Dubai - Thoughts of a weary traveler...

Finally we went to Dubai for a vacation - wife, kid and and your truly.. This was on 'to see list' for the past 5 years... time and again something stopped us from going there...

Well, it turns out that we would not have missed much at all.. giving it a skip. As you enter Dubai - the first thing you do notice... is the concrete jungle filled with sky scrapers and malls... ('malls' may not give you a sense of size - a normal mall multiplied by 100 would come close to the size of Dubai mall... this is just one of the many). The Dubai mall had more shop attendants than customers... there was the famed Dubai Shopping festival ongoing...

Anyway.. the whole place looked very surreal to me... If you visit the city with eyes open –  the truth is hidden in plain view, behind the glitter and glamour of the place.. you see more servants.. more maids, workers and poor laborers on the building sites (all from the Indian subcontinent) than Arabs... None looking all that happy. We did see some rich Emiratis in their white dresses being driven by Indian drivers in Porsches, Mercs, BMWs and Rolls Royces... The undercurrent I felt was - South Asians were not looked upon as equals in Dubai. Some research later did confirm this after fact.

The place... seemed more like Albert Speer was reborn to build commercial castles for modern day Walt Disney... The multitude of sky scrapers had big screaming 'TO-LET', 'FOR SALE' or 'CALL FOR LEASE' signs.. written in BIG..BOLD letters (each letter looked like covering 3 - 4 floors to me..). Most roads have unfinished sky scrapers with workers teeming to complete them in that scorching heat... wonder why the hurry to add one more unoccupied sky scrapper...

The friendly taxi driver (South Asian again... a little research on Google later confirms that the population in Dubai is indeed 50%+ South Asian - Emiratis' make up less than 15% of the population).....was more than happy to talk about the desert revolution - how he has seen the desert bloom in past 15 years... On top of Burj Khalifa (at 160 floors - this dwarfs the other buildings around.... wonder if even 5% of this structure is occupied...) - you get to see the other sky scrapers like Gulliver would have seen the Liliputs....so many.. every where... you even see a 'Before' and 'Now' picture on walls at the observation deck showing how Dubai looked 15 years back and now... made me wonder how on earth could someone build this concrete jungle in the wide vast desert.... what was the need? Who are they building it for? 15% Emiratis living there? Are they trying to turn this place into a commercial nerve center in the middle east - is that needed at all? Deep inside - it struck me hard.. how money can make people try to fight nature... could money turn Dubai into Las Vegas / Singapore? For how long?

Dubai - 1990 v/s 2013

Where do they get so much water to pump up 160 floors on Burj Khalifa.... or 100 floors... or even 20 floors... every building around seemed like 20+ floors to me (turns out that there are over 200 sky scrapers in  Dubai)... Water, after-all is more costly than Petrol there... During its peak in mid 2000's- 1/5th of cranes worldwide were in Dubai - its afterall a small place: a little Googling tells me that the State of Dubai is smaller that our city of Mysore (or any level 2 City in India - in terms of land mass).. how on earth do they even get to build these structures... who builds them??... the posters all around in Dubai will make us believe that the Ruler Sheikh Mohammed has built this city.. Turns out that the vast majority of the concrete structure gets built by teeming underpaid workers from India, Pakistan / Bangladesh.... one gets to hear about the scamsters luring people to go to Dubai / Middle-East in smaller towns of India in exchange for large sums of upfront visa 'fees' / facilitation money - did not seem impossible to me that they get lured to work in these mammoth construction sites.... we did walk past some construction site filled with Indian laborers.... felt a slight tinge in my heart.

Dubai went on the verge of bankruptcy in 2009... big brother Abu Dhabi saved them from defaulting their Dubai World loan. Seems like a time bomb ticking... with all those empty buildings and the empty malls....  seems like Dubai is headed for a hard crash...

Wonder how long can the lights be lit on the sky scrapers and water be pumped in those artificial islands.. and in those landscaped golf courses and multitudes of parks when Oil Money runs out. After all.. Oil will not last forever.. not even for big brother Abu Dhabi..

How much waste. What for and for how long? This money could have been easily put to better use. With much less human suffering. Something reminds me of that beautiful poem from Percy B. Shelley -

Ozymandias

I met a traveler from an antique land
Who said: `Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear --
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.'

Ciao till next time...Harsha

'Indian Stocks' - desi eshtyle, dose of news.. something which does not easily go out of fashion

Well.. most of Warren Buffett fans would know his love for media stocks (newspaper specifically) and how he has moved away from them over time. His shareholder letters are a wonderful source of 'gyan'..

Been in India for a vacation.. first thing which catches my eye is the newspaper.... I have 'read' the news, I know what to expect from online sources... but still... I LOVE to hold that paper in hand to get latest on the local stuff... happenings in politics... gossip.. some discussions on what are the current hot handles...

