Thursday, March 15, 2007

The 'Have Nots', 'Know Nots' and Nandigram
This is what I posted in DC against an article on Nandigram:
Thanks Bharath for the coverage.

One distinction we need to keep in mind, in many a comment here and in general is the linkage between 'stupidity (stupid)' and 'poverty (poor)'. A kid is born in the family of 'have not', thereby s/he remains 'know-not' mostly through-out his/her life, and thus may be mistakenly identified as a 'stupid'. Parental/guidance based learning takes us to a certain stage beyond which self-learning starts - they simply don't get that basic infrastructure/privilege.

So I feel we hurt the dignity of those 'have-nots' who remain thereby 'know-nots' by calling them 'stupids', though I understand that, that's not the intention.

Otherwise they would be as good as we are in society. And we need to keep in mind globally nearly half (3 billion) people live with less than $2 a day, more than a billion with less than a dollar a day. The picture in India/broad South Asia is worse.

Take a look on our ability to borrow and even do average business, with having the reasonable ability to pay back. And then more you can borrow, richer one becomes fast.

Grameen Bank is an example of that model for the poor.

Probably, driven by my instinct here, I feel that the present form of democracy (or whatever form of government in similar societies when other similar countries are viewed) we talk about globally would go for a toss the day these guys break that cycle of 'have-nots to know-nots' by upgrading themselves to something that a 'universal access' can bring, that too real fast. And if this transition happens that fast (that global economy can't accommodate to leap them all out of poverty quickly), they still remain in the category of 'know' and 'have nots' together; it may destabilize society, country and potentially the world.

Because whatever free market economies few propagate, present markets no where is free (take Doha round imbroglio in WTO). It's mostly regulated by policies, credit money supply, trade rules, military power, etc. etc.

The day Government stops credit money supply (or declares in advance how much it would supply, and may have a means to distribute that equally to each citizen's hands), the day there are no domestic or global duties (or uniform duties everywhere globally), no trade barriers of goods or services...that would be true free market economy.

We are far away from that...and what we see as 'market corrections' often now are merely an attempt of 'market forces' getting out of that shackle to be free; but that shackle is too strong to be broken soon, thro' policy actions or military actions (many US interventions when policies fail. Many believe reason for attacking Iraq in past, and now probable Iran in future was their decision to trade crude against euro by breaking away the decades old petro-dollar relationship. Gold-dollar is already broken in collapse of Bretton Woods, now if petro-dollar is also broken, why should China hold trillions of dollars of reserve, and thereby fund US deficit?).

Income divergence even in the U.S. has been on the rise in last few decades because of imbalances in market forces is getting higher and higher, and have been a concern for many there too. And going at this rate, even U.S. may potentially face that destabilizing effect internally, unless something different is done there in next few decades.

Based on this logic, if I state a conspiracy theory that the 'haves' of the world, more so the super-rich and government (to maintain social stability) need poverty to be slowwwwwwly eradicated, and know-nots to be slowwwwwly converted to knows, it makes sense.

Even in such a hypothetical scenario where everyone has a decent level of income, when one looks that with present level of pollution, Mother Earth's capability of natural cleansing, and the potential consumerism it may lead to because of global warming...we would have another kind of catastrophe getting only escalated.

Sounds bad I know, many may argue these are 'pessimistic' 'doomsayers' theories...and I would love them to fault the flow of logic in my linkages so that I can be even more optimistic. So thanks to them in advance...
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© Ranjit Goswami. Ranjit is a research scholar with IIT Kharagpur and the author of the book Wondering Man, Money & Go(l)d.

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Friday, December 01, 2006

Present day trade-offs of parenthood
Child is the father of the man - so said William Wordsworth (1770-1850) in his poem titled 'The Rainbow'. I heard it long time back, it registered in my mind subconsciously somewhere, and then came out the trigger where OMNI suggested the topic of parenthood to its citizen journalists.

