Sell, sell and book profit !!

A full week of trading without much progress in either direction for the BSE Sensex. The chart pattern is tantalisingly poised and may move either way. Let us first take a look at the 6 months bar chart pattern of the BSE Sensex index:-

The Sensex broke above the trend line connecting the tops of the rising wedge pattern almost a month back but has continued to move sideways, and has failed to cross the previous high of 17200. Last week the index alternated between lower and higher closes, and is now resting on the trend line. As we will see in the 3 months bar chart pattern of the BSE Sensex, the index is also resting on the 20 day EMA, which has provided good support to recent corrections.

While there is a possibility of the Sensex moving up again – particularly if the FIIs start pouring in money, the chances of a break downwards is increasing. As the three EMAs are still merrily moving up, the distance between the 50 day EMA and 200 day EMA has increased more than 2000 points. This indicates a likely correction in the near future.

The technical indicators are all looking bearish. The RSI, MFI, Aroon, MACD and slow stochastic are all in the positive zone but are moving down steadily. Most importantly in the shorter term, market sentiments seem to be turning bearish, as good news (like the Reliance Industries 1:1 bonus after 12 years, and the Q209 results of Infosys that turned out better than consensus estimates) failed to produce any buying interest.

Watch out for a downward break below the lower trend line joining the bottoms of the rising wedge pattern. That may start an ‘end run’ that could lead to a sharp correction. The rising wedge pattern is quite bearish and is usually followed by a sharp downward break.

Bull markets climb a wall or worry, and a large inflow of liquidity can nullify all technical analysis – as has happened a few times during this bull rally. So avoid shorting the market.

Bottomline? The chart pattern of the BSE Sensex index is poised at a crucial support level. Stay on the sidelines and watch the unfolding battle between the bulls and bears. Keep tight stop-losses and book partial profits at every opportunity.

Banking: The Next Crises & The Ignorance of the Economic Establishment

Rajib Handa

In over six decades post India’s independence from the British I never recall Repo rates dropping down to 2 per cent and peak rates on 5 year unsecured bank deposits to 7 per cent. Compared to a CPI of 12 per cent banks are now offering negative returns of 5 per cent per annum to depositors, while throwing money at near bankrupt Real Estate concerns at artificially induced low interest rates. The CAPM pricing theory propounded by Nobel laureates Muller and Modigliani professed that the only difference between debt and equity was the tax. So why do investors expect ROEs of 20 per cent on Equity but are willing to settle for 2 per cent income on deposits? If this is not laying the seeds of a gargantuan Real Estate Asset Bubble and everything else connected with it, then what else is it? The repercussions of easy money will be felt over a number of years, but the disaster will strike investors in many forms. So Brace yourself up. It’s easy to understand how loose monetary policy causes inflation and/or speculative bubbles. But the economic establishment in Washington, on Wall Street, and more or less all over the world refuses to acknowledge the cause and effect relationship! They insist on Keynesian theories of macro managing the economy mainly by monetary and fiscal policies, thereby rapidly increasing the government’s influence. Their models and theories totally missed the importance of the real estate bubble and its aftermath … the most severe crisis since the Great Depression. And they were incapable of forecasting the meltdown of the banking system. It should be clear that following the wrong models and theories leads to the wrong conclusions and wrong policies. And that’s exactly what’s going on today. The policy prescriptions since this crisis erupted are the very same that laid the foundation for the real estate bubble. So the toxin that caused the crisis is being given as the antidote! This has led to a postponement of the next stage of the current crisis. Yet if governments keep throwing trillions down these rat holes, we’ll end up with a financial and economic catastrophe much larger than the current one. So although I suggest you take a bullish medium-term view, you should remain very bearish about the long-term. Remember … Secular Bear Markets Consist of Cyclical Swings I believe that the stock market and the economy entered a secular bear market in 2000 when the technology bubble burst. The first recession took place in 2001, and the first cyclical stock bear market ran from 2000 until 2002/03. That’s when governments all over the world implemented extremely easy monetary and fiscal policies. Their strategy worked … the recession stopped in its tracks. But it came at a very high price … starting a real estate bubble. This artificial and unsound boom lasted until 2007. Then the bubble burst and all hell broke loose! And the second recession and the second cyclical stock bear market began. Again governments stepped in, but to a much larger degree than in 2001-2004. And, for now at least, they’ve rescued the banking system by bailing out nearly all big banks and initiated a medium-term uptrend in the world’s stock markets. The long-term analysis is simple and easy: With each round of counter crisis policy, governments are upping the ante. So each crisis is getting more expensive and more damaging than its predecessor. The severity of the 2007/08 crisis should make it clear what an even worse version could look like: The total collapse of the banking system and of the world’s dollar-based financial system, probably including the bankruptcy of some states. Even hyperinflation seems to be a probable outcome of these policies.

