Monday, 19 February 2018

The poor state of business journalism

If you clicked on Business News from the US on Google, here's a sample of the news items that are featured


Business news has become a reality show. Where are the many important economic issues facing the world ? Where is the reasoned debate ? I had hoped that the dry area of economics and business would be the last to succumb to trivialisation and  sensationalisation. Alas, it has already fallen.

Take the case of the Nirav Modi - Punjab National Bank fraud that has hit the headlines in India. It is a massive fraud and yet try as I might,  and despite the millions of words written and aired on this (the favourite word is scam - in India everything is a scam), I am not able to make out what exactly happened. There isn't one journalistic piece on what exactly happened in detail, why it happened and how can it be prevented. Instead the predominant coverage is that because of the same surname as the Indian Prime Minister, the opposition Congress Party has been going around calling Nirav Modi as "Chhota Modi" (Smaller Modi) although there is absolutely no evidence of any relationship.  Both the parties are blaming each other loudly (from what news has come out, this appears to be a plain banking fraud with no link to politics).

The two finest business newspapers in the world - Financial Times of the UK and the Wall Street Journal have become obsessed with Trump. No, I don't want to read anything about him, thank you.

The Economist remains the only "good" read. Alas, this blogger's subscription is having some niggles and there has been no issue to read for a month.

Can we examine America pumping itself with steroids? They are reducing taxes, increasing military spending, increasing social spending and presuming to invest in infrastructure at the same time, and that too when the country is near full employment. This is deficit financing on a staggering scale , being done by the party that ostensibly hates deficits. 

Can we examine the Brexit issue in terms of what exactly the trade deal issues are ? Can we examine China's pile of debt ? Can we marvel at Europe overtaking the US in economic growth - yes that happened last quarter. Can we think about the boom in India's indirect tax revenues ?

Instead I am being told that a Transavia flight made an emergency landing because a passenger refused to stop farting.

Saturday, 17 February 2018

Sack all Fund Managers !

Here is uncontestable proof that all Fund Managers are a waste of time. They are (mostly) lavishly paid for nothing. If that sounds a radical statement, read on.

Its a well known saying in financial circles that you cannot beat the market in the long run. The sage of Omaha, Warren Buffett has been saying this for a long time. In 2007, he publicly laid a bet that the S&P 500 index would outperform hedge funds over a 10 year period. He wagered $500,000 on it to anybody who would take up the challenge, observing cheekily , " "After all, these managers urged others to bet billions on their abilities. Why should they fear putting a little of their own money on the line?"

Surprisingly only one person took up the bet (shame on you hedge fund industry). Protege Partners handpicked a  portfolio of hedge funds. And the wager was on - the S&P 500 against this handpicked pool of hedge funds.

Ten years ended on 31 Dec 2017. And guess who won ? The hedge fund pool gained 22% over 10 years. The S&P 500 rose 85%. No contest ! Buffet won a handsome amount and promptly donated it to the charity,  Girls Inc of Omaha.

There's a big lesson to everybody who is saving and investing. In the long run you cannot beat the market index. Repeat after me, In the long run you cannot beat the index. Repeat again, In the long run you cannot beat the index. Write it out 1000 times.

And yet, we listen to advice from friends. To tips. We hire investment managers. Fund Managers design all sort of esoteric funds and write research reports on how their funds are outperforming the market. A million online portals exist that cater to advice on investment. All of them charge a fee. All of them get handsomely paid.  

Instead follow the advice of Warren Buffet (for free; no fees charged). Simply invest in an index fund - the S&P 500 if you are in the US, the Footsie if you are in the UK, the Nifty if you are in India. A fund that will charge minimum fees to simply hold the basket of securities exactly mimicking the index. And then forget about it. Come back after 10 or 20 or 30 years. You would have made more money than anybody else. It's as simple as that.

There's only one slight problem. Warren Buffet has beaten the S&P Index handsomely in the 50 odd years he has been at the helm of Berkshire Hathaway !

Tuesday, 13 February 2018

Thus spake Gates

Regular leaders of the blog know that this blogger is an unabashed admirer of Bill & Melinda Gates. He is of the opinion that they must be sainted - for they have have done more good in the world than many, if not most, religious leaders.