Life is beautiful. We may not often realize this in our day to day routine lives or difficulties, more so in journalism where we report more on the wrongs than the rights. The world and nature may not as complex as human civilization and society is, world and nature follows universal rules. In human civilization and society, rulers claim same, however in effect there are two sets of universal rules if not more. The rule to be applied for any case does not depend on the merit of the case alone, but more on the background of the participants on that case.

Journalists (and citizen journalists alike) focus more on those 2nd and subsequent sets of universal rules.

But there seldom are 2nd or subsequent sets of parenthood. So I thought of not letting this opportunity go. And thereby I got into some basic research on parenthood and our story of parenthood, keeping aside my academic research.

Things can wait. What don't wait are time...and the growing up of our son. And this experience of sharing this with a few other parents (or would be parents) is so much fulfilling that it must be done. All love stories sound same but still is unique in the eyes of any lover, similarly the mention of parenthood brightens up any parent anywhere.

Today I wish there were more stories on parenthood than there are love stories. Married men would probably agree more (my apologies to the other sex, including my wife who has agreed to join me in coauthoring this article. Any more such remark and she may walk-off!).

On a serious note, nothing teaches you in life more than life itself. Well, coming back to the words of Wordsworth - I could not make out the true worth of those few words till now. Let me confess, it's still not that clear to me (like 2+2 makes four, however with that mindset one should not approach in finding the meaning of those words). However few ideas came through simple but powerful Google search which makes research a kid's play and so much fun now-a-days.

A revisit to the context of those words below (The Rainbow, 1807):

My heart leaps up when I behold
A rainbow in the sky:
So was it when my life began;
So is it now I am a man;
So be it when I shall grow old,
Or let me die!
The Child is father of the Man;
I could wish my days to be
Bound each to each by natural piety

There's no mention of any son or daughter there...it's more of an inner reflection and the process of growing up.

In the poetry archive, General Discussion (Phorum 5), Marian-NYC offered following explanation :

'I want to never outgrow that part of being a child. "So let it be when I am old."

And here went another by Just Jack

Before my son, Conor was born I was just a guy. Nothing special. Nothing to lose. I did my share of stupid things, knowing they were stupid. Maybe more than my share. Since his birth I have a new take on things. I have a new role in life. I don't think I'm anything special, but now when a questionable situation arises I have to consider 'What kind of example am I setting for him?'
Don't get me wrong. I'm not trying to be a saint or anything. It's just that now that I have a son, it's important to do the right thing. I want to be a man he can be proud of.

As far as Wordsworth goes, I guess it could be this. A father is the guy you count on to keep you in line. I don't speak for anybody else, but he is the reason I keep myself in line.'

The site also has some nice words 'On Children' where it states 'Your children are not your children. They are the sons and daughters of Life's longing for itself'

So what's my/our story of parenthood. There are so many of those as any parents would say. To start with one universally accepted one (and as explained by father of either Larry or Segrey - I don't remember which one of the co-founders of Google) for the Dennis the Menace like little naughty ones we have at our homes 'he (either Larry or Sergey) was good in his childhood when he was alseep'.

That's on the funnier side. However deep in my heart now I feel that I take more from my son than I give. My wife (did someone say as usual?) cribs that I don't give him time, however I know sooner or later would come a period when our today's five-tear old won't give me time. As the old experienced principal of his school, Calcutta Boys School, explained to us - 'Hold your youngsters
fingers as long as you can when you take them out; because as they grow and take pride in being independent, they won't allow that privilege to you later'.

We did not plan for Sonu. The best things in life happen. Like any first-time parents, we were apprehensive about the forthcoming challenges and demands that parenthood would bring. I thought I was not yet ready, Mithu - co-author and my wife had to pursue her Doctoral studies. Now we Thank God that it happened.

I was in corporate world - at times being away from my family for more than half of the time in managing my role between Mumbai and Kolkata. Later on as I was not heading anywhere in my job, and as I had keen interest to pursue academics, I enrolled for a PhD program (Indian Institute of Technology, Kharagpur) in the middle of my thirties thereby endangering my family from the ensconce of a stable income. So long all household activities were managed by my wife alone. Yes, I was one of the self-centered persons happy in delegating all family responsibilities to Mithu (here Mithu is absolutely right and laughs at my confession). So once my status in the family as a wage-earner gone, I volunteered to Mithu to help her in few of her regular household activities.

