FIXED INCOME INVESTING - BY BENJAMIN GRAHAM

I came across an interesting article on "fixed income value investing". A larger part of this text has been taken from Benjamin Graham's popular books - Security Analysis and The Intelligent Investor.

Two paragraphs I particularly liked :

1. "It's our argument that a sufficiently low price can turn a security of temperance quality into a sound investment opportunity - provided that the buyer is informed and experienced, and that he practices adequate diversification."

2. On the topic of diversification, Graham makes an interesting connection between investing and insurance. He notes that any individual security purchase may not prove profitable, even if the margin of safety is present at the time of purchase.

Graham says, "The margin guarantees only, that he has a better chance for profit than for loss - and not that loss is impossible. But as the number of such commitments is increased the more certain does it become that the aggregate of the profits will exceed the aggregate of the losses. That is the simple basis of the insurance under-writing business."

FINANCIALS OF IPL : A PERSPECTIVE

Alchemy released a report on the economics involved for teams participating in the IPL. I have heard a lot about franchisees overpaying for teams, players, rights ... and blaming BCCI for being non-transparent. Incidentally BCCI has itself called on franchisees to be patient and enjoy the fruits of their investment (read : ROI) after 3-4 years. Alchemy's report paints an optimist picture of the T20 cricket league and explains how much BCCI, the franchisees and supporting institutions (like Sony for media rights) tend to gain from the venture.Surprisingly, the report claims that an individual franchisee will be profitable from year 1 onwards , scoring an EBIT of Rs. 4 crores. A bulk of the revenue (Rs. 90.2 crores) will come from global media rights (Rs. 25 crores) a mere ten second commercial on Sony sells for at least $6000, supported by ticket sales (15 crs), lead sponsor (15 crs) and in-stadia advertising (10 crs). From the cost angle, the franchisee cost takes the wind out of the financials with a Rs. 40 crs charge followed by player acquisition cost (Rs. 24 crs). The assumptions have not factored a number of things like cost of capital, or financing of the acquisition cost, or trading of players etc. But the investment for Sony seems to have paid off, for this season alone they’re expected to make about fifty million dollars. These things happen a lot in soccer leagues around the world (Real Madrid finds it hard to survive until they have purchased the most expensive player in the world; am not sure where Jose Mourinho is headed but expect some big signings there too)The report has drawn a number of parallels between the English Premier League (with two clubs - Tottenham Hotspurs and Arsenal) and the IPL. Not to mention, a number of these EPL teams are also listed on the stock exchange. Manchester United was listed in the London Stock Exchange (1992) at GBP 47 million. In 2005, American businessman Malcolm Glazer acquired a controlling interest in the club in a takeover valuing the club at approximately £800 million (approx. $1.5 billion) .Perhaps, IPL is the alchemist's secret portion afterall !

VOTER ID CARD REGISTRATION ONLINE IN INDIA: EASY & FREE

In India, Voter ID card is important Identity document for lots of work. You can get your Voter ID card easily by filling online application form.

Here is the website for online registration for voter ID card- Jaagore.com (on clicking the link you will visit at Form filling page).

After submitting the form you will get pdf copy of your filled application, that you need to take printout. After taking print out, you need to submit this printed copy to your nearest local Electoral Registration Officer (ERO) with xerox copy of other ID card and proof of residence.Find your nearest ERO office here.

The address proof document is required for the BLO (Booth Level Officer) to come and verify your residence status. Therefore, it is not essential for the address proof document to have your name, but needs to have only the address of the place you are staying at.

You can use address proof document on the name of your parents, relatives, friends etc. with whom you are staying. During address verification, the person whose name appears on the address proof document needs to confirm that you are staying at the same address.

Full answer of all FAQs about voting is here. After this, your job is over, Voter ID card will be ready after few days of submission of application.

Currently there is no requirement for Voter ID card for voting purpose (for 2009 Election), only your name should be there on voter list. Some state governments like Andhra Pradesh has provided the list of name of people on voter list online here.

If we are seeing disinflation rather than deflation, what does that mean?

Disinflation is a drop in the rate at which prices rise, and does not actually mean a price fall -- at least, on a sustained basis across-the-board. For example, the WPI rate was 0.44 per cent in the week to March 7, which means prices actually rose by a tiny percentage. We call that disinflation because the WPI has been falling almost continuously since August, 2008, when the rate nearly touched 13 per cent.

In the coming weeks, if the WPI goes into negative territory, and prices actually start falling, it would still be called disinflation -- as long as the fall does not continue indefinitely. On the other hand, the US, Western Europe and Japan are closer to deflation, as their inflation rates are down and economies are actually contracting .It is to counter the threat of deflation that their governments are shovelling trillions of dollars into the credit markets, into failing banks and industries like autos.

So what will tell us if we are really into a deflationary scenario? Experts says the first signal would be a contraction in GDP. "A contraction in output (GDP) is when there will be a worry on deflation. This is happening in the US, where prices are declining and output is contracting. GDP is not contracting in India; there is only a slower rate of growth."

This, however, does not mean we have no cause for worry, or that deflation will never happen. Experts belive "More than cutting rates, ensuring the flow of credit is important. If credit does not flow then any amount of interest rate cuts will not help. We have room for cuts, but cuts should be only a part of the plan. The main objective should be credit flow, which is not happening now."

It's disinflation, not deflation, we're facing now

Today inflation number came at -- a drop to 0.27 per cent in the wholesale prices index (WPI) -- brought more worries than cheers. That's because deflation -- a situation where prices, jobs and incomes keep falling on a sustained basis, and the economy keeps contracting -- has become a new cause for worry. Is India on the way of a debilitating deflation?

INDIA is not going through deflation, just disinflation. What we have now is inflation coming down. It is coming off a high commodity price base. Deflation is when prices fall very rapidly and we haven't seen that happening. In a deflation, people stop spending because they believe that prices will fall further. That is not the situation we are in.

Though WPI for all commodities is up 0.1% at 227 (WoW) in the week ended March 14, from 226.7 in the , CPI is still hovers around 9-10 per cent levels from the double digits of 10.75 per cent. The world over, inflation is measured in CPI, not WPI. The fact that CPI is up means that the price level is still very high. The prices of food, primary articles and housing have still not fallen much. So rather than talking about deflation, policy measures should concentrate on how to bring the CPI down.