Credit Default Swaps - Anti-Social?

As we all know, derivatives and CDS in particular were the focus and a root cause of the failures of big banks in the recent 1 year.Investors like Warren Buffet had warned years before about the ill-effects of using derivative instruments. They described them as "dormant economic weapons of mass destruction" of size upto $500 Trillion dollars . But people simply ignored the wise words...they simply loved the idea of leverage to make BIG money....

A recent article in the Financial Times, refers to CDS as an anti-social product. Its very interesting to know why. As many of you might know, a CDS involves 3 parties. One which has granted credit to another party (e.g. Corporation A gives credit to Corporation B) and the third which insures that loan (e.g. AIG). If company B fails to pay-back or has a credit downgrade, AIG would compensate company A. In return for this protection, Company A pays AIG a regular premium (insurance premium).

Thus CDS is anti-social as there is an incentive for Company A debt holders that Company B fails. There are also real cases wherein the debt holders of Company A forced Company B to go bankrupt. But what if the intermediary who provides for the protection (AIG in this case) also fails? This is what exactly happened ! Company A was left to the street along-with Company B and all the intermediary insurance providers.....The Financial world was paralysed and is still recovering......

Price v/s Value -

The other day i was talking to one of my friends about stock market investing. He seemed to be pretty excited about lessons he learnt in his Finance 101 class about cash flows, dividend growth, etc. ..He said i am going to invest in this company X. Its a market leader in its field, has a strong brand recognition, its earnings are forecasted to grow N times and therefore its stock is worth investing in. You might say well my friend is making a correct decision with his investment.

Well, he might or might not be correct. I said to myself, He might make a VERY BIG Mistake. Why? Simply because of the fact that the stock of a good company need not always be a good investment. You may ask why? Whats wrong with investing in such a company. Because the stock might be over-valued in the market !

The biggest mistake that investors make is failing to differentiate between good companies and good stocks. Take the example of GE or e-bay. It is a good company but has been always over-valued. Its earnings have grown by leaps and bounds since the 90s but its stock price has roughly remained the same since then ! It would be so much frustrating to see no growth in your investment all these years. Or consider Microsoft and Google. Everybody knows these are excellent companies. But are their stocks worth investing in?They may or may not be. If you think their stocks are great investments at any price, you might be in trouble.

Here comes the emotional aspect of investing. Investors tend to overestimate the performance of good companies thereby driving-up their price to ridiculous levels.
They fail to realize that good investment is a product of fundamentals (cash flows, earnings growth, etc) and valuation (P/E, P/CF ratios, etc) . If you invest considering only one factor, you are at the risk of a loss.

Benjamin Graham had once said "Price is what you pay. Value is what you get".

Dividend Confusion

Every now and then i read news about dividend declaration by Mutual Funds and every time i read such news, i am sure a lot of investors especially new to the world of investing in mutual funds are mis-guided. Basically, a mutual fund offers three schemes to choose from : growth, dividend re-investment, and dividend pay-out. These have been in the market for quite some years now but many investors still dont completely understand the last one (dividend payout).

Simply speaking, a dividend payout scheme returns back a portion of an investors own money. Full Stop ! When and How much is upto the descrition of the company (thats why it cannot be a guranteed source of income as otherwise thought and promoted by many). Why does an MF declare a dividend? One reason might be there is no asset worth investing in the market at the moment. e.g. when markets are over-heated. Other reason might also be to attract new investors to the fund luring them to grab this "income".

For e.g. if you have invested $100 in a scheme which declares a 2 $ dividend, then your investment in the scheme now becomes 98$ if you had opted for a dividend pay-out scheme with the 2$ returned to you. Its as simple as that. Its upto you to decide what to do with that 2$. There are also some tax implications with dividends but i will leave them out from this discussion. The point is the term "dividend" seems so attractive that mis-informed investors easily fall prey to all the positive marketing about such schemes. They also plan their investment (in some cases even encouraged by the investment advisors!) close to the schemes dividend declaration date to capture that "dividend" because there is a gap between when the company declares a dividend and the time the money reaches the bank account.

