A Warning from the Taxi Driver - The Honest Truth By Ajit Dayal
» INVESTING IN INDIA  
Investing in India - Honest Truth by Ajit Dayal
A Warning from the Taxi Driver A  A  A
PRINTER FRIENDLY | ARCHIVES
12 JULY 2010


I have not taken a taxi in London in years. They are pretty expensive. But a delayed flight and a series of meetings forced me to take the good old London Cab rather than the good old London Tube.

After having paid the driver, I asked for the receipt, collected that and shoved it in my pocket as I rushed into the building for a security check for the next meeting. Later, in the hotel, I took out the crumpled receipt and saw, to my surprise in bold capital red letters:

WARNING

And below that, in black letters:
Every year in London there are 100's of rapes and
sexual assaults and 1000's of robberies
committed by unlicensed minicab drivers.
Then in red again, this time not in bold capital letters:
Don't become a victim
only use a traditional licensed taxi
And again in bold capital (but smaller font size) red letters:
REMEMBER NO TAXI SIGN MEANS IT'S NOT A TAXI.
The Taxi was written in the logo that adorns the black taxi cabs of London.

--------------------- Now Equitymaster is on Facebook! ---------------------
We are on Facebook... Finally!
So go ahead, become an Equitymaster fan and start receiving regular updates right away!
Click here and be our fan!

-----------------------------------------------------------------------------

Should Finance Companies carry a Warning sign?
I was, to say the least, impressed by this blunt and clear statement.

This statement was obviously not drafted by a lawyer.
Nor was it drafted by members of the various sub-committees set up by well-intentioned regulators and central banks globally; sub-committees that are dotted with familiar names and whose members seem keen to pacify their friends and business clients in the financial world.

A recent example of such a sub-committee in India: the respectable and well reputed people who devoted their time to re-examining the issue of the net worth required to be in the business of fund management, stock broking, or investment banking.
Of course, a few people did not bother to attend these meetings, but they happily signed on the dotted line to support their business relationships and friendships.

In the US, their government has just spent months of time debating and adopting new laws for the financial services industry. I don't know how long this new Act is, but I doubt there is a line that says: WARNING, YOU ARE DEALING WITH COMPANIES THAT HAVE TIME AND AGAIN ROBBED YOU OR ATTEMPTED TO ROB YOU AND IN MANY CASES HAVE BROKEN THE LAWS, BUT THEIR LAWYERS ARE SO GOOD AND THEIR POLITICAL CONNECTIONS ARE SO STRONG THAT THEY GET AWAY WITH THESE CRIMES BY PAYING A FINE NORMALLY EQUAL TO 30 BUSINESS DAYS OF PROFITS FROM CHEATING INVESTORS LIKE YOU. WHILE WE DO NOT HAVE ANY INFORMATION ON HOW MANY PEOPLE HAVE BEEN RAPED OR KILLED FROM SUCH ACTIONS, WE KNOW THAT FAMILIES HAVE LOST THEIR SAVINGS AND WE RECOGNISE THAT THIS MAY HAVE LED TO SUICIDES, BROKEN FAMILIES AND SHATTERED LIVES. SO BE CAREFUL AND ASK YOUR FINANCIAL ADVISOR FOR A LIST OF WRONG ACTIONS HIS/HER FIRM HAS PERFORMED OVER THE PAST DECADE. (There may not be enough paper in the world - or server farm capacity at Google - to list all the wrong actions they have performed over longer time periods, so we will have to settle for the past ten years!)

If you think I am exaggerating you should read books written on the recent financial meltdown in the US, on the internet bubble, on the blow up of hedge funds like LTCM - or Google this stuff on the internet and read what the newspapers had to report when all these messy things blew up.

Tobacco kills your lungs, we destroy more
Given that I am not a taxi driver but I am in the field of finance, I was wondering if it would be good for every finance company to carry such a blunt and frank statement with their advertisements and billboards.
And also paste them prominently at the end of every TV show or newspaper article or internet report written in the media by reporters who either play along with "the story" or get fooled into helping spread false claims and images.

Right now there are those long lines of statutory disclaimers on offer documents and IPO stuff that pretty much no one really reads or understands.

The tobacco companies were forced to have skull sign and a large WARNING TOBACCO KILLS printed on their boxes of death.

Investing your money based on the advice of a financial company is probably as dangerous for your health. And your life.

But, you may argue, despite the tobacco warning, people still go ahead and light up their cigarettes for that desperate smoke.
The "risk" is that even if the finance industry was to be sweet-talked or arm-twisted into this WARNING label, the industry may still harm investors.

That's fine.
The job of the regulator (or the government) is to warn you about the risks, not to make you believe that it is a perfectly safe world out there. Because the world is not safe.

If you still go ahead and do silly things, that's your problem - not the regulator's problems. You need to act responsibly and take responsibility for your actions. The regulators' job is to set the framework and shut down those who cheat (but, as I pointed out, sometimes the lawyers are too smart or the political pressure is too much).

