Speculation is Good

Speculation is one word that has been over used and defined by every individual in their own suitable way. There are two kind of Wealth creators, one who create wealth over a period of time, by creating real assets giving consistent and modest returns year on year and then there is a breed of people like Georg Soros, Jim Roggers , Harshad Mehta who rise on the scene out of nowhere, and end up becoming hero’s and legends overnight. They don’t create wealth they own it. One might argue that one should create real assets and Jobs that would add value the Society. And we almost always blame the Speculators for rigging the prices, and take prices of commodities and stocks or for that matter any other asset class to nightmare proportions.
If you ask me speculation is the biggest gift of free markets, to the world. When we talk about great success stories scripted by Real wealth creators, we seldom forget the contribution of Speculators to their achievement. The most important thing that speculators bring to the table is liquidity. Speculators are buyers of risk they buy risk from hedgers or investors having interests or positions in underlying assets.
We have this tendency to blame speculators for bubble formation, and we don’t blame the bubble here, we tend to blame the breaking of it and me make the hoolah only after a crash, as we loose money else , we have a fantastic word for any asset bubble formation and that is ‘Bull-run’, the aftermath obviously brings us the pain , and we start to blame, but is it right to blame the Speculator? The real culprit is the leverage in the system .History has testified that men who were not over levered have survived the carnage of asset bubble bursts.
I am against banning of trading in commodities; the Govt. by doing so is not addressing the real cause of the price escalation. The degree of leverage is extremely high in the Commodities Futures market. For instance if we take the hottest sticky story of 2005 Guar Gum a commodity which saw nightmare prices, and daily trades greater than the actual yearly production. This commodity’s initial margin was 7% ( In case of additional volatility a special margin is charged on both sides in respect of all outstanding position, which will remain in force for next 2 days, after which the special margin will be relaxed.) this translates into a basic leverage of 14.3 times.
The extra leverage though earns you big, but then when it comes to taking back its very brutal. Managing risk’s is extremely important to impart sufficient liquidity and having logical proportions of leverage. Else we will see more asset bubble formations.

*Any Exchange requires its members to deposit and maintain in their accounts a certain minimum amount of funds for each open position held. These funds are known as margin and represent a good faith deposit that serves to provide protection against losses in the market. The Clearinghouse collects margins directly from each of MCX clearing members who in turn are responsible for the collection of funds from their clients. Margin requirements and contract specifications are subject to change.

This document by MCX was used for reference

Who is More Powerful? Finance or Marketing Guys?

Before i write anything, i would like to make it clear that i am doing my majors In Banking & Finance. Now that should not make me bias towards a particular side.I strongly believe we as human beings do selling continuously in some way or the other sell, weather its HR manager selling a company to employee, or CEO selling it to investor, a top notch Investment banker pricing the issue and selling it to the Public.Selling may sound sad or to some of you harsh but then its an integral part of marketing. Now some of you may say, hey i want to get into Equity Research,i want to do Financial Modeling, why should i sell,if not that question then what should i sell; interesting my friend Abhishek Arora once said, Equity Research is of two types Buy side and sell side, one that you sell to management for proprietary trades executed by brokerage house and other either sold to your clients (generally Institutional)for the fees, and the other one which is made open to public through analyst upgrades/downgrades, bottom line is if you are an excellent analyst but you dont know how to put it in words and present it to clients,and pitch the report properly there will be no takers and all that excellence ,brilliance and exuberance with which you make the report goes in vain. See if you have good analytical skills you can have a nice job travel first class have a stiff life,but can u reach to the Top, my readers would have seen the 1985 flick WALLSTREET , Gordon Geckko was not an analyst but a great street smart marketer.we all know the Success story which Apple Inc. has crafted the person responsible for making Apple Steve Wozniac (hey who's this Guy a typing error ) no sir no typing error the Brain Behind apple was of Wozniac,still we say it was a brain child of Steve Jobs.Who took Wipro from $250 million Co. to a $1 billion Enterprise, it was Vivek Paul the most charismatic CEO. You might feel why this guy is writing this article many of you reading this feel that Marketing is for wimps no its not the case the most infuential and sucessful people born who have made History were /are good marketers .Another reason i am of this view point is that God is a smart kid sitting out there, we can improve our soft /negotiation skills to a large extent but not our analytical. And i belive the key to sucess in life is identify your weakness and play to your strengths !

Its Different ! ! !

We always try to be different, at least try to be apart from crowd.
But why some of us do that, it was true in my case as I dint want to work with any IT major , as I will be sitting in the same old cubicle, I will be lost in the crowd.
Aaaahaana!!, so is it the fear of not being notice makes us this way, where we push ourselves to be different. This is for sure we all love to leave a mark, an impression in whatever we do.
And it takes courage not to follow the sheep herd mentality, yes we all think differently but very few have actually the courage to be different.
And those who try to be different have been successful, at least most of them , to name a few Warren Buffet, Georg Soros, and all most all the entrepreneurs have the ability to think differently and go against the God’s and the odds to convert the perceptions of vision into realm’s of reality.
Now thinking differently stems from two types of personalities, one of them are who have fear of being noticed, the inherent motivator for them is fear. And the other who try to stay away from limelight!
Lets not go too far the famous networking site, and one of my friend Kailash Bajaj ( poster boy of Dara Shaw & Co. and one of the most famous, admired, respected and celebrated (amongst students) student at IBS HYDERABAD ) has the words “less u knw me better is 4 u” on his orkut profile and is flocked by mob in IBS and everywhere he goes.( again he does not do this to garner attention.... he runs awy from lime light and still adulation follows him!)
The reason may the charisma that is created by being different, where people have their profiles overflowing with information and you write few words , it does creates that enigma which is inexplicable.
So being different does it work? Yes if you have the courage to create an identity for you apart from the crowd it can be a real plus.
This article is being inspired by an unknown female on orkut by the name of Bharvi Pandya.