My personal recommendation would be to invest in an MF (scheme suited to your equity-debt exposure) with a good track-record atleast for the past 5 years rather than falling prey to this very "attractive" dividend proposition. Finally, how much net return you make in the long-term is what really matters with or without dividends.

System Security at Banks

Recently an IT executive at a top US bank was arrested for stealing the companys proprietary trading software before moving to another employer. Apparently, there is a possibility of the entire trading platform to be stolen and if actually used by rival firms would result in losses of millions of dollars for the bank. The high-speed trading system used for taking equity and commodity markets positions is an asset to the bank as it assists in making trades ahead of the competition and thereby benefit from it. But if the system falls in the hands of rival firms, the banks competitive edge is eroded. Not only this, but if the system falls in the wrong hands for e.g. terrorists then the entire US financial system might be in danger !

The suspect quit the bank to move to a start-up company offering 3 times his existing salary. It is very likely then that he would have used the stolen trading application to benefit his new employer. Upon discovery of the theft, the new employer suspended the suspect. This event should be an eye-opener to banks and financial institutions to beef-up their IT security and take stringent measures to protect their data and systems agaisnt theft or mis-use and guard the interest of all the stake-holders in the financial markets.

Finally Madoff gets his "return" on "investment"

Madoff, the infamous ponzi-scheme fraudster gets 150 years in prison for duping investors of billions of dollars. Its a welcome news and given the fact that the sentence was handed just a few months after the discovery of the fraud is commendable. But i think the punishment is still not enough. Look at the age of Madoff. He is already 71 and has enjoyed his life all these years "fooling" innocent investors. Given that he will probably live for another 10 more years doesnt make the number 150 attractive anymore. Capital punishment would have been harsher and more suitable for this fraudster who ruined the lives of so many investors and bought immense shame to the financial world and investment profession in general.

While Madoff should be subjected to the harshest punishment, the case should be an eye-opener for the investors all over the world. They need to always read the fine print of any investment plan before investing even a single penny and be skeptical especially about schemes that advertise "guaranteed returns" or boast of "excellent performance even during bad times". Time and again investors have fallen prey to such obviously suspicious schemes. These might be the red flags for the next scandal as well......

Missed the Bus?Dont miss the Flight

Many individual investors feel that they missed the recent stock market rally. The stock market gave a fantastic over 30% returns in just a couple of months and stocks with high beta (higher volatility to the market) gave more than 50%. Those who invested in stocks then (and very few of them did) enjoyed enormous gains. While those who had put in their money a year ago are still struggling to break-even. But it was not only the retail investors who missed this years spectacular rally.

Almost all Mutual Funds (supposed to be managed by smart money managers) were sitting idle all these months. Mutual Fund data shows that funds were sitting on a cash pile of upto Rs 20,000 crore !!! as of April-end. They were waiting for the market to correct post-election. But just the opposite happened. The election results were un-expectedly positive, the market zoomed and everyone were a mere spectator to the rally. But money managers should have realized that valuations had already hit the bottom. Unsystematic Risk was still there and there was no strong reason enough to be optimistic but it was clear that many stocks were dirt cheap and the path from thereon was north-wards towards their fair price even though at a slow pace. But they totally missed it. What are these funds doing now? They are waiting again as they think valuations are too high now ! to enter so they want to wait before prices correct again. These Investment Mangers advise investors not to time their Investment and have a long-term horizon to achieve decent returns. But what they themselves do is the opposite.

Individual and Institutional Investors may have missed the bus by not getting in the market. I think, if they continue to wait further, they might miss the Flight towards the next rally.

Where to Invest?

Usually when people think of Investment, they think in terms of monetary gains. They ask questions like "If i invest X amount in this opportunity, how much shall i get in return?", "How can i make my money grow 10% in a year?",etc,etc. Today, the list of instruments to invest in is virtually endless...from bank deposits to stocks to real estate investment to Exchange Traded Funds and to even complex derivatives like Index Futures, almost all products are available to invest in for retail investors like you and me and that too at the simple click of a mouse ! Amazing isnt it?

Ofcourse Money is very important. But easy access to and a wide product variety creates confusion due to lack of proper knowledge and might create frustration if your decisions go wrong. The Question is "Are monetary gains the only success criteria in Investment?" I dont think so if you look at Investment from a different angle that is. The concept is simple to understand but might be difficult to implement.

