I hate the way you talk to me
and the way you cut your hair.
I hate the way you drive my car;
I hate it when you stare.
I hate your big dumb combat boots
and the way you read my mind.
I hate you so much it makes me sick.
It even makes me rhyme.
I hate it -- I hate the way you're always right;
I hate it when you lie.
I hate it when you make me laugh;
even worse when you make me cry.
I hate it when you're not around
and the fact that you didn't call.
But mostly I hate the way I don't hate you --
not even close, not even a little bit, not even at all.
Saturday, September 18, 2010
Monday, August 23, 2010
What every investor must understand about risk
Many a wise person has shared their wisdom to the effect that "if you want to achieve lofty goals, you have to take some risk." Usually, the goal is compelling and rewarding enough for us to willingly take on the risk. However, we think of ways of mitigating the risk through some kind of damage control so that we don't end up suffering if the risks were to materialize.
For instance, lets say our team is batting second in a one-day cricket match where the opponents have set us a very demanding target of scoring 400 runs in our allotted overs. If our team just scores singles and doubles, it might be safe, but we will fall dramatically short of achieving our target. By taking no risk, we might conserve wickets, but we are almost sure to lose. To achieve this lofty goal of scoring 400 runs, our team will have to take risks. We will have to swing for the fences. Only then can we have some hope of reaching our target. In summary, scoring 400 runs (or earning a high return) while taking no risks is going to be almost impossible.
The same is true for investing. Earning a high return but while taking on very low risk is not possible. It's a balance that even world-class investors struggle to achieve. Investment history has shown that you just cannot have it both ways - you generally get high returns only when you take higher than usual risk.
Take calculated risks - reward must be compelling
Exposing oneself to risk is not something one should do blindly. It must be done in the context of what the expected pay-off might be. If the reward is compelling enough, then it probably makes sense to take on the risk. Otherwise, it is not worth it.
Let's take an example from everyday life. Wearing a seat-belt while driving is compulsory. Yet, many of us choose to drive without fastening our seatbelt. This exposes us to numerous risks. However, taking on these kind of risks has very little upside or payoff, but clearly disastrous consequences if the worst were to happen. This kind of a risk, which has no upside, is not worth taking.
Contrast this with the batsman chasing 400 runs who tries to hit every other ball to the boundary, with a degree of power and placement. Sure, there is a risk of getting caught but this risk is probably one that is worth taking because the payoff of scoring a six and chasing down the target is rewarding enough.
The big takeaway here for all of us here is that risks should only be taken when there is an upside and the expected payoff is rewarding enough. This is a lesson we must remember when investing our money.
Risk across the investment spectrum
Let's take a look at common investment options and their risk reward trade-offs. The following will help illustrate how we as investors expect higher returns as the risk associated with the investment increases.
Let's say I have Rs. 10,000 to invest into a fixed income instrument, an instrument that will give me a fixed return that is pre-set at the time of making the investment. I am considering 3 options: investing in a fixed income security issued by the government or a government backed entity, investing in an FD issued by a bank, or investing in an FD issued by a company.
The government security will pay the least amount of return (the reward) because it is least risky. It is backed by the government, and all things being equal the government ought to be a safe party to loan money to.
The bank FD will pay a slightly higher return because the government guarantees only part of the deposit so there is the risk of the bank failing, even if it is a very small risk. However, the company FD will pay the highest return because the risk perceived in lending to the company is the highest, so we expect a slightly higher reward for it.
What I am trying to demonstrate is that as the riskiness of the investment increases, so does our expectation of return. As a corollary, if we set out to earn a high return, please recognize that this will come at the cost of taking on a higher risk.
As one moves from holding cash in a bank savings account that earns only 3.5% return towards equities that are expected to earn up to 12% in the long-term, the riskiness of these different types of investments increases.
No pain, no gain
For those who frequently go to gyms, the idiom "no pain, no gain" is probably a familiar one. In the investment world as well, if we want gains, it's going to be possible only when one takes some risks. Almost every investment option involves taking on some risks. Taking risks, albeit in a calculated manner, is something that is advisable, depending upon one's personal situation. Just like not every one has the capacity to lift weights of up to 40 kilos in the gym, not every one has the capacity to take on high risks. You must take on risks according to what your risk appetite allows you to do, and what you feel you comfortable about.