She entrusted me to take Sonu, our son, to the car pick-up point on his way to the school in the morning. Sonu goes to the school in car-pool (a concept ike school bus, but a car takes the position of the car). First few days, there was a strange feeling of degradation that got into me. That's the same time earlier I used to get ready to go to office after browsing the morning papers,
and now, without a job I am holding my son's hand in that 3-4 minutes walk to the pick-up point. A strange feeling used to hurt me as Sonu used to chat with all our neighbors on his way to the point.

For a few days. The strange stupid feeling has now gone and now I wish I could hold those little fingers as I walk down in the morning Sun for a few minutes to take him to that pick-up point. He babbles to me on his way never knowing when to keep quite or shut-up, earlier I was less attentive. Now I try to be more attentive, and at times start a discussion on my own. At times he
asks me not to speak much when he sees any known face close by.

Then there are other funny moments with scope of introspection. To control his watching cartoons over TV, Mithu took the extreme step of locking those channels; and we lied to him. I was not too sure on the correctness of this, as sooner and later, with his growing technical prowess - he is likely to catch our trick. However Mithu knows what's best for Sonu (and I know she has so far been right, so I don't argue), however when he appeals to us to talk to the cable-
operator about restoring those channels, a guilty conscience bites me. Then on the other day, as my father visited us, I saw my neighboring two generations were watching some channels (like Animal Planet/National geohraphic), and during a commercial break, an ad-line went with voice-over TV commercials saying 'Very Very Sexy'. We knew Sonu speaks the same thing along with that commercial, but so far did not know (neither we know now) whether to say anything, and if
yes, what to say. Mithu and I looked from a distance on any visible reaction from my father, and expectedly, we saw none. I don't remember to have uttered that three-lettered word in front of my father ever in my life. Should such ads be aired in programs meant for kids? We aren't sure. Sonu misconstrues mating over such channels as another round of pre-mating fights as prevalent
in many animal species, I fumbled couple of times explaining him the difference, but can't claim success as of now.

Offsprings bring fresh airs in married life. One can spend time with them hour after hour without being tired, unfortunately we don't do that. On the walls of a school in Kharagpur, as it catches my attention on my frequent visits to-and-from Kolkata are written following line:

'Your kids need your presence more than your presents'.

Other than Sonu and Nature, I can't think of spending days and months alone with anyone else together in close proximity without bringing in some bitterness. That's true for Mithu as well. We love each other - but that blind love that brought us together 18 years ago (we shared ten-years affair before our marriage) has now been replaced by trust and mutual unspoken dependence on
each other. It's Mithu who binds our family together today. We scold him at times, he cries - but in the very next moment all is forgotten and he smiles and jumps with us, and no baggage are carried forward. That's what otherwise we do in our civilized society too often and as stated by the
master song-writer Dylan in the 'Gates of Eden'
"With no attempts to shovel the glimpse
Into the ditch of what each one means
At times I think there are no words
But these to tell what's true
And there are no truths outside the Gates of Eden"

There are trade-offs in life, and they have never been as stark as in present time. As we move ahead, the trade-offs would be even higher. These are essentially between money and time. I wish I had the money that I earned in my corporate job along with the quality of time and mental frame to enjoy my time the way I liked. I can't say that I have overcome that altogether - I no longer
jealously look at the corporate parties in five star hotels in which we no longer are a part of. We wish we could as human expectations don't have any limit. However what I am trying to learn in this parenthood phase of my life is never to trade-off a simple get together with my family against
whatever be the offer in a corporate platter. Or that of money can buy many things, but not time and neither it can buy quality time. As it's said, the best things of life are always free. So why trade-off limited time with unlimited money-supply, more so in many of the jobs that we do (I was in business development) where in many occasions one needs to sale his soul to be a
successful sales-manager. Many times we aren't pleased to meet someone, but the pleasantries of life teaches us to lie to each-other and say blatantly 'pleased to meet you'.