What a wonderful business to be in - 'local news'... better still in your own mother tongue. Hindi.. Kannada.. Tamil.. Telugu... Marathi.. Gujarati.. Bengali... Malayalam... whatever other languages which are 'not easily available on the net'.

Well... I'm now classifying all the regional newspapers listed on the market. There seem to be host of the small players. I have not spent time riding on one or two stocks in this space. Starting tops down - I am listing the top 1 -2 in each languages and trying to download their annual reports..

For starters - Hindi, Malayalam and Telugu have struck my mind. One tip: In Hindi - I like 'Hindustan Media Ventures'. Strong balance sheet and lot of cash (too much cash can be bad in wrong hands.. however I think coming from the HT stable, could be a good buy in mid term). I am still trying to see other language papers currently...



Ciao till next time...Harsha

Recently struck me... Food inflation

YoY increase in food prices (India) - 45.67%

No sane man could have guessed this correct if you asked him a year back (whatever happened to garibi hatao..). The weekend was spent doing research on how food ends up on our table (will not bore you will details).

Anyway.. There are at least 6 - 7 value adding layers which add-up to produce that basic idli-vada / anna-sambar on dining table.

Interestingly many companies in the supply chain have seen Sales, GM% increase quite consistently. Debt seems to be the only concern for some big companies.. (Example - Jain Irrigation.. by the way - I trust this to be a multi-bagger); then again I think the inflationary trend is not factored in at all. Stock prices have remained at pre - 2008 levels though earnings have more than doubled for most agri based firms.

Well.. on a side note, maybe... instead of getting MBA degrees - youngsters should pursue agriculture degrees. Anyway; for me - its time to pick up some stocks cheap.

But seriously - think again 45.67%!

Ciao till next time... Harsha

Banking - Only way is up.

Banking in India is fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks... I think from a long term perspective the only way is 'UP'....

From a global perspective - Indian banks are very limited in size (example: SBI - India's largest bank in all respects doesn't figure in top 50 banks worldwide. I think it is no. 89 or so on the list). Nevertheless - I reckon RBI is taking more measures to speed up banking growth. New banking licenses coming in by end of 2013 is one such indicators...

Banking (and Insurance - which is nascent in India and somewhat related) would be long term growth story. Last private sector banks to be given licenses were - Yes Bank, Kotak Mahindra.. nearly 9 years back. Before that sometime in 1990's - ICICI / HDFC (one knows the meteoric rise of these banks).

From a growth perspective, my picks -

Yes Bank - One of the fastest growing banks in India. Have been accumulating ever since 2008 when it reached sub 50 levels... some nice buying opportunity now when its hovering sub 300 levels now..

South Indian Bank - One of the oldest private banks in India. Steady presence in south.. patronized by NRI's. Nice one to pick sub 20's.

DCB - Its sort of rising again as a phoenix... dark horse worth holding. Once the debt goes (hopefully next year) - I like this one.

What could be interesting bets - some of the applicants for new banking licenses - LIC Housing Finance, L and T Finance Holdings, AB Nuvo, others... I'm kinda looking at averaging the top 6 - 7 players who most probably will get a license. Seems like the safest strategy for me!

Ciao till next time...Harsha

Auto ancillaries - Lumax Auto Tech

Auto Ancillaries is a long term growth story in India.

I have been pretty bullish on Auto Ancillaries as a long term India story. There are many good picks currently and one of the interesting ones I feel is Lumax Auto Tech.

Recent panic has seen many of the Auto ancillaries trade all time lows. This led me to research recently about all my picks in this sector. Best of the lot I think is this little known company.

Have been following this for a few years since its IPO. Pretty strong promoter presence, nice dividend yield (trading in 90 - 93 range, dividend yield of ~6.2%), strong growth prospects since they have a strong presence in Auto lighting segment (Near monopoly at Bajaj) and others like two wheeler chassis, Adjustor Motors, Exhaust systems & Mufflers, Fork & Handle Bar Assemblies, Petrol tanks, etc to two and three wheelers.

I didn't have enough money in 2008 when I thought this could be a nice bet - just had another buying opportunity. Seems like a nice investment for next 5 - 10 years.

Ciao till next time...Harsha

Stock Investing - My little mutual fund

As I have said sometime back - it feels awesome to get more return on your money than a fixed deposit could give you. Better still if you could average 20%+ YoY.

I am going to share with you my current thoughts on stock investing. Its just my story as I see it. I know I have a long way to go. I am just starting off and I feel happy to have struck to investing. I have no reason to share this, but for my own personal gratification.

Stocks have always been fascinating. Dad's old shares - mastergain / mastershare and the small talks in house made me want to invest and learn.