So next time you are looking to invest money, do keep in mind that there will be "no gain without pain". Be realistic and don't expect to get high returns unless you take on some risk.
For instance, lets say our team is batting second in a one-day cricket match where the opponents have set us a very demanding target of scoring 400 runs in our allotted overs. If our team just scores singles and doubles, it might be safe, but we will fall dramatically short of achieving our target. By taking no risk, we might conserve wickets, but we are almost sure to lose. To achieve this lofty goal of scoring 400 runs, our team will have to take risks. We will have to swing for the fences. Only then can we have some hope of reaching our target. In summary, scoring 400 runs (or earning a high return) while taking no risks is going to be almost impossible.
The same is true for investing. Earning a high return but while taking on very low risk is not possible. It's a balance that even world-class investors struggle to achieve. Investment history has shown that you just cannot have it both ways - you generally get high returns only when you take higher than usual risk.
Take calculated risks - reward must be compelling
Exposing oneself to risk is not something one should do blindly. It must be done in the context of what the expected pay-off might be. If the reward is compelling enough, then it probably makes sense to take on the risk. Otherwise, it is not worth it.
Let's take an example from everyday life. Wearing a seat-belt while driving is compulsory. Yet, many of us choose to drive without fastening our seatbelt. This exposes us to numerous risks. However, taking on these kind of risks has very little upside or payoff, but clearly disastrous consequences if the worst were to happen. This kind of a risk, which has no upside, is not worth taking.
Contrast this with the batsman chasing 400 runs who tries to hit every other ball to the boundary, with a degree of power and placement. Sure, there is a risk of getting caught but this risk is probably one that is worth taking because the payoff of scoring a six and chasing down the target is rewarding enough.
The big takeaway here for all of us here is that risks should only be taken when there is an upside and the expected payoff is rewarding enough. This is a lesson we must remember when investing our money.
Risk across the investment spectrum
Let's take a look at common investment options and their risk reward trade-offs. The following will help illustrate how we as investors expect higher returns as the risk associated with the investment increases.
Let's say I have Rs. 10,000 to invest into a fixed income instrument, an instrument that will give me a fixed return that is pre-set at the time of making the investment. I am considering 3 options: investing in a fixed income security issued by the government or a government backed entity, investing in an FD issued by a bank, or investing in an FD issued by a company.
The government security will pay the least amount of return (the reward) because it is least risky. It is backed by the government, and all things being equal the government ought to be a safe party to loan money to.
The bank FD will pay a slightly higher return because the government guarantees only part of the deposit so there is the risk of the bank failing, even if it is a very small risk. However, the company FD will pay the highest return because the risk perceived in lending to the company is the highest, so we expect a slightly higher reward for it.
What I am trying to demonstrate is that as the riskiness of the investment increases, so does our expectation of return. As a corollary, if we set out to earn a high return, please recognize that this will come at the cost of taking on a higher risk.
As one moves from holding cash in a bank savings account that earns only 3.5% return towards equities that are expected to earn up to 12% in the long-term, the riskiness of these different types of investments increases.
No pain, no gain
For those who frequently go to gyms, the idiom "no pain, no gain" is probably a familiar one. In the investment world as well, if we want gains, it's going to be possible only when one takes some risks. Almost every investment option involves taking on some risks. Taking risks, albeit in a calculated manner, is something that is advisable, depending upon one's personal situation. Just like not every one has the capacity to lift weights of up to 40 kilos in the gym, not every one has the capacity to take on high risks. You must take on risks according to what your risk appetite allows you to do, and what you feel you comfortable about.
So next time you are looking to invest money, do keep in mind that there will be "no gain without pain". Be realistic and don't expect to get high returns unless you take on some risk.
Thursday, July 1, 2010
Shivaji Park to Wankhede - A spotless journey of eternal sunshine
The evening of April 23rd 1973 was an ordinary one you would think, Lord our god was havin a regular day, his friends were outside playing cricket. He wanted to join but was too busy making designs & attending to complaints. His friends mocked him, his mom was like, “atta kuthehi jaycha naiye khelayla…kama kara!”…He so wanted to play…but determined & powerful as he was he said, “Baas, udya dakhavtoch!”… then dawned the pious morning of 24th April 1973 & his show that started on February the 15th 1989 hasn’t stopped! That was the day mankind was blessed with hope, talent, determination, inspiration & that smacking cover-drive. God said “let there be a player for those who can’t play, cuz maybe they are busy, have duties, are ill equipped in any way, have dreams, lack determination, need inspiration, need addictions, need something to take their mind off things, are disabled, basically for all mortals…
Karachi drew flak but confirmed entry,
But …“Mai Khelega” hinted longevity & determination.