8 key ratios to spot the right stocks

It’s a very common dilemma for first time stock buyers. You want to invest in ’safe’ stocks yet have no idea about the process involved. Should you trust your broker? Or should you trust the markets analysts. And at the end of the day you are left confused by the myriad of opinions and advices that are thrown at you.

Instead, why not understand the parameters yourself so that you can make the best choice? To help you understand the intricate art of choosing the best stocks to invest in, here are eight key ratios. Read on, understand…and happy investing!

Ploughback/reserves: Every year, a company divides its net profit (profit left after subtracting various expenses including taxes) in two portions: ploughback and dividends. While dividends are handed out to the shareholders, ploughback is kept by the company for its future use and is included in its reserves.

Ploughback is essential because besides boosting the company’s reserves, it is a source of funds for the company’s expansion plans. Hence if you are looking for a company with good growth prospects, check its ploughback figures.

Reserves are also known as shareholders’ funds, since they belong to the shareholders. If a company’s reserves are twice its equity capital it can then reward its shareholders with a generous bonus. Also any increase in reserves will push the share price of your share.

Book value per share: This ratio shows the worth of each share of a company as per the company’s accounting books. It is calculated as:

Book Value per share = Shareholders’ funds / Total quantity of equity shares issued

Shareholders’ funds can be computed by subtracting the total liabilities (money owed to creditors) of the company from its total assets. It can also be calculated by adding the equity capital to the company’s reserves.

Book value is an old record that uses the original purchase prices of the assets. However it doesn’t show the present market price of the company’s assets. As a result, this ratio has a restricted use when it comes to estimating the market price of the shares, but can give you an estimate of the minimum price of the company’s shares. It will also help you judge if the share price is overpriced or under-priced.

Earnings per share (EPS): One of the most popular investment ratios, it can be computed as:

Earnings Per Share (EPS) = Profit Post Tax / Total quantity of equity shares issued

This ratio computes the company’s earnings on a per share basis. E.g. you own 100 shares of ABC Co., each having a face value of Rs 10.

Assume the earnings per share is Rs 10 and the dividend declared is 30 per cent, or Rs 3 per share. This implies that on every share of ABC Co, you earn Rs. 6 each year, but you actually get Rs 3 via dividend. The balance of Rs 4 per share goes into the ploughback (retained earnings). Had you purchased these shares at par, it implies a return of 60 per cent.

This example shows that instead of looking at the dividends received from to company as the base of investment returns, always look at earnings per share, as it is the actual indicator of the returns earned by your shares.

Price earnings ratio (P/E): This ratio highlights the connection between the market price of a share and its EPS.

Price/Earnings Ratio (P/E) = Price of the share / Earnings per share

It shows the degree to which earnings of a share are protected by its price. E.g. if the P/E is 40, it means the share price is 40 times its earnings. So if the company’s EPS is constant, it will need about 40 years to make up for the purchase price of the share, after taking into account the dividends and the capital appreciation. Hence low P/E means you will recover your money quickly.

P/E ratio shows what the market thinks about the earnings potential and future business forecast of a company. Companies with high P/E ratios are the darlings of the investors and thus enjoy a higher market rating.

In order to use the P/E ratio properly, take into account the future earnings and growth projections of the company. If the current P/E ratio is low, as against the future prospects of a company, then the shares make an attractive investment option.

But if the company is saddled with losses and falling sales, stay away from it, despite the low P/E ratio.

Dividend & yield: Dividend is the portion of the profit that is distributed amongst shareholders. Companies offering high dividends, normally don’t have much of growth to talk about.

This is because the ploughback required to finance future development is insufficient. Similarly, those companies in high growth sector don’t give any dividend. Instead here they give sharp capital appreciation, which ultimately will lead to higher dividends.

