Sniffing Out Shareholder-Friendliness

Shareholder-friendly managements…

…are the need of the hour.

What are the signs that we need to look out for, to know that a management is benevolent towards its co-owner?

Frugality in lifestyle and attitude is worth looking at.

What I’m trying to say is…

…that one hates to see a promoter living it up on company funds, at the cost of the company’s health.

Living it up is ok. Have the balance-sheet to justify it – first – please.

Are you debt-free? Quasi debt-free will do too.

Does your company ooze free cash-flow?

Are your employees well-paid and automatons for growth?

NPM double-digit?

RoE in the 20s?

Fine.

Live it up for all I care.

Take a high salary. Throw in a hefty commission.

God bless you.

I still want to co-own your company.

Any or most of these metrics not present & living it up on company money – well, nice knowing you, but no thanks.

We’re then looking for shareholder give-aways, you know,…

…dividends, bonuses, buybacks and stuff.

Again, the balance-sheet should show enough robustness to justify a giveaway.

If it doesn’t, it means that the management is trying to appease shareholders at the cost of the balance-sheet, and that’s an avoid in my book.

Look for simplicity in the annual report.

If one is getting lost in fancy words and hi-fi design, without being given the nitty-gritty at a glance, one is probably knocking on the wrong door.

Free cash-flow is a good thing. It allows for leverage to act upon opportunity and without incurring debt, among other things.

Look at deployment of net cash-flow generated from operating activities also. Deployment should be healthy. Shows growth.

Instead of looking for fad-stuff like synergy, let’s look to see if promoter action adds to the balance-sheet and makes it stronger.

These are just examples.

Sniff out shareholder-friendliness.

Put your own metrics together, to do so.

Scaling Up

When you find a system… 

… that works… 

… what’s the next step? 

Plunge? 

Wait. 

Look left and right. 

Meaning? 

Look at your basics. 

Are they in place? 

Meaning? 

No worries about food on the table? 

No worries about kids’ education funds?

Basic family luxuries in place? 

No? 

Get these together and going. 

Yes. 

Ok. 

Go for it. 

Scale up. 

Your decision to scale up should at no time endanger your basics. 

You’re scaling up from  your extras.

You’re scaling up with stops in place. 

If your stops are hit, you’ll change your system till it works again. 

You will not borrow from your basics. 

You will wait for your extras to accumulate, and divert these into scaling up. 

Having gotten all that out of the way, let’s cast a glance at the concrete process. 

1x is working, or so you say. 

In fact, you’re sure 1x is working. 

Ok. 

Now do 2x.

Working? 

5x.

Can you take it? 

Do you sleep well at night? 

Fine. 

10x.

Working? 

Family life intact? 

Basics intact?

Fine. You take it from here. 

Where do you plateau? 

Right before a level where something might get disturbed. 

It’s really that simple. 

Happy scaling up! 

🙂 

The One Basic Difference between Wealth and Income 

What’s with this wealth vs income series? 

It goes on and on. 

So what? 

Any problems? 

Thoughts are like threads. 

They can be pulled into infinite. 

Also, they are a realm in which one has unlimited freedom. 

The speed of thought is faster than the speed of light. 

Think about it. 

From here to there – anywhere – Jupiter – Uranus – some other universe – in a flash. 

Explore your thoughts. Pull them out into infinite threads. It pays. 

We are trying to understand the meaning of wealth. 

How is it different from income?

What’s the one elephant-in-the-room factor that sums up this difference? 

Is there even such a factor? 

Yes, I feel there is. 

Maybe someone’s come up with this before. I don’t care. We all stand upon the shoulders of giants, as do I. From there, we generate our two pennies. 

So, how is wealth intrinsically and basically different from income?

Income is something you take out of your flow, to finance your everyday environment, including shucking up for nitty-gritties in day to day lives of those who depend upon you. 

Wealth can be generated from that portion of your flow that has not been taken out for mundane use. This flow, which has not been taken out, has then been simultaneously allowed to coexist by you in a different form, over a long period of time. It accrues, compounds and multiplies – over the long period of time – into wealth.

The most lucrative things in life are also the most simple ones. 

Being simple doesn’t come easy to most of us. 

That is why the majority of humans are not wealthy. 

How do you manage your Fiefdoms? 

Are your subjects happy? 

Is there surplus going around? 

Is dealing smooth and efficient? 

Are you content with your performance? 

Do you have the vision and the energy to enhance your fiefdoms into a kingdom? 

What are we talking about? 

How are these questions relevant for a career in finance? 

We all establish some position or positions of power, in the many areas of our lives. 

These are our fiefdoms. 

Inside these, we rule. 

Inside these, people or objects seem to be temporarily under our control. 

The micro reflects the macro. 

Our behaviour while governing a fiefdom hints at what / how we’ll be like when governing a kingdom. 

Get your acts together, people. 

Good governance is a habit. It starts small. Ultimately, it becomes a way of life. 

Your many fiefdoms multiply as you progress into a kingdom of sorts. 

