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Investing in India - Honest Truth by Ajit Dayal
The board meeting A  A  A
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30 MARCH 2012


There were two board meetings that I knew of being held in India on March 29, 2012.

One was of the internationally well-known and profitable Goldman, Sachs. It was the first time in the firm’s 143 year old history, said the news reports, that the meeting of the Board of Directors was being held in Bombay.

Goldman has been the subject of numerous articles, though the tone has changed over the years. It used to be that people spoke and wrote about the firm in hushed tones and in awe. The haloed partners made millions, their traders were always right, their clients were lucky to have a firm of such magnificence and good standing as their clients. Of course, that was before the Teflon started wearing off and people saw Goldman for what it was. An octopus, wrote Barron's, with its tentacles wrapped around its clients sucking away at will.

The other firm was Quantum Information Services which held its 108th board meeting and helped create www.equitymaster.com and www.PersonalFn.com

Neither of these web sites and businesses is internationally known. And we certainly don't have the muscle power of the large financial firms - local or foreign. But we "keep on keeping on" - to use the words of a dedicated social worker who is helping millions of women across India lead a better life.

---------------------------- Raise your voice before this turns into yet another scam! ----------------------------

When millions don't even have food to eat, our government is thinking about bailing out multi-millionaire CEOs!

Is this government really made up of our representatives or is it on the payroll of those corporate giants?

We at Equitymaster feel strongly about this cause, and thus have started an Urgent Poll where you can read all about this and cast your vote to make your voice be heard!

We strongly recommend every Indian, who wants to make a change, to take a look at this.

Click Here to read more and cast your Vote... Before it's too late!

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To serve or to severe

Our views of the financial world have not changed much: most are in it for their personal wealth creation. A client with an Rs 10 lakh PMS account needs to be converted into a client who can generate Rs 10 lakhs of revenue every year for the firm. How? By flipping the client's hard earned savings in and out of various products. Every flip generates a commission. If the client makes money, that is his good fortune. Ifthe client wipes out his capital following all the trading recommendations and "don't miss this deal" suggestions, that is acceptable. Hey, why was the client stupid enough to come to us in the first place?

Buyers beware!

But our "business" objective is a little different. Yes, we all need a fee or a commission from advising a client. But we must earn that fee because we give good advice to the clients - advice based on what is good for the client.

Our fees must be a by-product of that focus on the client.

The fee cannot be an end in itself.

That has not been a good business model and it may take another 10 years to prove itself. Though my gut is it will happen sooner.

Every time there is a scandal in the financial world, our "warnings" over the methods used by many other financial firms attracts attention. People who have been mis-led by others start to call us. And some become clients. They wonder how such a firm can exist.

Wasn't that the original reason for our existence: to serve customers? But times have changed.

The people we elect, rule - they don't serve their electorate anymore. What happens to the people is not relevant.

The doctors suggest various tests because they may get a fee from the hospital or laboratory. What is good for the patient is not relevant.

The fund manager may buy a share of a company because there may be something extra for him along the way. Whether that company is safe enough to invest his client's capital is not relevant.

"When you give us the budget for the next year", I told the committed team," do not focus on how you will make profits. Give us a budget that captures how you can serve your clients well and hire more people if you need to. We are patient. We believe that what we are doing is right. And we will support you."

What do you think many of the financial firms discuss at their board meetings:How to best look after your money? Or how to channel your money into their pockets?

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Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)
Quantum Long Term Equity Fund Quantum Gold Fund
(NSE symbol: QGOLDHALF)
Quantum Liquid Fund
Why you
should own
it:
An investment for the future and an opportunity to profit from the long term economic growth in India A hedge against a global financial crisis and an "insurance" for your portfolio Cash in hand for any emergency uses but should get better returns than a savings account in a bank
Suggested allocation 80% 20% Keep aside money to meet your expenses for 6 months to 2 years

Disclaimer: Past performance may or may not be sustained in the future. Mutual Fund investments are subject to market risks, fluctuation in NAV's and uncertainty of dividend distributions. Please read offer documents of the relevant schemes carefully before making any investments. Click here for the detailed risk factors and statutory information"


Disclaimer: The Honest Truth is authored by Ajit Dayal. Ajit is a Director at Quantum Advisors Pvt. Ltd and Quantum Asset Management Company Pvt. Ltd. The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The author, Equitymaster, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same. Please read the detailed Terms of Use of the web site. To write to Ajit, please click here.


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5 Responses to "The board meeting"
ramesh
Mar 31, 2012
mr dayal!
it has been pleasant hearing from you and as a student in financial market i am learning with your valuable guidance; i have faith in equity and gold

kindly enlighten me and all other subscribers more about equities
Like 
Sankar
Mar 31, 2012
Manoj - I think that there is nothing wrong in boasting when you do things fairly and legally since it is becoming very rare in today's financial world.

Ajit - I am associated with equitymaster, personalfn and quantum MF for around 8 years. I can understand how tough to be fair and legal in todays business (run for making profit) world.
Like 
jasmine
Mar 30, 2012
shri ajit dayalji,

you are a good person. very few people in india are good people.
in india today 90% are bad people and only 10% are good people.
i have faith in you. beacause surronding atmosphere is bad , it takes time to cultivate 100% faith.
keep on writing good thing for investors like us. i am watching vey closely your predictions of 28500 of sensex by august or november 2012.
trend is like that you will come true.
i want to subscribe , but i am waiting beacause india's current situations.
thank you sir,
yours,
jasmine
Like 
param
Mar 30, 2012
i recall having a 30 min call with subbu 5 yrs back when i was interested in your PMS product, but he patiently convinced me to stick to your QLTEF based on my needs. i don't think i have regretted the decision once in half a decade. you must be blessed to have such a team... Like 
Manoj
Mar 30, 2012
I'm still wondering how such a company can exist :-).. Pls stop blowing your own triumphant :-0 Like 
  
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