Lesson # 26 : Surviving the coming Apocalypse

If you aren't aware of what's happening around the world then my simple advice is to wake up and smell the coffee. Hell is about to break lose and massive riots around the world are in development. If London is anything to go by then the world is soon going to see lots of looting and rioting in the coming years.

If you have absolutely no idea about I am talking about click on the following link :

http://www.youtube.com/watch?v=Jjv-MtGpj2U&feature=player_detailpage

So, the question now remains how to prepare for it?

1. Buy Gold and tons of it : Gold is the only thing that is going to shine in the near future. If all hell breaks    loose and we go back to the barter system in general then the only thing that will be able to buy you food and water is gold. Obviously with the current prices people aren't going to be willing to buy gold and traders and analysts will advice you to sell gold. My advice is to hold onto it.

2. Limit Fixed Savings : If you are the sort of person who depends on Fixed Deposits and Closed Ended schemes for returns. I would suggest that you immediately stop investing any further. Because if governments the world over default on payments. Then banks default on payments and eventually you as the consumer don't get paid.

3. Stop Taking Debt : As it is there is enough debt in the economy stop forcing it to bleed any further by taking more debt. The more debt you take the less money there is and as a result the closer we are to a world economic crash.

4. Limit Cash Holdings: While a greater number of you might not agree with me the best thing you can do right now is to put your capital to work. Use your cash to buy commodities. Apart from buying last you for gold, silver and other metals invest in your businesses further or buy essential goods which do not come with an expiry date or come with a longer expiry date. Stock up on basic essentials of life or buy any good that comes cheap.

5. Read up and Prepare for the Worst : This is probably the only time after the 2008 Economic Crash when the people of the world will be forced to read The Communist Manifesto and other books by Karl Marx. Apart from these read up on the barter system and a resource based economy.

6. Sell Stock Holdings : Your stocks stand at the greatest risk at this point of time. The moment the market shows any sign of recovery and you can make up your principal sell immediately your holdings and convert the money into liquid savings.

That's pretty much it. Not much you can do. We are all sitting ducks who can simply wait and watch.


-Doodle

Lesson # 25 : Wall Street Crash of 1929 and the Aftermath

It's any other Thursday in 1929. Investors and traders wake with a hope to see their investments multiply. The market has been performing wonderfully and was at it's all time high. Investors wanted to be there for the long run.

The market closed that day with a record sale of 12.9 million shares. Bankers from all over the country met up and pumped in money in the market. They bought US Steel and a bunch of other blue chip shares{ Shares they expected would rise sooner or later}. This action is somewhat similar to the US Government's pumping in of around a trillion dollars at the time of the Economic Recession of 2008 only in this case it was the bankers and not the government that was putting in the money.

However, over the weekend President Hoover chose not to veto- the pending Smoot Tawley Tariff bill{ Which was basically a bill that was aimed to provide protection to American businesses similar to India's closed economy prior to 1992 Liberalisation}

As a result, the market tanked and what followed was the worst bear market ever. Stocks plunged, debt in the economy increased, bankruptcies were filed for and wages were reduced. A similar situation is in the works today and if we don't act now perhaps we should be prepared for the Great Depression 2. Though Governments and Analysts will state everything is all right perhaps they should look at America's 14 trillion dollar debt or the current crisis in EU and the weakening of Euro. They should look at China where manufacturing costs are increasing.

The future seems bleak with the current economic situation it wont be surprising if sooner or later we do go into The Great Economic Recession.

With a hope for a brighter future,

-Doodle

Lesson # 24 : Why Select City Walk sells?

Delhi has seen it's share of malls. There was Ansal Plaza the first and once the grandest mall in New Delhi. For years it ruled the market attracting shoppers all over from Delhi and regions near by. Some years down the line the GMS {Gurgaon Mall Syndrome} started and shoppers flocked to Gurgaon where every few blocks a new mall was cropping up. The competition got stiffer and malls felt the heat.

Amidst all of this a new mall came up. Select City Walk, Saket. Right from the start people knew it was going to be big and so did it's founders and today it stands tall. The 6 acre mall is today India's premier shopping destination.The question remains why is it so different?


1. The owners realized that the cost of developing the mall could be recovered by retailing a large portion of the mall. Hence, they brought in svelte thereby earning a part of their costs.

