Wednesday, May 28, 2008

One tight slap

Here is a possible response to the Petroleum Minister's proposal to levy a cess on income tax payers in lieu of a hike in the price of fuel. Get hold of your neighbourhood Congress man and give him one tight slap. Sounds ridiculous ? But that is exactly what the minister is trying to do. He dare not pass the price increase to the consumers of fuel so he has decided to hit a soft target i.e the income tax payer. We the people cannot give the minister the one tight slap that he deserves so we hit another target. How different is that ?

Monday, May 26, 2008

Bangalore is still under represented

Bangalore now sends 28 representatives to the Karnataka assembly ( Up from 16 after the recent delimitation exercise). Even after this massive increase in the number of MLAs it sends, Bangalore is still under represented by 8 to 9 MLAs. Imagine having 36-37 MLAs for Bangalore. The whole political landscape changes even more dramatically than what has happened in the 2008 elections

Here is the analysis based on the data supplied by the Election Commission

Average Number of Voters per constituency = 179336
Total Deviation for Greater Bangalore = 1552437
Under Representation = 1552437/179336 = 8.66

Yelahanka 241439 62103
K.R. Pura 308339 129003
Byatarayanapura 265952 86616
Yeshvanthapura 265174 85838
Rajarajeshwarinagar 301531 122195
Dasarahalli 291000 111664
Mahalakshmi Layout 218552 39216
Malleshwaram 194147 14811
Hebbal 100986 -78350
Pulakeshinagar 184980 5644
Sarvagnanagar 301976 122640
C.V. Raman Nagar 219663 40327
Shivajinagar 166829 -12507
Shanti Nagar 184138 4802
Gandhi Nagar 222144 42808
Rajaji Nagar 183301 3965
Govindraj Nagar 246476 67140
Vijay Nagar 253321 73985
Chamrajpet 214503 35167
Chickpet 207906 28570
Basavanagudi 226320 46984
Padmanaba Nagar 219637 40301
B.T.M. Layout 212808 33472
Jayanagar 189232 9896
Mahadevapura 275328 95992
Bommanahalli 261058 81722
Bangalore South 379115 199779
Anekal 237990 58654

Here is the data for all constituencies

Friday, May 23, 2008

Fund of Funds & Poll of Polls

Long long ago unsophisticated investors were guided to invest in mutual funds. They were told that since they did not have either the expertise or the time to select individual stocks, they should leave it to a professional to manage their stock investment. In those days selecting a fund was easy. You had about 20-25 odd funds and you just had to pick a few of them to invest in and you were done. Then thousands of funds bloomed (OK I exaggerate , only hundreds of funds bloomed) and each had varying risks and return profile. Selecting which fund to invest in became a nightmare. The unsophisticated investor was then guided to a fund of funds ( i.e a mutual fund that would select the best funds to invest in, and these selected funds would in turn invest in individual stocks etc ).

The same seems to be playing out in the exit poll field. The exit polls for Karnataka has thrown up so many possibilities, that one probably needs a poll of these polls to decide which way the election results would go. I am sure some astute pollster will come up with this idea and hopefully exit polls can go back to being one number that is at least expected to be right in theory if not in practice.

Monday, May 12, 2008

Possible explanation for the mother of disconnects

Anantha Nageswaran who writes the wonderful column Bare Talk in Mint had an article titled " The mother of disconnects". He was puzzled at the disconnect between US economic news and US stock markets. I have been puzzled too, but here is a possible explanation, that I can think, for the market behaving the way it is.

1) Most people have bought into the theory that one needs to invest in the stock market with a long term view. So bad news is not getting as many people to flee the markets as it would have a few years ago. So fewer sellers than expected.
2) The liquidity that the Fed is pumping into the system is going into the commodities & stock market, keeping both elevated.
3) In ordinary circumstance, this excess liquidity should have caused the dollar to nosedive. The presence of Central banks ( primarily PBoC) is keeping the dollar from depreciating quickly. Instead it is falling at a pace which China ( and possibly other countries ) are comfortable with and which will allow them to adjust without great social upheaval.
4) What else can one invest in ? Overvalued bonds ? Fast depreciating real estate ? Keep it as cash and watch raging inflation eat it ? Short the market & find that the market is irrational longer than you can be solvent ?

BTW people waiting for the "great crash" may be disappointed. It might be a slow grind down. Waiting with cash ( US dollar) is not going to help either ( Inflation !). Agri commodities seem to be in their own bubble. Investing in gold is fraught with danger ( Not much danger if the Fed continues its current " to heck with inflation" stance) as Fed can quickly change its stance ( Given a pliant media, it will also be sold as the very thing that will end the inflation and therefore is great for America). Oil is possibly the only asset class that may withstand any adverse Fed policy. If any of you know of any other way of preserving capital over the next couple of years,it would be wonderful if you me know about it.