Back from an excellent vacation and also having watched the big blockbuster movie “3 Idiots”. An amazing movie in which for the first time I actually saw the audience clapping after the end of the show and a movie liked by all and sundry right from small kids to the old. Given the fact that it was shot in IIM Bangalore also was nostalgic especially for me. I think the clear message that it reinforces is that one has to ride ones convictions to do what one think is right and not do things that everyone thinks are right. It also reminded me of an incident that happened during my IIM days.
In the first semester of the second year we had a course on Business Strategy. It mostly comprised case studies which had to be analyzed and discussed in the class. It was also conducted by a very prominent professor (I think his name was Ramakrishna or radhakrishnan). After a time the course was very boring and I specifically used to find it very laborious to attend this course. One day a particular case discussion was on and the particular professor asked the class to choose between two options. First he asked students who agreed with option A to put up their hands, half the class did (obviously). Then came option B. At the end I was the only one who did not put up his hand. Somehow the professor noticed this and asked me my view. At that time I told him on his face that the course is very boring and I find it of no use and as such have no view on whatever he is discussing. This made him totally furious and I was asked to leave the class and not come back. I missed the next few classes and finally was convinced by friends to apologize to the professor otherwise he could fail me in the subject. The course also involved a project at the end which carried the maximum weightage. My group made one of the best projects and I also had one of the maximum marks in all the tests. However I got a B grade vis a vis all others of my group who got an A grade. I was very angry as I was not evaluated on my performance but on a personal grudge, however I let it pass.
The short point is that the education system that we have even in the most prestigious of Engineering and Management schools still does not promote out of the box thinking and ideas. There are still a large number of courses that involve cramming and as such do not serve any purpose. As a result there is so much of theory that needs to be unlearnt when a person starts working.
Anyways moving to the year 2010 –
As we start off the new year it begins with cautious optimism vis a vis the utter despair that was seen at the beginning of the year 2009. Even after markets have moved up strongly and there is clear evidence of growth stabilizing and picking up in most emerging markets. In the developed world the jury is still out on what is likely to happen as the downward spiral has come in control and growth seems to be picking up somewhat. However there are risks ahead due to the structural deficiencies in the economies and the fact that credit availability still sluggish. The magnitude of stimulus given is also so large that its withdrawal is likely to slow down growth again going forward. The Japanese economy even with near zero rates and huge stimulus packages seems to be going no where. As such 2010 could see the return of the Yen carry trade as large quantities of cheap Yen floods the global markets.
I see the current year as a year of ALPHA investing rather than BETA investing that dominated the year 2009. As such given the obvious that markets are unlikely to repeat their 80-100% return show of the year 2009 specific stock picking is likely to dominate. I propose to meet at least twice the number of companies that I met last year so as to enable me to find at least 5-10 good ideas which will work for the current year. One thing that is very clear is that the recovery process in
Overall I still stick to my view that the next big correction in the markets is likely to happen only after a new high is achieved. Intermittent corrections will only be an opportunity to buy.
I have just come back after a long fog delayed journey. Will write more later.