As soon as I finished engineering - I bought a few shares from my first salary. I have not stopped doing so till today. Analyzing companies, reading balance sheets and just reading about different sectors and trying to create a vision for future gives me a kick.

Here is a timeline of my investment story.

2004 - started investing from my account.

2006 - doubled my money (what little I had put in).

2007 - was a bad year. made investments at wrong level. Let me blame this on my MBA degree I just got. Broke even though.

2008 - worst year till date. Lost nearly 40% of my money. However - stayed put.

2009 - through 2010 - recovery. Modest gains - something which I really took on was habit of reading balance sheets and analyzing cash flows.

2011, 2012 - picked some good ones. Started diversifying. Something which hit me hard last year was the dividend aspect. I feel that a way of making easy tax free money is dividends.. money that comes back to you every year. never ending. usually increasing.

2013 - currently analyze and hold positions in 80 - 90 different stocks. The wild swings and high rupee-eur/usd rates have been my friends. Lots of stocks trading at low valuations during past couple of months. I am not much into buying and selling on short term basis. Like to hold onto them. Except that I like to keep most of my money in few of my favorites!

So.. that's my hobby. Let me give you my thoughts on my favorite picks next time I write my blog (hopefully soon)...!

Ciao till next time...Harsha

My bucket list in Europe...

Well.. was just thinking what are the things I would love to do / explore while in Europe -

1. Skiing on Alps.... the feeling of gliding down the mountain side is a dream come true sort of experience.

2. Full road trip around Europe....

3. Explore Rome. Istanbul (Constantinople). birthplace of Roman Empire and Byzantium - East Roman Empire...

4. Explore London. Visit the museums.. Big Ben.. Thames... Sherlock Holmes No 221b Baker street.. London Eye.. Westminster Abey.. Windsor.. The globe..

5. Explore Berlin.. Third Reich.. Berlin wall... Cycle around and while away basking in the historic city..

Well... those according to me would be the top 5 things to do!

The next 5 places (cannot think of things.. so changing it to places) to go would be -
6. Paris
7. Prague
8. Munich
9. Amsterdam
10. Athens..

Ciao till next time...Harsha

New year resolutions and more..

New year resolutions are going out of fashion.. I know :-) ; but, ever since I was a small kid - its been a kinda yearly routine to have 2-3 things written down which I really want to get done through the year.

What does 2012 hold for me...

Frankly I have no idea.. but, what 'I' personally want to do in 2012 are as follows-

1. Learn German. I have come to know that I can never be fluent in languages (you see when I speak my national language - Hindi, one can easily see a gentle smile come up.. I learnt that language for years in school and still don't get it right)... But, atleast I want to try.

2. Write. I have seen that over past few years - my ability to put pen on paper has almost diminished to a fault. I really would like that habit back..!

3. Get smart at compartmentalization. The ability to focus and de-focus. At the moment I think this has become a concern area... could soon burn-out with just work taking up 80% of all thinking time..

4. Focus. Focus. Focus. Few items to think and execute... and try to do an extraordinarily good job of it.. 

Let's see if I can stick to these!

Ciao till next time...Harsha

Year 2011 fading away...

The year 2011 has been slipping away from my hands before I can sit.. ponder and think what is happening. Maddening.. lots of travel.. new house.. new place.. new life into our lives.. lots of new stuff.

Its already November and I just vaguely remember it as just yesterday that we landed in Munich.. Living life fast forward mode..

Come to think of it.. many things have happened in 2011 - economy has just gone from bad to worse.. greeks are down in dumps.. US economy not AAA+ anymore?.. Japan earthquakes.. Chinese increasing dominance.. Osama dead!! (living nicely in Pakistan?).. Gaddafi dead (whatever is happening to dictators).. lots more bad guys killed (US now have every reason to rejoice.. except, their economy is slowly coming to a rumbling halt... too bad for all of us).. overall depressing economy..

If I could give one sentence to define 2011 it will be 'start of tough times ahead'.. ever heard of 20 year economic cycles (we could be entering into the down curve now).

Personally this has been the most different year I have had till now.. away from India (Started off in Germany).. lots of learning (I have just been going through a crash course in Sales.. I fancy, that I am not a bad student).. traveled over 20,000 Kms (believe me.. 'I' drove all those kms: add multiple flight journeys.. and.. I am sure that I have crossed a 100,000 Kms travel this year) : It has been a learning experience.. as I said (sorry for the repetition), but this has been a crash course in sales.. learning German (not bad at a short conversation.. but next year I need to get that skill right up!)..

Baby.. we had our first baby.. thank god I have a understanding wife, we have been able to get super along in this.. lots of stuff have changed... someday I will write how it feels...

World has changed.. or rather am I wearing a fresh pair of glasses which makes me think the world is looking different?

Well, how does it matter. I AM ON HIGHWAY, AND I LOVE DRIVING.