2. The major revenue malls earn is from food. Select City didn't sell out to other food businesses. The food court is standard offering a variety of cuisines with absolutely no competition. The rates are relatively high as the food court is run by the mall owners.

3. Select City also is the hub of premier flagship stores, from Esprit to Tommy Hilfiger.

4. Select City also has exclusive stores of international brands. Zara and Calvin Klien along with Hagen Dasz add to the mall's attractiveness.

5. The Flea market held every Wednesday brings in huge crowds thereby resulting in larger footfall and greater profits.

6. The mall has maintained it's reputation,the authorities keep the mall clean and run it efficiently. Thus, consumers get a much better shopping experience and choose it over other malls every single time.

7. Select City also charges an hourly parking rate unlike other malls which sort of adds to their revenue.

8. Select City is probably one of the first malls to introduce open shops in the country. Small spaces on each floor are given to retailers who cannot afford larger shops or do not wish to buy shops. Hence, Select City earns a major chunk from rent as rents range anywhere between 650-750 per sq foot.*

So the next time you visit Select City take a closer look at the little things and you'll figure out why some businesses work and others do not.

Loads of Business Sense

-Doodle
*Source : Wikipedia

Lesson # 23 :Tulipomania and What We Should Learn From It

Tulipomania or the Tulip Bubble refers to the exponential growth in the price of tulips and its subsequent fall. It took place in the Netherlands in the late 1630's  and was one of the world's first recorded instances of an economic bubble. At the bubble's peak, the price of an ordinary tulip bubble was so astronomical that a nice Dutch villa by the river cost as much as a single tulip bubble.  
Tulips have no uses except their aesthetic value (unlike other commodities like gold or silver or even diamonds, all of which have other uses). So why did such a trivial flower cost ten times as much as a skilled craftsman's yearly wages?


One obvious reason that many economists cite was the novelty of a certain kind of tulip, which increased the demand for tulips several folds (Similar, in my opinion, to the novelty of Tech IPOs during the Dot-Com in 1999). Novelty of a good and the promises of unlimited potential always cause mass hysteria and demand for the product. Another reason was the scarce supply of the tulip bubble in the Netherlands at that point of time (People had started hoarding tulip bubbles). Yet another reason was that the tulip had become a highly coveted luxury good and a status symbol, an indicator of wealth and power.

When there was finally a correction in the price of the tulip flower, the Dutch economy was in shock. People were left with useless tulip bulbs that were suddenly worthless. The Tulip Bubble was first chronicled in Chrles Mackay's book  Extraordinary Popular Delusions and the Madness of Crowds. In Mackay's account, panicked tulip speculators sought help from the government. The government declared that  that anyone who had bought contracts to purchase bulbs in the future could void their contract by payment of a 10% sum. 

The most important lesson to learn here is that buying anything due to mass hysteria and speculation is wrong. Oftentimes, the price of already overvalued things skyrockets due to consumer hype and then crashes suddenly, leaving invstors empty pocketed. A lot of research and thought should be put into an investment, and one should not follow the crowds blindly.

Happy Investing (Hopefully not in tulips)

Madhav Behl (On Behalf of The Doodle Corporation).

Lesson #22: Why Property is the best investment ever OR How to Buy a Property Without Being a Millionaire

Ah, Property. A chunk of land that you can call your own. Property, is, and will always be, in my humble opinion the best investment a man can make. Whether it is commercial property or resedential property that you're buying, in a country like India, there will always be demand for your chunk of land. Investing in property has two benefits:


1) The price of land, one of the most precious resources, will always go up in a country like India, where the population is ever increasing. The more the population increases, the higher property prices will be.


2) You can always rent out your property. Huge sums of money are being paid in rent today in places like Delhi.


Say you buy an apartment worth Rs.50,00,000. You spend Rs.25,00,000 from your own pocket and take a loan against the very same apartment  for Rs.25,00,000. Say you decide to pay this loan back over a period of 10 years at an interest rate of about 12%


It works out to roughly Rs 35868 a month. Now assuming that you put that apartment on rent. The average rent you can make is roughly 20,000-25,000. So your monthly expenditure works out to  Rs 10,868. And you continue to pay your EMI (Estimated Monthly Installment) till the end of ten years. Each year your rent rises by 10% and assuming that value of property appreciates. The same property would be valued at Rs 75,00,000 or even Rs 1,00,00,000. And your rent is now roughly worth your EMI or even higher.