Applied to finance, your kingdom is then your market footprint at your peak. Good governance thrown in, you’re rocking already. 

How did it happen? 

Baby steps of good governance multiplied into giant ones. 

It’s as simple as that. 

The most coveted things in life are also the simplest ones. 

🙂 

System Addict

System. 

Make. 

Now. 

Life in the markets requires a plan.

No plan…no life…in the markets. 

Many don’t know this. 

Some are finding out…the hard way. 

Others are looking for free lunches…and not finding any. 

Few…have found out. 

They’re perfecting their plan…chiseling away. 

When they have something substantial…it’s called a system. 

Have system…will move. 

It’s as simple as that. 

That’s another master-word. 

What?

Simple. 

The most powerful systems in the world…are simple. 

They consist of a few basic elements, woven into a mother element. 

They have an on-off switch which even a donkey can operate. 

But that’s about it. The donkey can operate the on-off switch. Only the maker can operate his or her system properly.

Why?

Because the maker knows the nitty-gritty. 

Nitty-grittiness shows itself while making. 

No one else knows it. 

Only you do, as a system-maker. 

Also, no one else needs to be bothered about your system, because your system only applies to you, and to no one else. Unfortunately, it ain’t so in real life. Many don’t want the hard work involved in developing a system. They just want the system. That’s dangerous. 

Why?

You see, those who have a system falling into their lap, well, they don’t know its pitfalls. They can’t know. They haven’t had that alone time, when the system showed its limitations. That’s why, they’re in for a big surprise if things get ugly. They risk losing everything. 

Don’t bother about anyone else’s system. 

Develop your own. Know how to work it. Know when to work it. Know when to stop. Know when to find remedies. Know when to pull the plug and develop a new system. 

This game is about you. Not about the markets. Not about the money. Not about anyone else. Not about anything else. 

It’s about you. 

Realise that. Now. Please.

Playing Ball

Everyone plays some kind of ball. 

Friendly play. 

Bread and butter play. 

Big play.

Small play.

Whatever. 

We play. 

When we play, we need to make sure…

…that we play. 

Meaning that it’s one thing to play ball, and its a wholly another thing to avoid ball. 

Make yourself play…take a few swings…try to strike…do something…that moves and shakes other things…OR…

…when your leave, you’ll be kinda feeling empty…at not having amounted to much in your sojourn. 

Make a difference. Play hard. If nothing, then just…play. 

How does one do that?

Meaning, how does one put oneself in a situation, that one just has to take a swing, if nothing else?

Hmmmm, that’s an important question, but I’m sure you’ve already realised that.

Took me a long time to find the answer. A long, long time. 

When I did, I was surprised at the simplicity of the solution. 

Don’t do many things. 

Do one or two things, that is. 

In other words, play a coupla games, that’s all. 

That way, the ones you do play will ask you to address them, again and again and again, till you do address them. That’s your play. You’ll have played. 

Too many games?

You don’t get around to addressing most to the extent of obscurity and irrelevance. 

Not worth it. 

Games that are complicated?

Cost energy. 

Activation barrier is large. 

Many times, you don’t overcome this activation barrier. You let things go. Again, to the extent of obscurity and irrelevance. Amounts to nothing. 

Play an A-game. 

Play a B-game. 

I also have a C-game. That’s it. No more. 

I try and address A, B and C everyday. 

A gets the most time. I keep trying to convince myself that B should get more time than C, but sometimes C gets more time than B. You see, C is recreational and pro-bono, whereas B is supposed to yield secondary income. Anyways, I need to show some professionalism and give B more time than C. We’ll see about that. 

You get my point. 

What are your A, B and Cs? 

Define them.

Then play them. 

What’s the Next Step?

Movement is from step to step. 

That’s stable movement. 

During stable movement, one is aware of former step, gap, and latter step. 

Transition is smooth. 

Former step is digested well and moved on from. 

Latter step is taken on with enthusiasm. 

The cycle repeats, so on and so forth. 

Yeah, given above is one question that I ask myself many times a day – What’s the next step?

The next step dawns upon one. 

Mostly, that’s when it’s the correct one. 

It’s coming from depth. 

It’s the Universe speaking.

The Universe tells you the next step, from within you. The Universe is in you. 

Sometimes, you’re not sure. 

Ok, happens. It’s normal. 

Ask, simply. 

Ask the Universe. 

It’ll tell. 

You need to listen to the answer. 

The Universe speaks in many ways. These are subtle ways. You have to be receptive to subtle answers. 

Once you realise what’s the next step, you also feel that – oh, so simple, the answer was staring at me in the face, why didn’t I realise this earlier – or something to that effect. 

The most logical next steps in the world are also the simplest ones. 

We’ve become complicated. We refuse to think simply, till Nature forces us to do so, sometimes causing pain during the cleansing process. 

Think SIMPLE, people. Empty your minds. Let the next step dawn upon you. Let your mind experience that – aha! of course! that’s it! – feeling. 

The most beautiful ideas in the world – are simple ones. 

Did You Hear About the Last Mile?