They publish an annual letter which is like a "State of the Union address" in their field. This time they have answered in their letter, the ten toughest questions they get. And yes, Donald Trump is one of them, but if you expect an incendiary answer, well, you don't know the Gates.

I consider their Annual Letter as required reading for any human being with a heart. Here is this year's letter.

Its a bit different as it addresses questions, some of which are not developmental in nature - like Trump, or what do they do when they disagree. But it is , as always, an interesting and often motivating read.

May I exhort you to read this one, and then every one of their previous 10 letters. It is a far more productive use of your time, than reading you know what !

Sunday, 11 February 2018

Immigration and Agriculture

There are some basic facts about agriculture. One ; you cannot do away with agriculture; you have to eat after all. Two; However much you mechanise agriculture, there are large portions of it that have to be done by hand and you need manual labour. Three; agricultural labour is hard hard work. You and I cannot do it. Four; everywhere in the world, the natives do not want to do agricultural labour. Five; You therefore have to "import" labour - poor people from places other than where the farms are and usually from another country. Six; the natives do not want these "immigrants" to come.


This is a real problem, which as stated, does not have a solution. Witness what's happening in the UK.

The Brits don't want to work in the fields. Therefore most of the agricultural labour comes from Eastern Europe (white Christians, mind you; the problem is compounded in the US because the labour is Hispanic). The Brits have voted to leave the EU and don't want anybody coming into their country. End result - fruit is rotting in the fields as reported in the article linked. 

This was not even about illegal immigration - these workers all came perfectly legally from Eastern Europe and since it was seasonal work, actually often went back to their countries after the picking was over. And yet the Brits have spat on their face and told them they are not welcome.

The same rural folk in the UK are the ones who voted for Brexit. London overwhelmingly voted for staying. And the main reason for voting exit ? Immigration. We don't want foreigners; period.

The UK farming lobby wants to reinstate the seasonal workers scheme. The deal is , please come and do the dirty work we don't want to do, stay in some ghetto so that we don't see you, give us all the fruit and then bugger off to where you came from. Couching it in polite language does not detract from what it really is meant to be.

Agricultural labourers should simply organise themselves and show the middle finger to the UK. If you want us to work, treat us as decent human beings and give us the respect we deserve. Or else, you can do your own dirty work.

To paraphrase the Duke of Norfolk - you cannot have your fruit and eat it too !

Friday, 9 February 2018

Indra Nooyi is not an idiot !

No No. PepsiCo is not foolish enough to launch Doritos for women. For Gods sake, PepsiCo is one of the greatest consumer marketing companies on earth. Sure, even the finest companies can lay a goose egg once in a while. But  not such an obvious bloomer like Doritos for women.

The brouhaha started with an interview Indra Nooyi, the Chairperson of Pepsico gave to Freakonomics. As reported in the New York Times -

 Ms. Nooyi told the interviewer that women did not eat Doritos the same way men did.“They don’t like to crunch too loudly in public,” she said. “And they don’t lick their fingers generously, and they don’t like to pour the little broken pieces and the flavor into their mouth.”She was asked whether PepsiCo — which owns Frito-Lay, the manufacturer of Doritos — was planning “a male and female version of chips.”

Ms. Nooyi responded: “It’s not a male and female as much as, ‘Are there snacks for women that can be designed and packaged differently?’ And yes, we are looking at it, and we’re getting ready to launch a bunch of them soon. For women, low-crunch, the full taste profile, not have so much of the flavor stick on the fingers, and how can you put it in a purse? Because women love to carry a snack in their purse.”

The Sun (of the  notorious British tabloid fame) took this and reported that Doritos for women was being launched. Social media picked it up and hyped it with juicy headlines.

Feminists responded by lashing out and saying this simply reinforced gender stereotypes. Men  lashed out saying this was PC going too far. Sending a tweet is easy - you don't have to think and you can spew whatever banality you wish to without any consequence;  just ask a certain old man occupying a seat of power. And then before you could say Doritos, a full blown controversy had erupted. The company had to issue a statement that No, they were not launching Doritos for women !

Indra Nooyi must be scratching her head in bewilderment. All she was outlining in her podcast was how Frito Lay really tried to understand consumers, tried to get insights and tailor products accordingly. Very likely they may have launched a variant that was less crunchy, if that's what women preferred. But they wouldn't do something as dumb as launching a "Doritos for women".