If you want to be really successfuly in Life, Invest more in YOURSELF. By "Invest", i dont necessarily mean only in terms of money. It can be just your Time.
Invest to get a good education, Invest to upgrade your skills and get a broader and matured view of the world around you. Invest for a better health for you and your family. Go for a Jog outside if you can't afford going to the Gym ! Invest your time and energy to make relationships stronger. Invest time in Listening to Yourself. Invest in ways to enhance your beauty (get atleast 8 hours sleep per day and drink more water; its for free isnt it? ! )

These "Investments" shall give you "returns" that are not clearly "measurable" (we have a bad tendency to measure everything in terms of money !) but immensely beneficial for a healthy mind, body, and peaceful living. This is the biggest dividend that any investment can give you. And this matters more than just a hefty bank balance. I think most of you would agree on this. Happy Investing ;-)

Is INDIA really a global power?

The other day i was wondering if the image of INDIA has really changed in the minds of the outside world especially the west. Statistics indicate that the worlds one-fifth population consist of Indians or are of Indian origin. But is the country today considered as an upcoming and powerful asian giant just like China is or is it still considered as just a cheap destination for outsourcing IT and BPO call center work with decent english language support?

While speaking to my European and American colleagues over lunch, i was shocked to know that they still think India mainly as a country of Camels and Elephants! I dont know if it is their true feeling or a deliberate comment. Here in Japan, indians are considered as good english speaking people with strong IT and Math skills. But is that all that indians and India as a nation is? Is the country today thought of as a real and strong upcoming force and a nation that can probably rise above the major first world countries in another decade or two? Many outside India wont think so. Why? Why are we not taken seriously yet by the outside world?

In my view, Indians lack Branding and Marketing skills. Majority are still quite behind in terms of communication and leadership skills. We might be good in Math and some English. We might be equally hard-working and dedicated to our work like the Chinese are. But what we really lack are the soft skills. The skills that can make people believe in you, trust you, follow you and stand by you. We fail to project a strong and interesting image of our country to the outside world. We lack the skills to attract more foreign tourists and thereby earn forex revenues.

Not enough is done to get us recognized and appreciated. Okay, outside India we are considered as good and nice people. People who can follow instructions and get the job done. But are we considered highly competitive, aggressive, and strong leaders like the Chinese are? NOT AT ALL !

Agreed that we need to improve on our manufacturing capability and product quality but what also needs to be achieved is brand creation, recognition, and respect. For this to happen, soft skills need a big-time upgrade and so does the civic sense ! A recent poll ranked India towards the bottom in terms of civic sense among developing nations. A stricter government needs to accomplish this. Would anyone dare to throw garbage anywhere on the streets in Singapore or talk on a mobile phone while driving a car in Tokyo or blow car horns un-thinkably and endlessly? Such things are near-impossible in these places. So why not implement and follow them in India too? People attitude and image change is what is the need of the hour in order to achieve true global recognition and success in the long-term. And this is more important than tackling Terrorism which is a threat to almost every nation today.

Stress Testing - Too Late?

So finally US banks are being stress tested ! Everybody now seems to look forward to May when the report of US banks stress testing result is released. This is supposedly to separate the healthier banks from the weaker ones. A report in Washington Post states that a total of 19 US banks would be stress tested.

The results would give an indicator as to which bank is doing fine and can steer clear on its own without further government funding. The weaker ones shall continue to receive government money for some more time. This seems to be a good move by the Obama Administration since it is hoped that the results of the tests would be made public.

However, i feel that although it is very important to stress test the business, it would have been better if the banks were stress tested before the crisis hit. Doesnt it make more sense that way? Stress testing, as most of us know, gives an insight into the micro/macroeconomic effects on the business. for e.g. it deals with questions like what will happen to our portfolio if interest rates rise by 5% ? How adversely our portfolio shall get affected if the sovereign bonds of country X default? Wouldnt one expect that banks conduct such tests on an on-going basis to identify potential impact on its business and the measures it can take to shield against it?

