Do Generalist succeed or Specialists

 

Sigmund Freud and his nephew Bernays

 Saw an interesting article in Kuwait times and is worth putting in here. Here it goes.

Frauds- some example

 

Inspite of the huge technology advances, Fraud keeps happening by making people gullible or provide incentives to make more money quickly. As i keep mentioning that only a few out of Trillions in the stock market make returns commensurate with their effort or a fairly large return. But these returns come from losers generally, unless the company has done really well.

One example of making people gullible is for, say, 50 people are targeted by X. 25 he tells a share Y to be bought because it will go UP and 25 he tells share Y to be sold because it will go DOWN. Depending on which 25 is correct, he splits the 25 into 12 and 13. He tells a Share Y to be bought because it will go UP and 13 he tells will go DOWN. Depending on which way stock has gone he splits the next, say 12 into 6 and 6. By now the guy who was in 25 (go UP) is sure the guy is on to something. next time he is in the 12 UP, he is more convinced. Now the 3rd time (out of 6) the guy who is giving tip is more convincing that he is for real prediction and the gullible person sends him money to double or triple it. Off goes the money.

Another Fraud example is Cashier is only supposed to collect money and not invoice. To manage with lower staff, Cashier was given the responsibility of making the invoice and for adjustments. (internal control of segragting cash collection and invoice) Cashier took money from the customer and stamped received on the Proforma invoice and gave it to customer, for say 105 KD. Then after customer left he pocketed 5 KD and made the invoice to 100 KD and customer paid 100 KD. Accounts side no dues as 100 KD invoice matched to 100 KD payment. He was doing it for 10-20 invoices in a day pocketing 100KD/day. Being smart, he targeted it on some days only and not all to avoid suspicion. He was caught one day when the customer had an issue and came with proforma invoice. On checking while proforma showed 105 KD the actual invoice in system was 100 KD. IT checked all his transactions, and it was found over a 2 year period he has taken out 10000 KD in all. Thus if management had heard internal control to keep invoicing  and payment separate this could not have happened. Cashier had invoicing adjustment to round of currency to the nearest 0 or 5 at the end.

Exercise

 You may be worth Crores, but as the saying goes Health is Wealth. This you realize when you have a failing health and would give away all the money to alleviate the pain you are facing. As a young lad or gentlemen, you tend to ignore health thinking it is part of fun to not exercise or go to gym.

Suddenly, upon reaching the age of 50 or even 60 you find yourself like regular SIPs you either missed out on investment and thought of become rich is dead or been doing it regularly.

It has been found and I can vouch for it, that after 60 your flexibility becomes less (unless you are doing yoga) and body tends to stiffen. The exercise of bending and touching toes which you used to do becomes a huge task.

The most influential areas, according to me, that need to be exercised regularly like SIPs are the shoulder and legs. These are the two pillars of old age. Mere walking, as per me, is not sufficient. Shoulder and legs have to be exercised till you feel the pain and can sweat it out. Mere walking may be good, but it does not push you to achieve a bit more that will hold you in good stead.

A simple daily 10 mins of Tai Chi (or yoga or pilates or whatever you decide) to strengthen the muscles on the shoulder and legs are important as you go into 50's and 60's.

The reason for Tai Chi is it looks simple, but the 1 minute repetition of the  exercise for 10-15 mins, makes you sweat.

One more advice once you cross 60 is dont run around like you are in 30's and always hold on to support while doing something as leg muscles turn rubbery and a fall can cause a huge issue.

 

Bhagavth Geeta message

 

One would have often come across Bhagavath Geeta message that "Do your duty and not wait for the fruits of your labor". Lot of people, particularly the scientific bent of mind always brought up on Cause and Effect scenario find it difficult to understand the concept. They do not know that there could be other variables in the system that could fail the cause and effect scenario. A captain of the ship controls it but does not know how the sea will behave. This does not mean he does not put in his effort. This is what the fruits of labor need not necessarily come if efforts are put in.

 Thus, even if you do your duty and still do not get fruits, how you deal with that situation is what the Geeta is about. Extending the above example of sailor, the captain puts in the effort not knowing how the sea will behave and if he will be able to bring the ship to harbour safely. The effort put in improves the probability of a favourable result.

Read one version recently and it states - Bhagavath Geeta message is never a method for a win. It is a solution for how to deal in case of a loss.

It talks about attachment causes suffering. Now we all know that having being born to this world one day one we will die. It is a fact, but the amount of distress one goes through when one loses a close one even if they are in the 90s. Geeta teaches one to be clinical. The more you are attached the more the pain and less attachment is how you deal a loss by keeping your expectations and reality at nearly the same level. 

Today, life is full of uncertainty. Every country wants to fight with other to get the benefits for internal vote or assets of others. One should understand that reality and not have the expectation of hunky dory throughout. This is the principal of investment. Ups and Downs will be there, but steady investment effort should go on.

