Posted tagged ‘Mukesh’

Politics and Money

July 10, 2008

I normally do not write about politics but this are special times! There is a chance that the government will fall (this is a defeat for Anil Ambani) or the government will survive (there is enough that AS and AA can do to irritate Mukesh).

However, there is a good chance that if the UPA government survives this scare, it will call for elections as soon as they announce some populist schemes. However in the meanwhile both the brothers will take a few millions from their market capitalisation, and this will hurt the sensex.

Congress and SP need to collect money for the elections (and for 5 years of unemployment perhaps) so you will find some shocking policies, and this will hurt. Badly.

Anil’s fight will mean Mayawati will not clear any proposal of his in UP. Reliance Power has quoted prices which are difficult to achieve in the best of situation. In a revised situation like this, I guess you will be able to get his share at the same price at which he took it.

If there is a “windfall tax” on Reliance, will Mukesh hit with a “you got cheap spectrum tax” on Reliance Communication? A good idea.

Uncertainty, political (business) fights, snatching Mukesh’s plane (posturing?), Chidambaram at his giving best – he telephones people to reduce prices while giving salary hikes to govt employees,…will see the market swing sensationally. So, like a broker told me buy puts and calls – both will make money if you do not panic!!

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Choosing the financial adviser..

June 30, 2008

This is arguably the most important financial decision in your life you will ever make! Not too long ago life was simple. You wanted a bank account, you went to a bank. If you wanted to buy shares, you went to a sub-broker (a broker was out of reach till about 15 years back). If you wanted a life insurance, a LIC agent sold you some policy which you hoped was good.

Today you find bankers who actively discourage you from coming to a bank. Insurance agents who sell you anything buy a life insurance product. Bankers who sell you mutual funds, life insurance, broking accounts, and real estate!

And the companies that sell you financial products are dime a dozen – Reliance (Mukesh) has a loyalty card, Reliance (anil) has a credit card. A call from Reliance Money says “Reliance Bank” and offers you a loan! Airtel offers you money transfer, cell phones can be used for paying utility bills. Why do I need a bank, a cheque book, a relationship manager? I do not know!

Now into this mess comes in a financial adviser. He should tell you the difference between information and noise. He should encourage you to write down your goals. He should be able to understand the difference between a 3 month track record of a scheme and a 3 year performance. He should be able to FORCE you to buy life insurance MUCH BEFORE you need it. Your pension plans and medical insurance plans should be in place when you CAN rather than when you must. He should be able to help you prioritise your goals. He should have the guts to tell you that your goals make sense only when you allocate resources for the same.

HOWEVER, he should not sell any products to you EVEN if it is a zero load mutual fund. Because then, he loses credibility. It is like a rep of a pharma company – I cannot trust him like i trust my family doctor. Sorry, I know this is an old world view.