Ofcourse, almost nobody could have imagined the size and the global scale of the current crisis. But I feel if the banks had conducted such testing more rigorously and diligently (even a child could have easily pointed out to the problems with the mindless lending and bad loans), the red flags could have been detected much earlier and the impact of the crisis could have been reduced to a smaller scale (possibly). We had all the necessary tools at our disposal then but the problem was no-one was willing to use them (out of sheer greed !)

Nuke for Commodity Trading !

Seems like US authorities were searching in the wrong part of the world for Nukes. An interesting article on the New York posts mentions "It turns out we were looking in the wrong place for weapons of mass destruction. They were not in Iraq. They were in Lehman Brothers'
portfolio."

See here for the related news.

Auto Profit Booking - Mutual Fund

Timing ! and more Correct Timing ! we know in all activities including Investment decisions is so important. Sometime or the other, we have felt "I should have invested in this a year ago and i would have made a killing" or "It was a stupid decision to buy that stock 2 months ago. Rather it would have made more sense to sell it and lock the 10% gain"....Timing our investments is very difficult and even though you have planned when to get in, you have to also carefully plan when to get out.

Recently, i read a news about a new Mutual Fund that gives an option to an investor regarding the exit point. i.e. Auto Redemption of fund units. Investors can choose between 10,20,50,100% return options. With this feature, once the fund returns since invested date reach the desired percentage, the units are auto-redeemed and the proceeds are invested in a safer instrument (such as a debt fund for example).

With this feature, an investor gets his desired returns which are then safeguarded (from value erosion in case of adverse market movement). Plus he doesnt need to track the market to find an exit point. Infact, i feel this feature can also aid to control investor greed. Studies have found that only few people redeem their investment at their desired return level. This is because investors become more greedy after a certain return % is reached and they still want more out of their investment !

I find the auto-redemption feature pretty cool and i wish all AMCs should have this option for all of their Funds especially in these uncertain times. This feature would certainly benefit the common investors. However, ofcourse if the market continues to move southwards, this feature is useless !

TARP and TRAP

As we know, many companies all over the globe are facing liquidity problems. i.e. are short on cash reserves. They are thus finding it very difficult to pay (interest) to their creditors. So who they will go to for funding? In usual case, the answer would be a bank loan or public debt (issuing bonds for example). But these days, the banks themselves are finding it extremely difficult to lend money (as trust among the market players is lost) and the public too would be hesitant to lend money to a company whose future is uncertain (a troubled company might default on its bond payment in the future).

The situation is so severe that many companies have become bankrupt or would file for a bankrupty in the near future if their need for cash is not satisfied immediately. There are already about 1,700 bankruptcies in Japan in 2009. The US government has helped such companies with multi-billion loans through the TARP (Trouble Asset Relief Program). For companies, who are finding this aid insufficient are now going to the public for help; by not offering debt but by means of equity shares ! some also want to repay their government debt by borrowing from the public. The idea is simple; in case of public debt the company is obligated to pay back the money with interest to the investors. If the company doesnt meet its obligations, it defaults, tis credit rating takes a hit and in worst case can even go bankrupt. On the other hand, by issuing equity, the company is on a safer side. It is not obligated to make dividend paymens to its shareholders.

I do not wish to name such companies or the size of their offering, but recently there has been a rise in number of equity offers in Japan as well as in the US. These amount to multi-buillion dollar deals. Companies are trying to woo the investors with such offers. This means from now on, it is the turn of the common investor (tax payer) to throw their hard-earned money at (troubled) businesses next to the US government. Do i sense some danger here? By the way, from where does the US government fund the money it loans to these "troubled" companies? From the tax payers pocket ofcourse. So it is the common man who is on the receiving end and is at high risk.
My view : Doubly evaluate the risks before jumping onto investing in any company (especially if its on the TARP list) else you might be in a TRAP !

Economic Poetry - on the lighter side !

With the world deep in recession
People are awaiting government action
With jobs vanishing into thin air
There seems no end to the common mans dispair

Some say the crisis was caused by unlimited greed and sub-prime
Leaving thousands without a nickle or a dime
With banks finding difficult to lend
Consumers cut down on their spend
With cash and assets gone in mortgages
Many now survive on just sandwitches

Something surely did go wrong
Erasing the value from dollar to the won
Gone are the days when businesses were making hay
With Defaults and Bankruptcies the order of the day
We all hope for a soon recovery come what may

Mark-to-Market Accounting rule relaxed !