So, as you can see, even if it requires taking a loan, buying a good property is the best investment one can ever make.


Happy Property Buying.
 
Madhav Behl  [On behalf of Doodle inc]

Lesson # 21 : The Art Of Penny Pinching

Penny pinching is the art of being smart enough to limit cash outflow and maximize cash inflow. Though common people may define it as being miserly what should be noticed is the fact that a lot of billionaire's are penny pinchers.

From Donald Trump who confessed the same in his book to Warren Buffet who till date believes that buying a brand new car is overrated to Azim Premji whose latest buy wasn't a BMW or Audi but a good
old Toyota.

The point is that it pays to be cheap in most cases.

For instance, A Taxi or Auto ride amounts to say 36 rupees and you don't have it in lose change. So you hand the guy a 100 rupee note. The guy refuses to pay you the exact amount and hands you over sixty bucks instead. The point is that if you would have handed him forty rupees or even fifty rupees with even a five rupee coin you would have lost out on barely a rupee.

So the question is that how does this affect you? Assuming that you let go of six rupees.And you travel around 5 times in a week. That makes it 10 round trips a week or 40 trips in a month or 480 trips in an year. That's 2880 in an year or 28.880 in 10 years on travel expenses alone.

But if you go out on a date and ask the girl to pay that is simply being impolite and chances of you going out with a girl again are extremely low. Similarly, not tipping a waiter when  he's served you well is just being cheap. But if you pay a service tax of say 10-12% then it's all right to not pay the waiter.

The point is that 'Little Strokes fell great oaks'. Every rupee you save adds to your wealth and in turn reduces your financial goal.

Happy Penny Pinching,

-Doodle

Lesson # 20 : To Fix Deposit or Not?

India is a country where the mindset is such that the average Indian household believes in the concept of saving. There is no problem at such with saving apart from the fact that the average yearly interest on savings in the bank are roughly 3.5-4%.

When compared to absolutely no return this seems rather promising. However, if a person would fix deposit the same amount he may be able to achieve 8-10% Interest. The only problem that arises is that there is a lock in period and that premature with drawls won't give the same return. Moreover, the higher interest rates are for senior citizens or for longer periods of times.

There are of course the good old company deposits which offer as high as 12-13% interest per year but these come with a higher risk.

FD's are good for the low and moderate risk consumer who has idle cash and wants some return. You need to pay Tax Deduction at source or TDS if your return on investment in a single bank is more than 10,000 so calculate your return before investing.

An FD of 10,000 made at 9% interest for a period of 10 years yields 23,674 on maturity.

The decision lies with you...

Happy Investing

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 19 : Why People Lose Money in Stocks?

There are two types of people in the stock market. There’s your average day trader who books his profits at the end of the day. He’s played in futures and trades in probably a lot more than you do and then there’s the investor which in all likely hood is you.

The reason why most people lose money in stocks is because they buy stocks not as an investment but as a trader. The problem is that a trader knows where the market is headed the average investor does not. The solution is relatively simple – If you are an investor invest for the long term and invest continuously. 

The Golden rule is that never invest in companies you do not understand and absolutely never buy a stock simply because it comes cheap.

Remember that not every penny stock is going to be worth your investment and not all stocks have the potential to grow into a Berkshire Hathaway or Microsoft.

Remember that investments are going to reap returns in the long turn and as long as your portfolio shows an average return of say 18 odd percent annually you are bound to earn high returns in the long run.

Happy Investing

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 18 : The Real Difference Between An Asset And A Liability

Asset: A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

Liability :An individual's legal debts or obligations that arise during the course of his lifetime.

That's the definition that has been passed on to us for generations and for all I care it's absolute crap and rubbish.

For instance answer the following questions:


Is your house an asset?


Is the money in your bank an asset?


Is your car an asset?


If the answer's to the above questions is YES then let me tell you that you are absolutely wrong and are like those people who have given the above definitions.


Let us examine the above examples in detail :


Your house is an asset if it put's money in your pocket. So, it becomes a real asset when you sell it and receive money or when you put it on rent and receive money from the house.


Similarly, idle cash in your bank account is not an asset because it is just there and it is not growing in value over a period of time. A 3% interest is nothing when you can easily earn 35-40% monthly if you invest that money.