With our sons and daughters, there's no such attempt to 'shovel the glimpse
into the ditch of what each one means'. Our unspoken words, body languages and surroundings speak the same language when we spend time with our little devils.

Sonu would grow up. As he grows, I can sense the signs of changing times blow in that morning wind. And now I feel how stupid I had been in awarding all these privileges to our Mithu (Mithu asks me to take all the associated responsibilities - and not something for few minutes only).

Dylan, the master said 'What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.' In present competitive society as we are taught to be successful, to be rich, to raise fast, etc. we often forget that all those are there to make life beautiful and happy. Sonu and our sons and daughters continuously teach us many of those important lessons that grown-ups know, but seldom apply.

Sometimes looking at the issues of terrorism, climate change, income divide, we get a feeling that it won't be a good world that we would be leaving behind for our offsprings. Echoing the words of Just-Jack and borrowing from a Native-American quote, "Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children."

Wish we could give them a beautiful world in lieu of the beautiful moments they give us...and thank God and Nature for bestowing us with the wonderful feelings called love, and parenthood.

Thanks to OMNI for the story-idea. And our final take is no trade-off is worth pursuing that comes on our way of being responsible parents. We aren't sure whether we are responsible parents, however we try to be one, and there's continuous learning here too like the learning curve that management world talks
about often.

Parenthood is a wonderful learning experience...
© Ranjit Goswami. Ranjit is a research scholar with IIT Kharagpur, and is the author of the book Wondering Man, and the Internet

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Thursday, May 25, 2006

Confessions of a trader...

(Neither trader nor investor in Indian markets in May 2006)


(Part of this article was published in ICFAI PortFolio in July 2006)

Wondering man series begins...Welcome aboard - all wondering people of the world. Let's share our ' heartache and the loss of god wondering, wondering in hopeless nights'. We all wonder, the universe wonders, the atoms wonder, our feelings wonder

and stock prices also wonder...

The series begins with a wondering trader - having lost all in May 2006 volatility.

This is confessions of a trader...who didn't know whether he was a trader or an investor.

Markets are cruel. They don’t forgive one casual decision when one calls his/her broker and buys which one may have done many times in the past, or the press of a single button in computer who trades online.

I lost heavily – I lost 95% since 12th May of my stock-market port-folio in three trading days.

What’s my background? Am I an ‘informed investor’ as the Finance Minister or SEBI would state? I believe so – educationally, knowledge wise and market information wise. I made a mistake and at times you get away with it, at times you don’t.

There are different participants in a stock market or in any market. People whose living depends on that – the brokers, and then there are investors/traders/position takers even operators and regulators. And the infrastructure needed for payment mechanism.

The brokers’ community is interested in more transactions and a healthy market, which leads to more transactions. And they compete for business by providing margins to customers.

Investors, traders and position takers interest is also in a healthy market. I started as an investor and moved to a position taker in the market. Ideally position takers should move fast with market developments – I failed to do so. Few others did so. So as some position takers lost heavily, some gained heavily and people who were hedged may have lost/gained not so heavily. Position takers are the speculators driven by greed of more return and may therefore may get that more return/loss, with more risk.

Regulators are those who need to stop operators from manipulating the market. Speculation is not bad – but manipulation is bad and therefore should be stopped for ideal functioning for any market. Exchange margin requirements should be such for any instrument so that that instrument’s market value till its expiry should not ideally fall below the margin. To give an example, to buy a Reliance stock at Rs. 1000/share, exchange may need a margin of 25 % that is Rs. 250/share at the time of placing the order. Brokers’ with additional risk management measures would put another additional margin depending on brokerage houses risk management or may even dilute that to get more business or without cash margin may generate margin out of other equity holdings.

