance and over-confidence control you – not just as an investor but also as a human being. You will never have internal peace if you are unable to look at everybody around you with love, compassion and understanding.- Warren Buffett

6) Irrespective of who the person is, he or she can teach you something you don’t know. I have learnt so much from people all around me and I wouldn’t have been able to learn all these wonderful things if I had not spoken to them with a smile. To quote Sir Isaac Newton- If I have seen farther than others, it is because I have stood on the shoulders of giants.- Warren Buffett

7) The market does not beat them.  They beat themselves, because though they have brains they cannot sit tight.  -Jesse Livermore

 

You can never predict when that unknown torpedo will come out of the dark and smash the price of a stock. -Ralph Seger

 

9) Just as a cautious businessman avoids investing all his capital in one concern, so wisdom would probably admonish us also not to anticipate all our happiness from one quarter alone. -Sigmund Freud (considered as father of modern Psychology)

 

10) To what purpose is all the toil and bustle of this world? What is the end of avarice and ambition, of the pursuit of wealth, of power and pre-eminence? – Adam Smith (considered as father of modern economics) in ‘The Theory of Moral Sentiments’

 

 

The Future course of our IT & BPO Industry

This article is  about the changes that may happen in IT & BPO Industry in the next 1 to 2 years and the need to be geared up to face the challenges. 

India derives its main competitive advantage both in IT & BPO space due to knowledge, skills and mainly labour arbitrage (i.e.) we are as good as our overseas counterparts in terms of knowledge and our costs were also low. This made an excellent business proposition for both clients and IT vendors. But it looks that this scenario is changing due to the recent global happenings.

With unemployment of not only blue collar but also skilled workers increasing in U.S, there is an indication that the professionals there would be willing to work at the per hour billing rates we charge here. I hear that this may first start in Tier-2 cities of U.S and may slowly start spreading to main cities as well. This coupled with the tax breaks the new Obama administration may announce for employing local talent, may reduce the business flow to India. Not only that, Latin American countries like Mexico which are closer to U.S. may offer these services at a cost lesser than ours. That is why even our IT majors have started establishing in Mexico.  Please read the below excerpts from Equitymaster which clearly explains what I mentioned above.

“India so far has been dominating the global business process outsourcing (BPO) industry. This is amply reiterated by the research firm Everest, which has stated that the global BPO industry will be worth around US$ 220-280 billion by 2012, with India accounting for almost US$ 50 billion of the opportunity.

But if you thought that this dominance is unshakeable, think again!

While India’s low cost advantage was one of the foremost drivers for the growth of the BPO industry in the country, looks like US and Latin America are fast catching up. This is because falling wage rates and increased availability of unemployed professionals are helping locations in the US and Latin America emerge as competitive ‘nearshore’ destinations for outsourcing of back-office work. In fact, wages in these countries are now only a tad above those in India.

This is just the tip of the iceberg. The unemployment rate in the US is rising fast. And with Obama already announcing that his administration would provide tax benefits to companies creating local jobs, means that India has something to worry about. What’s more, Indian IT biggies themselves are establishing centres in Mexico to tap opportunities in this lucrative market.”

We’ve the challenge of cutting costs (including salaries) and providing more value added services to retain our current position in the IT & BPO space. It is not only the question of retaining the position; to put it more candidly it is the question of our very survival.

 (with inputs from Equitymaster)

The UK is Finished & USA is declining rapidly

“The UK is finished!” Well, this isn’t a threat from a terrorist, wanting to blow up the country. Of course it is a diagnosis of destruction but we are talking economic destruction here. And the man behind the lethal comment is none other than Jim Rogers, one of the smartest investors of our times. Although Rogers is a contrarian but this time around, we guess a lot of people will be willing to agree with him.

 

What else could explain the steep fall in the UK’s currency yesterday, its biggest drop against the Yen and a record low against the dollar in seven years? The slide started when the British PM Gordon Brown sanctioned £100 billion pounds (US$ 142 billion) for banks. And the new bailout has come on the back of a £ 50 billion recapitalisation program and a £ 250 billion bank credit line. This at a time when the country’s economy is running twin deficits (budget as well as trade) and undergoing one of its worst recessions since the Second World War.

 

What more, there seems to be little respite in sight as the financial industry, on which a lot of UK’s growth was built in recent times is not likely to see its glory anytime soon. Little wonder, traders holding pounds are making a beeline to the exit door. And unlike its closest ally, the US, the pound cannot boast of being a reserve currency of the world, thus restricting UK’s ability to print endless amount of money without having an adverse effect on the exchange rate. Although it may not be finished just yet, it will definitely decline rapidly if the rot is not stemmed.

 

Another nation that is in danger of declining rapidly is of course, US. And hence, all roads led to Washington yesterday as Barack Obama, the last real hope of the US citizens was sworn in as the country’s 44th President. While the Americans hope, and expect, and pray for a better future, from what we have seen so far, Obama’s economic revival plan is just a little more than Bush’s plan in a different garb. Just like his predecessor, Obama is also planning to throw trillions of dollars at the problem that was created due to trillions of dollars.

 

However, unlike Bush who had the headroom (via the Fed) to bring interest rates to near zero to pump in more of cheap money into the system, Obama is short of this monetary policy ammunition. Rates are already near zero. So what will he do? Cut rates to less than zero like the Japanese did in the 1990s?

 

It didn’t work for the Japanese. Recession in the country lasted for more than a decade despite sub-zero interest rates. And despite Bush’s trillions of dollars in bailout money, around 2.5 million Americans have still lost their jobs and the recession is only getting worse.

 

Obama, like another former US President Franklin D. Roosevelt, has also talked about an infrastructure plan that will employ ‘millions of Americans’. To do what? Pave roads and dig ditches?

 

But Roosevelt’s ‘New Deal’ didn’t work either! Despite everything he did starting 1933, the US still entered into a recession by 1937. Industrial production declined sharply, as did profits and employment. Unemployment jumped from 14% in 1937 to 19% in 1938. As unemployment rose, consumers’ expenditures declined, leading to further cutbacks in production.

 

Despite the mountains of money Roosevelt threw at the Great Depression, it still took ten years and World War-II before the economy came back to life.

 

Now, if Obama were to repeat these failed policies, how will he be able to produce better results? Following the failed policies of Roosevelt and Bush will only make matters worse for the US and subsequently for the world.

 

Giving failing companies and consumers more money to make more debt repayments when the debt will eventually go bad, will only elongate this crisis. And if the crisis prolongs, Obama will ensure that many companies that might otherwise survive, fail. Millions of more job losses will follow.

 

(Courtesy : Equitymaster)