Yawn.

So you did, huh?

In investing?

No?

Yeah, I just thought about it.

Sharing it with you.

Churning, churning, churning…

… inside.

As you do your due diligence, information churns inside of you.

What is it that says yes, I’m investing?

Where does that go-ahead moment happen?

In the last mile.

Inside of you.

This is not to take away anything from your due diligence.

DD is central.

Very important.

However, last mile is important too.

One needs to respect it.

First, one needs to know about it.

Knowing about it will stop you from pushing an investment.

Don’t push… …in the markets.

Just be.

Take the shape of the container. Your container is your system.

Wait for your last mile to respond. Learn to understand its style of expression.

It’s a feeling…

… of well-being, …

… or something suffocating, nausea-like.

Embrace the former. Dump what’s causing the latter.

It’s as simple as that.

The most meaningful things in life are…

… exactly…

… SIMPLE.

Manipulation / Fraud / Ponzi – I Reject You

I detest manipulation, and manipulators. 

I like people who are straight-forward, without hidden agendas. Simplicity is gold. Simplicity breeds success. Simplicity gives satisfaction from within. 

All the twisting and turning, wheeling and dealing, wangling and dangling of manipulation makes me want to puke. 

Therefore, manipulators, frauds, Ponzis, I reject you. Manipulation doesn’t make the manipulator happy. Try it and see. I’m 100% sure your story won’t have a happy end.

Rejection is a simple process. When you reject something, you stay away from it. You get out of its way when it is in the vicinity. You head off elsewhere when that something is headed in your direction. Everyone’s probably been rejected sometime or someplace, so everyone probably understands rejection. 

Well, rejection is one thing, but how does one recognise a manipulator, fraud, or Ponzi?

Recognition is key. 

This breed of people talk sweet. They appear harmless. They don’t lose arguments. Quick, witty, sharp. Fast thinkers. They keep you hanging. Give ambiguous answers. Mostly, they like to not answer at all, so as to keep you dancing around them, making you more vulnerable to their schemes or ulterior motives. If you’re interested in their something, they use silence as a weapon. You’re hot, you’re interested, they’re silent, makes you hotter, makes you more interested. The idea is that ultimately, when the manipulator breaks the silence, you lap up whatever you’re getting. Also, they keep you hungry for more. Manipulators are vicious, vile people. 

Where manipulators push you to act, slowly, but steadily, by twisting and turning your world in the manner they consider appropriate (since you’ve given them that power), frauds outright present a reality which sucks you in to sign the dotted line. Frauds sell a dream. It’s a great dream. You want to be a part of it. It overwhelms you. It’s almost too good to be true.

Ponzis are frauds. They sell the dream of unrealistically large returns. They count on greed to cloud your vision. They lure new sets of investors by distributing investorial proceeds from one set of investors as dividends to slightly older investors, and so on and so forth, till the bandwagon is overloaded with thousands of investors paying full-throttle only to see the Ponzi vanish next day, with everything, never to be heard of again. 

When someone doesn’t give you a straight-forward answer, walk the other way. Don’t bother with benefit of doubt, just walk the other way. With very high probability, you’ll have avoided a manipulator. When someone uses silence as a weapon, walk away ten miles. Warn everyone of a mega-manipulator in the neighbourhood. Analyze sweet- and smooth-talk ten times. Is there any truth in what’s being said, or are the words an eye-wash, hiding a fraud behind themselves? If you’re not greedy, you won’t fall for a Ponzi. Don’t be greedy. Period. 

You’ve hit full cycle. 

You’ve understood the existence of the breed we speak about. It has dawned upon you. Let’s call this “internal realization”.

Then comes “external recognition”, of the breed being in your vicinity, and trying to exercise its powers upon you. 

Lastly, comes “complete rejection”. 

Well done. 

You’ve saved yourself from lots of emotional and or monetary trouble. 

Spread the word. 

How Will I Know?

What?

How will I know what?

Well, what do you think?

How will I know if I’m on the right track…? !!

I’m sure you have asked this question…many times. 

If not, you need to.

Why?

You’ve realised that you’re your most reliable source.

You know you.

Therefore, you need to ask this question… to yourself.

This is the marketplace, not some low-stakes video-game parlour.

Lives and futures hang on your decisions.

Make these the right decisions.

How will you know you are on the right track?

It’s quite simple, really. 

Once you’ve heard the answer, you’ll probably go in denial. 

You’ll probably say, naehhhh, this can’t be it.

Believe me please, it is. What’s totally simple need not be worthless. In fact, the best ideas in the world are…simple. 

You’ll know. 

You’ll feel right. 

There’ll be a sense of satisfaction. You’ll feel comfortable. 

Your mind will be sorted. It will make the body feel at ease with an endorphin burst. 

That’s how you’ll know. 

It’s that simple. 

Take the wrong decision, and the opposite things will be happening. Try it out. Trust your reflexes. 

Learn to rely on yourself. 

This is the marketplace we’re talking about…

…where…

…you’re on your own.