All these are self-fulfilling mechanism when everything goes fine. But when things start looking bad as it had been since 18th May, one triggers to another as all prices decline on a mark-to-market (MTM basis). And market is shaken-up. What added to the problem is online fund transfer mechanism prevalent in the country – someone who was overexposed in equity or derivative on a mark to market basis may have money in a bank. But that money needed to be transferred to the broker and unless that happened, to reduce his risk, brokers’ were forced to sell their holdings. So effectively brokers’ were waiting for a price at which they can sell and not make any losses – meaning clients were sort of left with nothing. And at the lack of Real Time Gross Settlement mechanism (RTGS) mechanism, unless that bank where clients’ money was were linked with brokers’ terminal, that money and valuation was useless as the money needed to be given to the exchange on everyday otherwise brokers’ terminal is blocked and exchange can sell shares to protect exchange from defaulting and leading to larger crisis.

I was overbought with my own money, and did not try to save my holdings and left it to brokers. I had other assets in PPF, LIC or even real estate, and an advanced economy may have given me time to interact online with these and arrange negative mark-to-market margin in the week-end. I did not have that option. I was crying internally and was philosophical, feeling (and believing) that God does everything for well. And probably I will be able to have better peace of mind and work better and spend quality time with my family now-onwards.

Valuation and beauty always lies with the beholder. A technical crisis like this was not the time to appreciate the beauty of someone when you are in deep mess and thinking about survival (and people with available funds enjoyed the opportunity better). With F&O expiry on 25th May, the problem only got expanded. Question is – could the exchange and Government have done something to avoid this?

Definitely yes – just like all of us who lost heavily may think why we sold our put options or did not buy them. Or did not sell long positions and waited in sideline for a correction. Many even jumped at the first sign of correction being over on 17th May when the market recovered. The CBDT circular did irreparable damage on a badly bruised market and so did comment of certain politicians. But although we lost money too soon and too much – all these were bound to happen. Market always surprises.

First of all by pampering someone with incentives and then not allowing them to have would definitely be against their interest – the CBDT circular did that for FIIs and even for investors/traders. Handling of the issue in media (even in The Economic Times[i] on Monday – 22nd morning on domestic investors/traders when Finance Minister clarified stand on FIIs) magnified that. And once the issue has come, wise man knows that the issue will not die down soon. So why take the risk when you are in profit – exit. Smart investors did that – pigs like me were left out. And FIIs don’t lose much if the domestic market is badly bruised. Domestic investors do. All FIIs are not evil just like all domestic investors are not good (my apology was because of that only as people like me lost and damaged the market).

There were ample money – it was not a liquidity problem even. Other than money with Mutual Funds, FIIs or India specific funds waiting in the sidelines – there were ample reserves that many Indian blue-chip company had. Take for example MTNL, SCI, J&K Bank, Neyveli Lignite, Hindalco or probably all – many of them have lined up aggressive expansion plans no doubt and can’t buy back, but if Indian incorporation don’t come at rescue at a valuation – please note at a valuation they feel buy back is justified, they can always do that and should be allowed to do that to avert future crisis. Few days back Mr. Damodaran, SEBI chief stated in a business channel that he would like to kill the myth that FIIs drive Indian market – and how awfully wrong he was and so soon. FM stated on 2nd Black Monday that FIIs were buying but they turned out to be net seller in NSE site, and more suspicion was raised as FII F&O figures came much late compared to cash market figure there again showing on index future they were marginally net sellers.

There was rescue from domestic mutual funds and from LIC/UTI and financial institutes like SBI. But then while saving domestic brokerages and culprits like me, they are playing with the market and also giving an opportunity to FIIs to exit. FII net buys in F&O may be just short-covering. Therefore when the market is already quite high and prospects of emerging markets not looking up in short-term, justification of such domestic institutional acts can be questioned. On Monday, before 11.58 when the market closed – there were absolutely no buyers at any price for many stocks till they hit their circuit. And that’s the failure of a market. People knew that without support from Government, till Thursday, i.e. F & O expiry stocks will only come down as longs or leveraged positions were finished. And when someone holds a gun at your head and ask you to depart with your valuables, we all do that. Monday morning, it was a case like that. All market participants observed that happening.