Just goes to show how careful anybody has to be when making a public appearance. It seems altogether appealing not to appear in public at all - after all no human is infallible enough not to utter an inanity. It also shows how lots of people have nothing else to do but to respond to every nonsense and tweet some rubbish. A certain distinguished reader of mine is a prodigious tweeter. He may want to pause :)

Tuesday, 6 February 2018

CEOs sacked for conduct don't deserve severance pay

This blogger has been fascinated with lululemon for some time. The Vancouver based company has been peddling fashion wear for yoga and been successful at it. Firstly this blogger is amazed that you have fashion wear for yoga. Secondly, can a company really be named lululemon ? And spelt without a capital L ? There was also the business of yoga pants that, er, revealed too much, a few years ago. With that sort of pedigree, it is a "must follow" company !

(Wunder Under Hi-Rise 7/8 Tight Full-On Luxtreme 25" for $98.00 USD - Note the price !)


They are in the news again. They fired their CEO yesterday. The gobbledygook announcement they put out said "lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr. Potdevin fell short of these standards of conduct." In plain English, the Board fired him. He did something wrong, relating to employees, and they fired him. Plain and simple. Nothing earth shattering about that - CEOs are fired for a variety of reasons and this happens all the time. But clearly he was fired, not for poor performance, but for something he should not have done with employee(s), but did. We should not speculate further.

So far nothing spectacular. But what got my goat was also the statement in the announcement that "Potdevin will receive a cash payment of $5 million, including $3.35 million upfront and an additional $1.65m over the next 18 months, according to a separation agreement filed with the Securities and Exchange Commission." This is outrageous. He's guilty of misconduct and you pay him $5 million ? I'm gobsmacked. Yes, there must have been a separation payment in his employment contract. That's standard in almost all CEO contracts. Why CEOs - any employee's contract. You have to be paid a severance pay (however measly it may be) if you are fired.

But this guy is being fired for wrong conduct. Would any low level employee guilty of the same conduct as Mr Potdevin ever be paid a severance pay ? No chance ? Then why should he be paid simply because he was the CEO. If there was an iron clad clause in his contract that said he would be paid no matter what the reasons for firing are, then the guys who drafted such a contract must be fired and made to pay a fine equal to this severance pay.

This sort of action is why companies are hated by the general public. Any corporate action must not only be fair, but be seen to be fair. The Board of lululemon deserves to be fried , roasted and hauled over coals. It is a listed company. What are the shareholders doing ?

CEOs are exactly the same as any other employee of a company. I have no problem with them being paid handsomely for the work they do. But they should not be paid for conduct that necessitates a firing.

Thursday, 1 February 2018

Reading this post may make you blind

We've all made fun of Americans and their crazy law of torts. That's why you have such gems such as "Contents Hot" on a coffee cup or a "Remove baby before folding" sticker on a pram. In that same vein is the recent move in California that may soon have the warning "Coffee Causes Cancer" in coffee shops !  Granted that the land of the free scores somewhere mid tier in the international rankings of IQ, but still .....

A news item about P&G and Tide laundry pods however made me pause. P&G has released an ad featuring  Rob Gronkowski, the New England Patriots' star exhorting people not to eat Tide laundry pods ! WTF ? 


Apparently some teenagers have started a campaign called the 'Tide Pod Challenge". You are supposed to eat a Tide Pod and then post the video online. Reportedly some 40 cases of this nonsense have already happened in the first 15 days of 2018. It became serious enough for P&G to take note and issue the aforementioned ad exhorting people to wash clothes with their Tide laundry pod and not eat it. Without a doubt, their legal department opined that if they kept quiet, it was only a matter of time before they were slapped with a class action suit from a parent that the company was liable because they did nothing to prevent their children from eating the damned pod !

The purpose of this post is not to rail against the stupidity of on line antics. There is enough and more written on that. But where does personal responsibility end and where does company liability begin ? We seem to be living in a day and age where there is no personal responsibility whatsoever and its always someone else to blame. If its a rich juicy company, then great. Blame them and sue for a zillion dollars.  Is it the job of a company to monitor every nonsense that's happening on social media and guard against them ?

I am taking no chances. I am a poor man and will be bankrupted if you sue me ! Please therefore take note that reading this post on a screen may be injurious to your eyes. Please also note that if you are sipping coffee at the same time it might spill and burn your thighs as it is hot !!

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