India's Debt

 India, like America is growing and we are getting the bad habit of Americans slowly. Eating out a lot through Zomato, Swiggy, eating carb rich foods like burger and pizzas, watching TV and eating and more worrisome is using BNPL (Buy now Pay later), EMIs and credit cards to buy items not necessarily needed, but advt. offers etc. (be it from Amazon, Temu, flipkart etc.) propel people to buy them. Some of it may be lying idle in one corner of the house

We are 47.8% of Debt to GDP up from 34.5% in 2016. A significant jump given our frugal living earlier (people used to wait endlessly for bus trips and not immediately call a cab like today) and the save for future mentality. 

While Debt for asset creation is not a big issue, debt for consumption is a bigger issue.

 

 

Source: RBI – Financial Stability report, June 26. 

As can be seen above debt for  consumption is 49.7%. This is worrisome. Some may argue that other 3 world countries have a higher Debt/GDP ratio like below:

 

 US can afford to have 122% Debt/GDP, but they have a currency which they can print and all countries accept. India's currency is not like that and any increase in Debt/GDP is worrisome. A false economic growth may be touted by the govt, but it is coming at a cost. The impact will be felt in future if our CAD and FC wealth of country does not improve through exports or otherwise.

 

 

Another concerning thing is as Income growth reduces, Debt is increasing and looks older version of income savings and debt is being replaced by Debt Income with no savings.

 As Kotak blog says.

Debt, in itself, is neither good nor bad. Its impact depends on what it finances and whether income growth keeps pace with repayment obligations. Borrowing that supports homeownership, education, entrepreneurship, and asset creation can strengthen long-term economic growth; 

borrowing that outpaces income growth can eventually become a constraint. 

 

 

 

 

 

 

 

 

 

COMPUTER AND MOBILE FRAUDS- PRECAUTIONS

 As one hears about the reach of the financial independence to ordinary people through UPI/WAMD online transfer and as banks move from brick and mortar structure to online apps (not even websites now a days) and the incidents of AI doing many tasks, it is VERY IMPORTANT   to ensure that you are not defrauded.

Please understand that to operate most of the apps, mobile phone number and emails are asked for and these could be  a potential weak point in the fraud that takes place. While a mobile phone number and email per se could not cause fraud (as of now), but their usage to send a malware link or call forwarding could be a potential threat.

Some basics to perform or understand  is essential. A few, not exhaustive, is given. You can suggest me more through my email @ mail.rsvp@gmail.com

 a) Do not download unwanted apps

b) Do not pick up phones from unknown numbers

c) Install truecaller to identify the person calling 

d) Do not click on unknown links

e) Do not fall for threats and do unnecessary actions.

f) If anyone is in danger and calls for money, always try to call them back or their relative to check the real situation (eg. a known caller might say that he is in thailand and needs you to send 1000$. Instead of sending, if you call him or his relative, you may be told that either he is at home or visiting a local place.

g) Do not hand over your phone to anybody. if someone wants to make a call from your phone, you input the number and let him talk with speaker on. Do not let the person walk a few meters to make the private call. Note: No one make a private call in emergency. 

 h)  keep your apps and phones updated and install a good antivirus software (mckafee, eset etc.)

i) The largest method to avoid frauds is TIME. Most fraudsters catch you in your vulnerable time (parents/husband children in hospital and need money or they are caught in crime and need money to drop the case etc.). Listen to them and Buy time through one excuse or another. Check with other sources about the nature of event. Inform the Computer police (present in all countries) via another phone to trace the call if possible. Inform the potential fraudster that your friend or relative is in police and will get back to you on your number ASAP. Most of the time, the number is fraud or they will look for an easier target elsewhere and leave you.

j) Always, physically check with your boss or secretary if thru WA or call or video call, he/she asks for an urgent transfer. Buy time.

k) Do not join WA or any other group for more gains.

l) Do not fall for small gain given (like 200$ for joining, clicking a few likes etc) as easy money implies some evil intention.

m) Please understand that no one can give more than 12% return doing a decent business. Anyone says 50% etc. move away from them as there are enough people to fall prey.

n) Some do a prediction on probability. Eg. 50 people are split 25 and told it will rain (obviously during monsoon season). If it rains you now have 25 believers (skip the 25 who you told it will not rain but rained). Split again into 12 and 13. Say it will rain. If it rains, you have now 12 believers who has seen two chamatkars from you. Split the 12 into 6 and 6. Say, it will rain. If it rains you have 6 believers eating out of your hand (for them 3 times you predicted correctly)- you are the Nostradamus. Now these 6 become dead ducks for scam

m) Do not put your FD on autorenewal for ease or rate. Put it on -let it come to my account and then do a fresh FD. This ensures a) you do not forget you have FD b) prevents some bank insider pledging your funds to play in market or elsewhere.

n) While most of the people lock their phone using passcode, some may not and it gives one more avenue for people to use your phone. Always use passcode and remember them to unlock your phone. I will prefer not to use FACE ID as it may require you to be present when using the phone and you want someone close to you to use it