Manchester ‘90 hinted at genius, Chennai ’93 claimed singularity
Sydney ’92 meant prodigal; Perth ’92 was magical,
Colombo ’94 implied belonging; Nottingham ’96 confirmed genius
Cape Town ’97 was princely, Sharjah ’98 confirmed coronation
Dhaka ’99 displayed performance; Bristol ’99 showed passion, responsibility & emotions
Chepauk ‘99 was tragic, hinted human; Chepauk ’99 & ‘08 confirmed peerless & granted redemption
Natwest ’03 showed adaptability & commitment, Sydney ’04 hinted @ sainthood,
Dhaka ’04 was comeback, Hamilton ’09 was Supremacy Re-Born
Sydney ’08 exorcised the demons; Eden Gardens ’10 was another step…
Jaipur’10 confirmed God!
Wankhede, Mumbai ’11 should not matter…
Forest Gump was a fictitious character who ran for little more than 3 years & won Oscars, this man (?) has been running for more than 20 and still draws flak for the Ferrari! The journey from Shivaji Park to Wankhede of little more than 10 kms takes about 30 minutes by local train, this particular one has lasted 21 years and features more than 30000 instances of running up & down that 22 yard strip.
Sometime in the near future he will stop running, take off his guards, hang his boots as they say, put his feet up & enjoy a cheesy-fatty burger & beer for breakfast. Slowly he will be able to do the small things he craves like having the Kirti college wada-pav, hanging out at Marine drive with old pals, not driving the Ferrari, attending award functions or having dinner at Hilton. Sometime in the near future the shoulders will heave a sigh of relief, the fingers will straighten, the heels will cool, the painkillers will stop, the lower back support will come off and the only the eyes will moisten at mentions of Chepauk, Sharjah, Perth & Shivaji Park. He will have done his part, it’s another matter whether the people will be satisfied or not. It’s not in his hands. Math suggests he will have, but destiny takes over where math ends. We can just Hope & pray…
It’s a reality we have to face; and the sooner we accept it the better it will be for us. Ours is a country living in nostalgia & hope, nothing wrong in that. But, sometimes in reminiscing & dreaming we forget to revere the present. Remember in school when after a typical mathematics exam we used to ask the teacher, “Will we get marks for steps?” We had an idea the answer will be wrong, but somehow to us that didn’t mean we had not put in efforts. To our parents it always did. Ends should not be a judge of the commitment put in the means.
Remember how our parents did not let us go out for a night out to our friend’s farmhouse cuz we were too young @ 17 to do that & it was outside city limits? He was 16, travelling to a country with whom we had fought 3 wars, which remains to this day our biggest enemy & whose bowlers thought that getting a batsman ‘out’ was to get him to not be physically able to play the next delivery. From the foggy, bloody Karachi morning of February 15th, the dusty Sharjah night, the chilly Manchester morning, the hot Chepauk afternoon to the divine Jaipur evening the journey has attracted all the adjectives this language had to offer. Now we resort to mere sounds, intonations & swear words…”Gacchi dakhavli…”, “Kadak!”, “aaaaaaiiicchhhya gaavat!!!” & “baba laagle” sadly cannot be termed as adjectives.
Coaching, sport merchandising, FMCG & advertising industries were riding solely on him for years, more critics & ‘experts’ have made money on him than you can imagine, more people must have retired from cricket after he started playing than people appearing on reality shows, every time a teenager shined, his throne was said to be in danger. But he stood & lasted.
All the Graeme Hicks, Saeed Anwars, Inzamams, Pietersens, Pontings, Shane Warnes, Wasim & Waqars, Donalds of the world have come and gone, they just were not enough to deter him. There is no proof that the sun will rise tomorrow, but in this world of seeming chaos there is one order that it is impossible to hide the sun after he rises. There will be prodigies, there will be displays of brilliance, statistics suggests that there might even be someone who will manage to score more runs...
but will there be a better on-drive, a more sonorous cover-drive, more conviction in a straight drive, more nirvana in that raised bat, a more joyous celebration of a wicket? Will there be another one? No. End of debate.
