Monday, March 23, 2009

Warren Buffett’s advice for 2009

We begin this New Year with dampened enthusiasm and dented optimism. Our happiness is diluted and our peace is threatened by the financial illness that has infected our families, organizations and nations. Everyone is desperate to find a remedy that will cure their financial illness and help them recover their financial health. They expect the financial experts to provide them with remedies, forgetting the fact that it is these experts who created this financial mess.
Every new year, I adopt a couple of old maxims as my beacons to guide my future. This self-prescribed therapy has ensured that with each passing year, I grow wiser and not older. This year, I invite you to tap into the financial wisdom of our elders along with me, and become financially wiser.
* Hard work: All hard work bring a profit, but mere talk leads only to poverty.
* Laziness: A sleeping lobster is carried away by the water current.
* Earnings: Never depend on a single source of income. [At least make your Investments get you second earning]
* Spending: If you buy things you don’t need, you’ll soon sell things you need.
* Savings: Don’t save what is left after spending; spend what is left after saving.
* Borrowings: The borrower becomes the lender’s slave.
* Accounting: It’s no use carrying an umbrella, if your shoes are leaking.
* Auditing: Beware of little expenses; A small leak can sink a large ship.
* Risk-taking: Never test the depth of the river with both feet. [Have an alternate plan ready]
* Investment: Don’t put all your eggs in one basket.
I’m certain that those who have already been practicing these principles remain financially healthy. I’m equally confident that those who resolve to start practicing these principles will quickly regain their financial health.
Let us become wiser and lead a happy, healthy, prosperous and peaceful life.

Explaining Current Crisis by Example

Linda is the proprietor of a bar in Cork .. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledge(thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Linda's bar. Taking advantage of her customers' freedom from immediate> payment constraints, Linda increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Linda's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed.. Nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices> are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Linda's bar. However they cannot pay back the debts. Linda cannot fulfill her loan> obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The suppliers of Linda's bar, having granted her generous payment due dates> and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties (and vested interests). The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Mind Set


Thursday, March 5, 2009

മാന്ദ്യം

മന്ദ്യം എന്റെ വാക്കുകള്‍ക്കും

എന്റെ പേന വാക്കുകള്‍ചുരത്തുന്നില്ല