And the car is definitely not an asset despite the fact that it acts as a mode of transportation because at the end of the day it is taking money out of your pocket and not putting money in your pocket. It's depreciating in value over a period of time and therefore is a liability.

Most people mistake a lot of their liabilities for assets and that is perhaps why a lot of people take debt they cannot repay as they have miscalculated their assets and liabilities which results in an imbalance in their cash flow sheets.



Simply put


An Asset puts money in your pocket at regular intervals or after a certain period
A Liability takes out money from your pocket at the speed of light


Happy Investing


Udit Sabharwal { On behalf of Doodle inc}

Lesson # 17 : Buying a 40,00,000 car for 46, 940.

All of us dream of owning a luxury car be it a BMW, a Mercedes, an Audi, a Porsche, Lamborghini or even a Rolls Royce.

Assuming that you want to buy a car say X which costs you 40,00,000  on road.

Assuming that the interest rate is roughly 4-5%. {This is relatively lower than your standard car loan rate because of the relatively larger amount}

Also, assume that you are willing to take the loan for say 7 years.

Your easy monthly installment works out to roughly 56,536.

Your yearly installment is roughly 6,78, 432

Considering, that you are smart enough to actually have at least half the value stacked up. {If you don't you don't deserve to buy the car} the average amount available with you is 20,00,000 which is roughly the amount you have saved to purchase car X.

Now investing this in a Fixed Deposit Scheme at roughly 9.5% interest or maybe even 10% the average return on this investment after 7 years is 39,92,990.

Assuming that you pay off your entire car loan through your salary and withdraw your investment after 7 years. Assuming it is taxed at 1% long term gains tax the amount left is 39,53,060.

Therefore, you have merely spent 46,940 to buy a car worth 40 lakhs.

Happy Shopping

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 16 : Why Credit Cards Suck

'If the devil were alive he would probably have sold his soul to the credit card companies.'

It was like a collectable Pokemon Card for adults. Having more cards meant greater power. Greater power because one had more liquid cash than he could ever imagine. Adults and teenagers all over the world signed up for these so called Plastic money lured by the fancy logos and advertisements of Visa and MasterCard.

What people forgot was that the money they were borrowing was not actually theirs and that someday someone was going to pay it and that the banks need to make money and the only way they are going to be able to do that is by thrashing the consumer with high rates of interest compounded monthly.

As a result people's debt goes on piling up and in order to pay off the monthly debt of one card they take on another and so on. The chain goes on till their debt has exceeded their net worth and the day has been ruined by the greatest collectable card in world history.

Credit Cards today charge an average consumer 40-50% interest which through various hidden costs and clauses is actually legal. They also charge you for every purchase you make. A person pays 3.5% - 5% surcharge for every purchase made with a credit card.

For every cash with drawl there is a surcharge of roughly 1 %. Similarly, for every late payment a daily interest is charged in some cases.

Still want to get a Credit Card?

I would suggest you sell your soul to the Devil instead.

With a hope of no debt

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 15 : Why A Business Works Better Than A Job

There are four sorts of people in this world. The first who get a job and continue doing the job for the remainder of their lives, the second who get a job then start of with their own business, the third who inherit their family business and the fourth who do absolutely nothing.

The reason why a business works better than a job is relatively simple.

Say work done by a person in the office is with an efficiency of  60%. The same work when done by the same person for himself would be in the range of 80 - 90 %. The reason is relatively simple. When all the money goes into your pocket you would rather work harder and get maximum utility from that work rather than work for someone else and get only a negligible share of your efforts.

Chance's of promotion in a job are relatively lower. Whereas the sky is the limit when it comes to a business. A business can grow every single day, every single hour, every single minute. As a result while the salary from a job is fixed the salary from business is often increasing and at an incredible rate.

The only problem perhaps is that of risk. But the fact is that probability of a failed business venture and the probability of losing a job are more or less in the same range.

So going over the pros and cons it is more than less obvious that a business is definitely better than a job.

Happy Business

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 14 : Earning the first 1,00,00,000 without working for it

Wealth is created over a long time and perhaps no one would understand that better than the average Indian. But there are certain shortcuts to creating this wealth. Diverting a certain portion of the savings or income towards various instruments can help generate income beyond imagination. A person can have a crore rupees in less than thirty years by investing just 18,00,000 over a period of 30 years or just 5,000 rupees a month.