This might be sounding a bit pessimistic cuz I am talking about the end of something which all of us who have held a willow fathom, but only because it took me a while to realize that yes we are having difficulties with comprehending what we will do when he is not around anymore, whom will we look up to, where will we dump our sadness? What will unite us? But the bigger problem which we selfishly seem to have overlooked is what will HE do? Not that he is incapable of doing anything else, cuz only God knows what he has created with so much attention & what are his creation's limits, but we seem to think of him as a machine that has been producing since the ribbon was cut 20 years back. We have no memory of him not being around. He has just been there, taken for granted. Just like the sun...
There came a time when he was riding a tiger in search of the tiger; the tiger he was, he knew, he owned & controlled. He was deciphered, figured out, if the critics were to be believed. The believers were quiet & confident. Its been 6 years since a leading newspaper printed an iniquitous headline, ‘Endulkar?’, I await the day when ill have the power to say to them “In your face!” that is what makes him different from us, he doesn’t think about retribution, he thinks about duty. Taoism says ‘be vacant & you shall remain full’; he emptied himself, went back to where it started & retraced his steps and as always just like after the eclipse the sun is brighter he came back stronger. He knew he had the ability, he knew he loved doing it; he had to make his body believe in his love. Today he is truly the Tao of Cricket.
I weep for the future of cricket as a visual attraction medium. The silence that follows his wicket is said to be the loudest sound in sports, let us make a deal that the applause that will be heard on his last day on the field shall be one of the most resonating sounds in sporting history. So I ask you all today to clap and contribute to the decibel levels, because the sound needs to reach the heavens, God needs to be told that we are thankful. Gather your tears because we need to repay the sweat. Stand up, fold your hands, close your eyes and worship because none of us will be alive to see another remotely like him.
It won’t matter if next time you think you can’t pull something off & don’t remember 143@ Sharjah, next time you think you are in pain & can’t think of 136 @ Chennai or 140 @Bristol, next time you think you can’t find a way but don’t remember 241 @ Sydney...but remember, every time that you feel your feet are above the ground think of Sachin Ramesh Tendulkar. We owe him that much...
Cheers & Good Luck to everyone for WC '11...
Karachi drew flak but confirmed entry,
But …“Mai Khelega” hinted longevity & determination.
Manchester ‘90 hinted at genius, Chennai ’93 claimed singularity
Sydney ’92 meant prodigal; Perth ’92 was magical,
Colombo ’94 implied belonging; Nottingham ’96 confirmed genius
Cape Town ’97 was princely, Sharjah ’98 confirmed coronation
Dhaka ’99 displayed performance; Bristol ’99 showed passion, responsibility & emotions
Chepauk ‘99 was tragic, hinted human; Chepauk ’99 & ‘08 confirmed peerless & granted redemption
Natwest ’03 showed adaptability & commitment, Sydney ’04 hinted @ sainthood,
Dhaka ’04 was comeback, Hamilton ’09 was Supremacy Re-Born
Sydney ’08 exorcised the demons; Eden Gardens ’10 was another step…
Jaipur’10 confirmed God!
Wankhede, Mumbai ’11 should not matter…
Forest Gump was a fictitious character who ran for little more than 3 years & won Oscars, this man (?) has been running for more than 20 and still draws flak for the Ferrari! The journey from Shivaji Park to Wankhede of little more than 10 kms takes about 30 minutes by local train, this particular one has lasted 21 years and features more than 30000 instances of running up & down that 22 yard strip.
Sometime in the near future he will stop running, take off his guards, hang his boots as they say, put his feet up & enjoy a cheesy-fatty burger & beer for breakfast. Slowly he will be able to do the small things he craves like having the Kirti college wada-pav, hanging out at Marine drive with old pals, not driving the Ferrari, attending award functions or having dinner at Hilton. Sometime in the near future the shoulders will heave a sigh of relief, the fingers will straighten, the heels will cool, the painkillers will stop, the lower back support will come off and the only the eyes will moisten at mentions of Chepauk, Sharjah, Perth & Shivaji Park. He will have done his part, it’s another matter whether the people will be satisfied or not. It’s not in his hands. Math suggests he will have, but destiny takes over where math ends. We can just Hope & pray…
It’s a reality we have to face; and the sooner we accept it the better it will be for us. Ours is a country living in nostalgia & hope, nothing wrong in that. But, sometimes in reminiscing & dreaming we forget to revere the present. Remember in school when after a typical mathematics exam we used to ask the teacher, “Will we get marks for steps?” We had an idea the answer will be wrong, but somehow to us that didn’t mean we had not put in efforts. To our parents it always did. Ends should not be a judge of the commitment put in the means.