However emerging market crisis, commodity melt-down and other triggers started by US Consumer Price Index (CPI[1]) number released on 12th May[ii] aggravated the problem. Deep in my heart I believe that when the strongest becomes the weakest, such turmoil would continue to happen – more so in commodity markets and emerging markets. The strongest is US dollar and that’s the weakest link in global financial markets today. An upside report of 0.1% in CPI in US than expected (0.6 vis-à-vis 0.5% expected) could send havoc and ruin many of us in emerging markets – combined with other reasons I stated. Taking a look at Fortune May 8, 2006 issue[iii] (refer Chart 1), US GDP is of $11.6trillion and China is a meager $1.6 trillion (and California alone has a GDP of $1.5 trillion) – 8th largest in the world and more than double of Indian economy. A separate IMF survey of leading global economies is attached in Table – I in next page. India’s GDP is a mere $665 billion.

IMF list (partial reproduction till India’s rank)[iv] http://en.wikipedia.org/wiki/Comparison_between_U.S._states_and_countries_nominal_GDP


Now admitting my absolute ignorance in economics – I find something awfully wrong here. Forget India – think about China and following Chart 2[v]. While China's GDP was less than 5% of Global GDP, it's demand was 12.5% of gloabl available energy, 15% of water, 25% of Aluminium, 27.5% of Steel, 42.5% of cement. And China's GDP is hardly 10% higher than California's GDP and one sixth of US GDP!



Source: http://www.stratfor.com/products/premium/read_article.php?id=260880




And US economy is 80% services dependent[vi] whereas Chinese economy is 40.7%[vii] service dependent. Without being sarcastic about it, taking an example that a majority percentage of males above 18 years need basic services from barbers, such service requirement would be at around 1/4th of that of China (on broad population measure taking into account younger Chinese population), but in service measurement, a simple calculation leads us to believe that a visit to a saloon in US costs 58 times than in China. Is it sustainable and reasonable in a globalize economy where physical goods are more or less uniformly priced globally today – protectionism in agriculture is more in developed world and in US and savings rate is negative in US with high fiscal and trade deficit[viii]. On the contrary Chinese savings rate is at phenomenal 40% of GDP versus 20% in India[ix]. In an article in crienglish.com[x], it was reported that domestic savings by end of 2005 topped 14 trillion Yuan as per Chinese Central Bank statistics, which meant a 100% increase from the figure in August 2001.

The global financial imbalances show starkly in an article “Save More, Uncle Sam’ from The Shanghai Daily of 23rd May, i.e day after India saw its exchanges closing down on triggering lower circuit for 2nd time in its history:

“There is something peculiar about a global financial system in which the richest country in the world, the United States, borrows more than US$2 billion a day from poorer countries.”

So I felt like many others (there is a strong other side view also) that US dollar would go down – not unilaterally but eventually – and a small CPI number would not have this much impact on Indian Capital Market. This also shows the imperfection of Indian financial markets in comparison to other financial markets (Russia also faced same crisis that day).

And the increased volatility that traders and investors faced alike in global commodity prices since 15th May morning were enough to kill many of the weakest hands in global commodity markets. Like the universal laws of equilibrium, when global financial imbalances reach a point of high degree of disequilibrium, small disturbances can cause high fluctuations. And any crisis – more so which is caused naturally against natural laws of equilibrium, be it a famine or a storm or flood kills more from the poorest or weakest strata of the society. So does global financial crisis - that first eliminates the weakest hands.

So did I/informed investors learn anything from this? There is a famous saying ‘Whenever US sneezes, rest of the world catches cold’. Recently I heard another commentary in one of the business channels since this stock-market obsession started nationally – ‘Commodity China sneezes, commodity market catches cold’ and the commodity melt down started with another trigger of Yuan appreciation. So the global factors and domestic factors are just too many, and sharp volatility is likely to be more frequent now-onwards.