With the global Financial Crisis getting deeper, we know that banks are finding it very difficult to lend and raise capital. To tackle this problem, seems like banks are coming up with new ways to make their portfolios "look" better than before. But how are they trying to achieve this?
By de-regulation ! Let me explain below what i mean

Recently FASB (Financial Accounting Standards Board) relaxed the rules for mark-to-market accounting. Now you may ask what is mark-to-market? Simply put, it means reflecting the market (fair) price of assets in your account. For e.g. if 1 year ago, you bought an asset at 50$ and today its market value (worth measured by investors) is 30$. This means the asset is now worth 20$ less than the price at which you bought it. So it makes sense to report the asset in your account at 30$ (which is the fair market price).

This erosion in Portfolio value is giving banks many sleepless nights. Their assets (like mortgages, and complex derivatives) which they thought were Apples a year ago have turned into Lemons ! thereby causing huge losses. So these banks now want to convert their lemons into Oranges ! How? by relaxing accounting rules.

I think this is outrageous. These are the same banks who asked the regulators to enforce Mark-to-Market accounting regualtion in the 1990 boom period and later. Why? Because at that time, prices were on the rise so reflecting a higer value in assets would surely prove to be beneficial. Banks wanted to show fair prices on their balance sheets which were higher than the prices at which they first bought the assets. But now the economy on the down-turn and assets fetching only Lemon value (literally!), they want to de-regulate the system.

The question now arises "Is regulation something that is flexible and can be tweaked as per the need or should it be permanent and fair enough irrespective of the global economic health"? I prefer the latter.

Covered Call Strategy

Last time i discussed the Straddle strategy which can be used in a volatile market condition. Today we discuss about Covered Call; a strategy to adopt when you anticipate some upside potential for the stock but at the same time wish to protect from the downside loss.

A Covered Call is nothing but a combination of short (sell) call option and long (buy) stock.For e.g. you bought a stock at 100$ and sold an option on the same stock for 10$ (this is the commission called as option premium). This option expires 1 month later with exercise price of 105$ (this means you promise to sell the stock at 105$ to the option buyer 1 month later). Lets assume this is a European option (exercise possible only at maturity).

Consider 2 scenarios for the Stock price 1 month later:

Scenario 1 : Stock price is 90$
You loose (100-90) = 10$
Commission earned by selling the option = 10$
Your Net Profit = 10-10=0$

The option will remain unexercised (it wont make sense for the option holder to buy the stock at 105$ when its market price is 90$)

Scenario 2 : Stock Price is 107$
Commission earned by selling the option = 10$
The option would be excercised. i.e. You have to sell the stock at 105$. but since you bought it at 100$, your gain is 5$
Your Net profit = 10+5 = 15$

In both the above scenarios, your loss is minimized and gain maximized.

The above example is quite simple without considering trading costs, etc which would reduce the pay-off. Also, one can argue that if the stock price shoots to say 130$ or is pulled down to say 80$ then your entire commission is lost and you make a net loss. So this strategy is better when market anticipates a lower volatility in the short term.It can also be argued that the option premium can be re-invested at a risk-free rate thereby increasing your gains.

Which Market is the leader?

Well, personally i prefer not to keep track of stocks/markets on a daily basis. I believe in remaining ivested with a company for atleast 2-3 years unless conditions have changed adversely for the company business which makes little sense in holding onto its stock/bonds. Anyway, almost everyday we come across a common news such as "Markets to open following global cues" or "Today market will open taking cues from the yesterdays NASDAQ/DOW closing figures". ..etc. So i believed it is fair to assume for example that the TOPIX or the NIKKEI index in Japan will perform in close co-relation with the previous day close for US indices.

So recently, i have been checking the US market moves/sentiment late Tokyo evening time before going to bed (bad habit!). This way i thought i will get a fair idea of what can be expected of the Tokyo indices the next morning. But last week, i was talking with a colleague from NY who had visited our Tokyo office for business. and he commented "You know we guys (US Market) are very much dependent on the performance of the Tokyo market. Our indices perform based on global cues (Tokyo in his case!)". While until then i was thinking the exact opposite. Apparantely, the colleague checks on NIKKEI index figure before he goes to bed NY time ! Chicken First/Egg first situation..