It's funny how an expensive taxi ride in a London taxi can teach you an inexpensive lesson - that is, if you really wish to learn.

So there it is: my warning to you.


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.


Read our Privacy Policy and Terms Of Use.
Get The Honest Truth directly
in your mail box.
Just enter your e-mail address» 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "A Warning from the Taxi Driver". Click here!

16 Responses to "A Warning from the Taxi Driver"

LAKSHMAN PARDHANANI

Jul 22, 2010

I do not know how much time you have spent actually living in London as opposed to experiencing America. My own observation for what it is worth is that England is a more straightforward country than America. You are quite right to point out the scandalous conduct of American Corporate leaders- politicians there are even worse, a la Dick Cheney and Rumsfield- and my big regret having lived in India for about 4 1/2 years is that we are copying the American model rather than the English one. India disappoints me deeply despite exceptions like Murthy, Nilekani and Ratan Tata and no amount of warning on marketed products is likely to deter the broad mass of Indian commerce/politics from continuing in its devious and crooked ways.
Just 15 days in London where I have returned to recover from a heart operation, have reminded me about the cultural chasm that exists in commercial/political activities between India and the U.K.
I hope your enlightened and patriotic younger readers will ponder over my remarks and engineer suitable solutions.

Like 

So What

Jul 18, 2010

The first think that is need is an open customer complaint file of the problem. This can clean up mess and will also disclose the angle Mr. Ajit Dayal is taking. Custormer complaints can solve problems if the customer complaints are revealed....!

Like 

DEEPAK RELAN

Jul 17, 2010

honesty is the best policy that mr.dayal has adopted,he is telling the truth of both plus and minus,how money can be washed in stock markes.ok thanks

Like 

babu

Jul 17, 2010

it is all very
true but nobody
is forcing you
to invest with
them.you in all
your greed put
your hard
earned
money.for all
the honesty
given a chance
you would do
the same,right?

Like 

chandra sekhar gupta

Jul 16, 2010

Nothing new! These are the things known to many people for long. These things can not be stopped completely but with better investor education, financial markets should improve. There are bigger things taking place which even many experts are not very well aware of like deals being made in the name of privatisation of infrastructre etc., Let us hope things change in future.

Like 

Chandra

Jul 14, 2010

Dear kumuda jayarama shetty:

"IL&FS Investsmart Securities Limited" has been taken over by HSBC, and it got re-branded as "HSBC InvestDirect Securities (India) Limited". You can google a bit and find detailed information updates regarding this takeover & rebranding exercise.

So, nothing illegal went on. There's not much one can do, or resort to a legal course of action.

It is unfortunate that in your case you had sub-normal return on your investment. Like you already mentioned, it is due to the very heavy expenses. Perhaps it is time that you consider a good quality low cost equity mutual fund than an opaque PMS product. Please give it a thought.

Like 

Chandra

Jul 14, 2010

J.Thomas and all:

Greetings.

These PMS schemes are nothing but day-light robberies. They come packaged with very very expensive cost structures. These are designed to make the PMS outfits wealthier. At the end of the day, if the investor's gains are eaten up by the PMS outfit, can the actual investor ever become wealthy?

That's why one should prefer low cost products that are more transparent (in terms of disclosures, regulation, etc.). Mutual Funds fit the bill very cleanly - extremely well regulated by SEBI, portfolios get disclosed on a monthly basis, NAVs disclosed every day, cost is fixed & it will be below 2.25% annualized, no entry loads at all, and usually all AMCs are providing on-line access to investment folio.

Certain fund houses have gone magnanimous (that's not a very big word) in reducing the management fee down to 1.5%; something that can only be dreamt about. Yes, I am talking about a Value Research Online 5-Star Rated Fund: Quantum Long Term Equity Fund.

You may want to verify the performance of the fund at Value Research Online web site, and evaluate for yourself if that is a better choice than these very high cost PMS offerings.

Wishing you the very best. May God bless us all!

Like 

sashikumar.k.s

Jul 13, 2010

Wonderful, please keep going and send us information about the murkier side of the financial world. Mr.Ajit, there are always people who show the rosier side but only a very few like you have the courage and honesty to tell the other side also. thank you.

Like 

Harit Shah

Jul 13, 2010

Dear Mr Bhavadip Vaidya,

Please do not say anything just for the sake of saying it! You invested your money in December 2007 at a time when the markets were at their all-time high levels. So obviously you would not have made much money on that investment, in fact you have lost money as the Sensex has never even come close to the levels touched in that month (in excess of 20,000). So you have lost money not because Tata MF has cheated you but because you invested at an inopportune time when valuations were totally unjustified at stratospheric levels!!!

Like 

dp gandhi

Jul 13, 2010

tie wale thug ,i have invested one lac in hdfc infra fund but to surprize everybody only 16 %(LATEST PORTFOLIO) invested in
infra rest in banking and other sectors like, ht media

zee tv ,tata dvr ,a new defination of infrastructure

TIE WALE THUG

Like 
Equitymaster requests your view! Post a comment on "A Warning from the Taxi Driver". Click here!