Remember how our parents did not let us go out for a night out to our friend’s farmhouse cuz we were too young @ 17 to do that & it was outside city limits? He was 16, travelling to a country with whom we had fought 3 wars, which remains to this day our biggest enemy & whose bowlers thought that getting a batsman ‘out’ was to get him to not be physically able to play the next delivery. From the foggy, bloody Karachi morning of February 15th, the dusty Sharjah night, the chilly Manchester morning, the hot Chepauk afternoon to the divine Jaipur evening the journey has attracted all the adjectives this language had to offer. Now we resort to mere sounds, intonations & swear words…”Gacchi dakhavli…”, “Kadak!”, “aaaaaaiiicchhhya gaavat!!!” & “baba laagle” sadly cannot be termed as adjectives.
Coaching, sport merchandising, FMCG & advertising industries were riding solely on him for years, more critics & ‘experts’ have made money on him than you can imagine, more people must have retired from cricket after he started playing than people appearing on reality shows, every time a teenager shined, his throne was said to be in danger. But he stood & lasted.
All the Graeme Hicks, Saeed Anwars, Inzamams, Pietersens, Pontings, Shane Warnes, Wasim & Waqars, Donalds of the world have come and gone, they just were not enough to deter him. There is no proof that the sun will rise tomorrow, but in this world of seeming chaos there is one order that it is impossible to hide the sun after he rises. There will be prodigies, there will be displays of brilliance, statistics suggests that there might even be someone who will manage to score more runs...
but will there be a better on-drive, a more sonorous cover-drive, more conviction in a straight drive, more nirvana in that raised bat, a more joyous celebration of a wicket? Will there be another one? No. End of debate.
This might be sounding a bit pessimistic cuz I am talking about the end of something which all of us who have held a willow fathom, but only because it took me a while to realize that yes we are having difficulties with comprehending what we will do when he is not around anymore, whom will we look up to, where will we dump our sadness? What will unite us? But the bigger problem which we selfishly seem to have overlooked is what will HE do? Not that he is incapable of doing anything else, cuz only God knows what he has created with so much attention & what are his creation's limits, but we seem to think of him as a machine that has been producing since the ribbon was cut 20 years back. We have no memory of him not being around. He has just been there, taken for granted. Just like the sun...
There came a time when he was riding a tiger in search of the tiger; the tiger he was, he knew, he owned & controlled. He was deciphered, figured out, if the critics were to be believed. The believers were quiet & confident. Its been 6 years since a leading newspaper printed an iniquitous headline, ‘Endulkar?’, I await the day when ill have the power to say to them “In your face!” that is what makes him different from us, he doesn’t think about retribution, he thinks about duty. Taoism says ‘be vacant & you shall remain full’; he emptied himself, went back to where it started & retraced his steps and as always just like after the eclipse the sun is brighter he came back stronger. He knew he had the ability, he knew he loved doing it; he had to make his body believe in his love. Today he is truly the Tao of Cricket.
I weep for the future of cricket as a visual attraction medium. The silence that follows his wicket is said to be the loudest sound in sports, let us make a deal that the applause that will be heard on his last day on the field shall be one of the most resonating sounds in sporting history. So I ask you all today to clap and contribute to the decibel levels, because the sound needs to reach the heavens, God needs to be told that we are thankful. Gather your tears because we need to repay the sweat. Stand up, fold your hands, close your eyes and worship because none of us will be alive to see another remotely like him.
It won’t matter if next time you think you can’t pull something off & don’t remember 143@ Sharjah, next time you think you are in pain & can’t think of 136 @ Chennai or 140 @Bristol, next time you think you can’t find a way but don’t remember 241 @ Sydney...but remember, every time that you feel your feet are above the ground think of Sachin Ramesh Tendulkar. We owe him that much...
Cheers & Good Luck to everyone for WC '11...
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