So who is the Market leader in this case? Tokyo (Early to rise) or NY(Late to Bed)? Well, i think both. Since the end values are affected by the intra-day price movements which depend on economic, political events and other updates during the business hours thereby affecting the markets in the other parts of the Globe (next morning). Also, advances in technology have made information to be available instantly and simultaneously to maket makers all over the globe thereby reducing the 'time-lag' factor. i.e. leaving very little scope for arbitragers to earn any profit !

Fundamental v/s Technical Analysis

The other day i was wondering about the investment strategy followed by well-known and highly successful investors. Take the case of Warren Buffet. The 80 something man has made billions through "correct" investing. There are mainly 2 ways of investment strategy "Fundamental Analysis" and "Technical Analysis" and i believe most of the successful investors (including Buffet) find favor with Technical Analysis even though they keep a close eye on Fundamental values.

Successful Technicians are the people who believe in market inefficiency. They believe they can get an edge by acquiring critical information much ahead of others and they really do ! They also use a Contrarian approach to their Investments. Time and again Buffet has mentioned about doing the exact opposite of what the majority of investors are thinking/doing. i.e. taking a view contrary to that of the market. In other words Buy when others are Selling and Sell when others are Buying. Be Bullish when Market is Bearish and vice-versa. But most of the investors find adopting this strategy extremely tough. The reason? FEAR. But they have no problem in following the herd mentality. The reason? GREED.

On what basis can one decide on the general market view? Well, there are various factors (signals) that can aid in understanding the view of the Market and then taking a contrary approach to the market (either buy or sell decisions). Some of these ratios are available to the general public free of cost. Some of these signals are

1. Mutual Funds Cash Ratio (Liquidity Ratio) : varies from 4% to 14%. higher cash ratio means market view is bearish.
2. Analysts recommendation of sectors/stocks : the most recommended ones (80% or more votes) would tend to be overbought and thereby adjust downwards in future.
3. Yield Spreads of bonds - higher values indicate higher risk taking appitite and thereby bullish market view.
4. Maring balances in demat accounts - Increase in balance indicate market is bullish.
5. put/call ratio : ratio of no of puts/no of calls. data available in news papers. more puts indicate bearish sentiment (remember puts give positive payoffs in case market declines)

Wherease technical analysis focusses on market inefficiencies and data patterns, fundamental analysis focusses heavily on accounting numbers, economic indicators. Which type of analysis best suits/convinces you is up to you to decide and test !

Straddle Strategy

Decisions ! and more Decisions ! We are faced with so many of them in our day-to-day lives. Whether a decision is good or bad depends on some future outcome. Everyone wants to make a "correct" decision. So how to go about making a correct decision NOW?

I believe, the uncertainity in the minds of a common investor about the economic situation world-wide is at its highest level ever since. Should we buy a stock now or wait until Election Results? Is it worth investing in real estate now or wait for further softening of mortgage rates? For an investor in a stock market, i would suggest playing with a "STRADDLE" strategy in these turbulent times.

Simply put, Straddle = Position 1 + Position 2 (opposite of 1) on the same asset. If your Winning Position "Wins" more than the "Loss" on your Loosing Position, you stand to gain irrespective of the direction of the stock market. If you incur a "Loss" , it is surely off-set with some definite positive values of "Win". With this double-sided strategy, your losses are thus quite less.

Consider This : Straddle on Stock Options. which is nothing but a "long put" option position and a "long call" option position. This means you purchase both a call and a put option on the same stock. As most of you would agree, there are only 2 possible outcomes of future value of a stock price : either UP or DOWN from the current price .

1. If Stock price goes up, Call option Wins and Put option Looses
2. If Stock price goes down, Put option Wins and Call option Looses

Remember that "Looses" here means only the option price paid by the investor for buying the option on the stock (which is much less than the stock price itself) thereby limiting the loss.