Ciao till next time...Harsha

Anna Hazare - What it means for us

A few days back, me and my cousin Ravi were arguing about Anna Hazare. Don't know why we picked the topic, but anways.. we ended up talking about him. May be.. it was the newspaper we were reading which made us talk about it. May be.. it was the TV which made us think about him.. but neways we took a vague liking to re-discuss this much discussed oft spoken man.

Was this guy only standing up to get one bill passed (Lokpal bill)? Was he trying to fight an endemic thing (corruption).. was he just wasting all our time.. or was he making a drama to create some name for himself? Why was there so much fuss about him? may be lack of other news? could be half crazed people who wanted to come in the media and get some mileage...

So many questions. So much confusion around this whole topic. I failed to make sense. So did Ravi. Somehow I wanted to argue 'for' this guy and Ravi (for sake of argument) was 'against' this guy.

Ravi mentioned that there is already a Lokayukta.. he has enough and more powers to curb corruption.. why this new bill? What was the use of all the natak in public.. may be it is un-democratic for one individual to hold up the parliament.. maybe the one lakh people who did gather in Ramlila maiden would stand for anyone who talks in populist terms.. Also to quote an oft quoted story - 2 people who were riding a scooter towards Ramlila maiden were caught by police for driving without a helmet. Coolly, the driver gives the policeman a 100 rupee note and moves ahead. Is this not corruption? Are we not all part of it. Why do we need corruption to go away..? May be its always been in our psyche.. may be we have it in our DNA... for 1000's of years.. before British.. before the Mughals.. we were a highly class oriented society where corruption and scandals were very much part of the Indian system.. why all this fuss now.. people bunking offices or colleges in guise of Anna Hazare and leaving home to have a nice early break.. is this not corruption of the mind as well? So on and on and on went the argument..

At one point may be I felt.. may be all this is so true. May be its timepass.. May be.. this too shall pass....

But in a slight corner of my heart I felt that maybe all of us.. irrespective of nationality / color / race or age are corrupt. It is a constant fight against human nature to take the easy road when faced with tough situations.. better to give the policeman 100 bucks than roam around police stations.. better get out of the situation and then, we can think of corruption. May be.. I will wait for all the 1 billion people to become white before I too shall become white. Maybe.. I will continue to 'want to be good' but.. be ok with slight temptations to be 'ungood' just for a little while...

None of us are white. None of us are black. We all fall in shades of grey. Some lighter. Some darker. It is our constant fight to be seen on the lighter shade of this color and confirm to the maxim - purer than thou.. this is what this guy is trying to stand up for. He is today talking about something small (Jan Lokpal).. but eventually he is trying to stand against the bad side of human nature.. he is standing to make the society a little bit more lighter.. he wants to say that all of us want to be good.. but cannot be for various reasons... maybe some day.. we will become good. Maybe our billion deities some day would provide us with divine powers to resist evil. Sooner than later. 'Hope' as they say, still burns bright in our hearts.

Something struck me when I was reading a book lazily on Sunday afternoon.. one of those books which you have in your closet (you buy it for the sake of that jazzy name.. but which you will never read). I happened to pick it up more out of curiosity. Chanakya Neethi was the name. In this, Chanakya narrates a story of how he was able to bring down a big Kingdom run by a king named Dananand. There was a time when Chanakya had honed his pupil Chandragupta for years and had finally managed to muster enough power to attack the king. Many a times Chandragupta attacked Dananand.. many a times he was beaten.. fair and square. After getting defeated more than a dozen times.. finally Chanakya gets dejected and is ready to leave the city; he is walking on the road when he gets attracted to a fight between a mother and daughter in a hut. He hears the mother loudly scolding her daughter - 'you are acting like that fool - chanakya.. would anyone turn the roti on a burning pan holding the middle?? you should always hold it from the ends, if you hold it in the middle you will always get burnt.. the humble roti is turned on the pan when one holds it from the end..'. this caught Chanakya's attention. He was fighting a losing battle trying to attack Dananand head-on. He soon changes tactics to fight Dananand. He starts attacking him from the fringes.. he asks his pupil Chandragupta to win over the fringe villages and towns.. not fight him directly but.. slowly win all the unimportant towns around the capital. Within a few years, Chandragupta wins over Dananand.

The success mantra - ' fight from the fringes.. fight the small battles first'.

Sorry for diverging... so coming back, maybe the fight for Corruption will take a long time to culminate. It is the small battles like this (Jan Lokpal) which people like Anna Hazare has started that will find a way.. Maybe its now starting in the fringes (fringes in all our minds..).. someday it could become so big that 'we' become strong enough to eliminate that nagging element of corruption. Maybe someday.. billion prayers will be answered. Maybe our billion deities finally relent to the fervent prayers..

Ciao till next time...Harsha