Year	Amount (5000 a month)
5	3,90,412
10	10,32,760
15	20,89,621
20	38,28,485
25	66,89,452
30	11,396,627

The following are the returns on investments made at 5000 a month for 30 years at 10% per year compounded annually. 

This makes creating money a lot easier. Now, if a person invests 10,000 rupees a month then the time reduces to half and the same target can be achieved in a lesser amount of time.

In the end remember that The money works for you and not the other way around.

Happy Investing

Udit Sabharwal { On behalf of Doodle inc}

Making sense of the previous lessons

Most of you would be probably wondering why out of the blue for more than five lessons I have been talking about the market and various factors that influence the market. Well the fact is that it is because of these factors that actually determine your wealth. If a person is able to make sense of all the things that are going on with the market he can easily use that information to exploit that situation and make profits.

For instance, if a person learns that the price of crude is going to increase then who should purchase crude and probably trade in crude futures. Similarly, if a person sees the price of gold declining then he should hold on to his stocks as the price of his shares is bound to rise in the near future.

Keep your eyes wide open and learn from every person. Every little rumor has the potential to make you a billionaire.

Happy Money Hunting

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 13 : The Market and The Banks

The Markets are influenced by The Banking system to a great extent. As the banks are the major source of money in the economy they also influence the market greatly. The market is affected by certain factors such as the interest rate, bank rate, repo rate etc which are determined by the Reserve Bank of India which also monitors the working of the banks.

If the loan rate is increased people will take less of loans. As a result, the amount of money in circulation will decrease. The bank’s will earn less profits and would in turn produce less earnings in that quarter. As a result the stock would tumble. Since the stocks of the banking sector are highly priced it would greatly affect the market and as a result the market would fall.The opposite would happen if the interest rate is decreased.

Another thing that should be understood is that since a greater number of these banks also offer Mutual Fund services and Demat Accounts. Therefore, as the people would invest less as the market falls the market would fall further as there wouldn’t be enough money to pull the market up.

Loads of wealth

Udit Sabharwal  { On behalf of Doodle inc}

Lesson # 12 : The Market and acquisitions, takeovers

When mergers and acquisitions take place various things can happen in the market.

For instance, if an Indian company is taking over a global counterpart then the Indian market would rise.

If a global counterpart is buying out an Indian company then the share of that Indian Company would rise.

Similarly, if two corporations decide to merge then the one which gets greater benefits from the merger sees a larger rise in price.

Remember if a smaller company is being bought by a larger company then the smaller company is the one which is bound to rise in price and not the larger company.

Sometimes, it may happen that the price of the larger company may decline as the shareholder’s may feel that the parent company’s decision to buy a smaller company is simply going to add to that company’s liabilities.

If a company decides to split it’s company into various sectors then the sector which generates the maximum revenue will see the largest rise in the price of shares.

Mergers and acquisitions are bound to affect the market irrespective of the size and volume of the trade.  In some cases it is positive and in some negative.

Loads of money

Udit Sabahrwal { On behalf of Doodle inc}

Lesson # 11 : Crude and the Market

There is an inverse relationship similar to gold between the market and crude. Crude in general refers to the price of oil in general. Oil as we all know is a rare commodity and due to it’s limited availability and restricted geographical locations the price of crude undergoes a change on daily basis.

The location of crude is mainly restricted to the Middle East and the amount of supply is directly controlled by a few powerful nations in the Middle East.

When the price of crude rises it affects almost all the industries in general.

For instance, Industries using petroleum as a source of energy to run their machines now have lesser production as the amount of petrol they can purchase decreases. Similarly, a consumer who owns a car has to spend in excess on petroleum if the price rises as a result the amount of his salary he is bound to spend on other goods decreases. Thereby, affecting the profits of those companies. This also results in lower investing in the Market. As the number of people purchasing shares are less the chances of the market going up are almost negligent.

When the crude was at it’s peak at around 150 $ a barrel the market was at it’s rock bottom.

The only stocks that go up when crude is up are those that deal in alternative sources of energy. For instance, stocks such as Jaiprakash Hydo { Hydro electricity} and Suzlon { Alternate sources of energy} were amongst the bullish stocks on the market.

Loads of Wealth

Udit Sabharwal { on behalf of Doodle inc}