To sum-up, i believe that a STRADDLE option strategy in volatile markets can bring in good gains irrespective of stock/market movement.

My advice:
NEVER bet on stock price direction. Bet on a fool-proof Investment Strategy to minimize your losses !

My Economic Theory

It feels like the world has suddenly become "strict". These days, the word we hear the most (next to recession) is "regulation". Everyone is asking for more stringent review of every industry, business practice, process, management, people, the list is endless.

Until not a few months ago, everything was OK. Why? Because every company and in-turn its employee was making money. Business was booming, and eye-popping bonuses were the order of the day. Now with the global economy in a down-turn, people are demading more stringent regualtion. Why? because globally jobs alongwith businesses have vanished into thin air and we feel something somewhere has gone wrong. World-wide People are angry and into punishing mood! They want to punish this "something". Why? because we humans, like to play the blame-game.

But whom to punish? Politicians (Govts) want to punish regulators, regualtors want to punish industry, industry wants to punish companies, and companies want to punish Employee (by denying bonuses ;-) who in-turn want to punish the politicians (whom they themselves have elected). So you can see, its a vicious-cycle and the whole world is asking for revenge at this point.

I would like to urge economists to measure a new "index" at this stage; Common Man Angry Index (CMAI) rather than CPI ( Consumer Price Index) or GDP (Gross Domestic Product). The higher the Index, the severe the economic impact. Calculate CMAI Y-O-Y . If it has increased over a period, survey why and then our dear politicians/regualtors/companies need to act accordingly to reduce it!

I believe it is the ordinary people who can make/break an economy and this "bottom-up" approach will help in making this world a better place to live for all of us.

Trip to Hakone & Mt. Fuji

It was the first day of the new year holidays and we decided to go to Hakone, a beautiful place about 1.5 hrs by train ride from Tokyo. The climate on the day (30th Dec 2006) was perfect, our moods were on high and we looked forward to an exciting day and this is just what we got to experience; i would call it as our most memorable trip til date. The events throughout the day follow.......

6:10 am - We got out out of our cozy beds, brushed and bathed and got ready

7:20 am - 10 min taxi ride to Nishi-kasai station (660 Yen)

7:35 am - 30 min train ride to takadano baba station (230 Yen)

8:10 am - 5 min train ride to Shinjuku station (130 Yen)

8:25 am - boarded the "Romance Car" train for Hakone. Journey took about 90 min to reach Hakone Yumoto station (5,500 Yen free pass + 1000 Yen express ticket that is valid for 3 days unlimited travel)

10:15 am - reached hakone yumoto, had breakfast (sandwhiches, apple pie and cake about 1500 Yen) and took a train to go to "Gora"

11:00 am - cable car ride to go to Souzan

11:30 am - 15 min rope way ride from Souzan (provides fantastic view of Fuji and the surrounding landscape and hot springs)

12:10 pm - time to relax and get a taste of eggs boiled in hot spring water! the taste is no different from a ordinary boiled egg only thing is the egg cover is black in color, it is believed that eating such eggs will increase ones life by 7 years!

2:10 pm- boarder 20 min bus to reach "Ashi" Lake

2:45 pm - boarded a 30 min cruise to go to Hakone- moto machi

3:35 pm- had lunch! at a cafe (shrimp piraff, pizza abt 2200 Yen)

4:10 pm - 40 min bus ride to hakone yumoto

5:20 pm - boarded "Romance Car" train to return to Shinjuku

6:45 pm - Arrived at Shinjuku and took Yamanote line to go to Yurakucho (190 Yen)

7:45 pm - Dinner at a Thai restaurant in Bic Camera building (the soup was fantastic, the yellow curry was delicious though a bit sweet, total aout 4000 Yen)

8:30 pm - took a 10 min taxi ride to Kayabacho (the taxi driver lost his way in between and we decided to get down at Monzen-Nakacho, he charged us only 660 Yen instead of 1300 Yen!)

8:45 pm- 10 min train ride back to Nishi-kasai (160 Yen)

9:00 pm - 5 min taxi ride back to our SWEET HOME! (660 Yen)

The whole day was filled with fun, enjoyment, excitement, and content in all aspects and would reamin as an unforgettable trip for many many years to come.