Subject like economics are both simple and complex, and on a lighter vein I read somewhere that ten economists are likely to have eleven opinions over one issue. Again admitting my ignorance on the whole field of economics, this tempts me to propagate my own theory (hoping that’s not yet been credited to any economists, physicists, sociologist, evolutionists or historian till date) which I admit all common people, more the weaker ones experience at times and know very well:

“As the strongest becomes the weakest in a chain, which normally is a gradual process; it eliminates the weaker sections of the chain through minor and major disturbances. The elimination part is usually much faster. Fast recoveries of minor disturbances are often observed, and the trend of disturbances and disequilibrium intensifies as weakness of the strongest grows. How, when and what triggers the final death knell of the strongest, and its aftermath is difficult, if not impossible to predict on a generalized basis and is governed by contextual circumstances.’

May be before The Big Bang, it was the death of previous strongest in that chain. And Physicists know better in case we have had any clear strongest body/force in present universal system. The evolution of the strongest is also gradual.

So knowing few of these, and philosophizing over few other nonsensical staffs now, truth is few like us were caught on the wrong foot in our adventures of making a fast buck. And we did not do what’s suggested in such situation - first thing is to cut your losses/positions at the earliest – 2nd even better never play on margin. Exchanges reduced margin on 25th May – the day F&O expires. Only big bulls and bears allow that to happen, small parties usually rolls-over/quits before the last hours. If this margin was reduced even after the 1100+ point fall when market reopened on 22nd May, I may have had saved my long positions on a mark-to-market basis.

The laws and orders of any market or country are always restored after a few are butchered, and usually the most adventurous ones with weakest links are butchered.

I thought about this article on 22nd May night itself (my mood was naturally off but the learning and subsequent introspection resulted in deeper realizations). Next day when I finished the first draft, thankfully market moved up. It financially derailed many like me, and jolted Indian capital market. Markets will always be volatile. That is good as long as that volatility for a week never reaches 7-10% of leading indices for almost one full nightmarish week – the week that was from 15th to 22nd May in Indian Capital market.

To end on a lighter note, Benjamin Graham, the father of value investing and Buffett's mentor, is credited with warning investors that there are only two rules of investing: "1. Don't lose money. And 2. Don't forget the first rule."[xi] I knew all that and also while writing this article found another interesting one about animals - bulls and bears from same source: "Bulls and bears make money, but pigs may get slaughtered". Many of us were ‘pigs’.

© Ranjit Goswami. Ranjit is a Research Scholar with Indian Institute of Technology, Kharagpur, India; and is the author of the book ‘Wondering Man & The Internet’. He can be reached at ranjit.goswami@gmail.com

References:
The Doors
[1] US Labor Department releases two categories of CPI every month – First termed CPI and 2nd termed CPI excluding food and energy.
[i] The Economic Times dated 22nd May 2006, cover page article ‘CBDTs new norms may cover old cases’ and also on web http://economictimes.indiatimes.com/articleshow/1540989.cms
[ii] ‘Treasuries Fall after consumer prices rise more than forecast’ http://quote.bloomberg.com/apps/news?pid=10000006&sid=axOPWzc9MNlY&refer=home
[iii] Fortune, May 8 2006, No. ppS5
[iv] ‘Comparison between US States and countries nominal GDP’ http://en.wikipedia.org/wiki/Comparison_between_U.S._states_and_countries_nominal_GDP updated on 29th March 2006.
[v] China & The World http://www.stratfor.com/products/premium/read_article.php?id=260880
[vi] ‘US Service Sector Grows Strongly’ http://news.bbc.co.uk/1/hi/business/4880502.stm
[vii] ‘China in Transition’ http://www.rieti.go.jp/en/china/05122703.html
[viii] ‘Save More, Uncle Sam’ http://www.shanghaidaily.com/art/2006/05/23/278759/Save_more__Uncle_Sam.htm dated 23rd May 2006
[ix] ‘The CEQ on FT.com: China versus India’, Financial Times 22nd May 2006 http://news.ft.com/cms/s/3907fd6e-e942-11da-b110-0000779e2340.html
[x] “Transforming China’s financial sector’ http://en.chinabroadcast.cn/855/2006/05/24/501@94637.htm
[xi] Weighing truth of famous sayings about stock market http://www.dailyrecord.com/apps/pbcs.dll/article?AID=/20060516/COLUMNISTS04/605160312/1103

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