So it makes much more sense to invest for capital appreciation instead of dividends. Rather it makes more sense to invest for yield, which is nothing but the association between the dividends and the market price of the shares. Yield (dividend yield) can be calculated as:

Yield = (Dividend per share / market price of a share) x 100

Yield shows the returns in percentage that you can expect via dividends earned by your investment at the current market price. It is more useful than simply focusing on the dividends.

Return on capital employed (ROCE): ROCE is the ratio that is calculated as:

ROCE: Operating profit / capital employed (net value + debt)

To get operating profit, add old taxes paid, depreciation, special one-off expenses, and special one-off income and miscellaneous income to get the net profit. The operating profit is a far better indicator of the profits earned by the company instead of the net profit.

Hence this ratio is the better indicator of the general performance of the company and the company’s operational efficiency. It is one of the most useful ratio that lets you compare amongst the companies.

Return on net worth (RONW): RONW is calculated as

RONW = Net Profit / Net Worth

This ratio gives you an idea of the returns generated by investing in the company. While ROCE is an effective measure to get a general overview of the profitability of the company’s business operations, RONW lets you gauge the returns you can earn on your investment.

When used along with ROCE, you get an overview of the company’s competence, financial standing and its capacity to generate returns on shareholders’ finances and capital employed.

PEG ratio: PEG is an essential and extensively used ratio for calculating the inbuilt worth of a share. It helps you decide whether the share is under-priced, totally priced or overpriced.

To derive the ratio, you have to associate the P/E ratio with the expected growth rate of the company. It assumes that higher the growth rate of the company, higher the P/E ratio of the company’s shares. Vice versa also holds true.

PEG = P/E / expected growth rate of the EPS of the company

In general, a PEG lesser than 0.5 is a lucrative investment opportunity. However if the PEG exceeds 1.5, it is time to sell.

These are some of the most critical ratios that must be considered when purchasing a share. Extensive reading of the financial performance of the company in newspapers and magazines will help you get all the relevant information to get the correct decision

Three eclipses in a month

The world will witness a rare astronomical event- a series of triple eclipses starting July 2009. The fist in the series of triple eclipses will be a lunar eclipse on July 7 which will be followed by a solar eclipse on July 22 and then a lunar eclipse on August 6.

What does this celestial phenomenon mean to the world and does this astronomical event portend anything for us. D K Hari and his wife Hema Hari discuss the above mentioned issues in their new book, Will History Repeat Itself? Triple Eclipse of July 2009. Omnious or Promising? the book has been published as part of the Bharath Gyan series by the Sri Sri publications.

What is strange is that if one looks back at the events that have unfolded in the past, triple eclipses have always been followed by destruction. Hari told rediff.com that the first of the triple eclipses was recorded way back in 3067 BCE (Before Common Era). Following this triple eclipse there was the Kurukshethra war which was fought between the Pandavas and Kauravas in which 47 lakh people took part. The sequence of the first triple eclipse was as follows- Lunar eclipse on 29 September 3067, Solar eclipse on 14 October 3067 and Lunar eclipse on 28 October 3067 BCE.

Nassim Taleb bets on hyper-inflation

By Maverick

A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation.

 

The firm, Universa Investments L.P., is known for its ties to gloomy investor Nassim Nicholas Taleb, author of the 2007 bestseller “The Black Swan,” which describes the impact of extreme events on the world and financial markets.

 

Nassim Nicholas Taleb Funds run by Universa, which is managed and owned by Mr. Taleb’s long-time collaborator Mark Spitznagel, last year gained more than 100% thanks to its bearish bets. Universa now runs about $6 billion, up from the $300 million it began with in January 2007. Earlier this year, Mr. Spitznagel closed several funds to new investors.

 

Unlike last year’s sudden market implosion, inflation isn’t an unimaginable event that few currently anticipate. In fact, many fear inflation right now amid government efforts to goose the economy. Universa’s bet, however, is that inflation will reach levels few expect.

 

By opening the inflation fund, Universa is trying to capitalize on a wave of investor demand for its products, which when they’re right can protect investors from extreme market moves.

 

The new strategy, designed by Mr. Spitznagel, aims to post big gains if inflation and interest rates take off as they did in the 1970s. Universa will invest in options tied to commodities such as corn, crude oil and copper, as well as options on stocks such as oil drillers and gold miners.  “We think these things are going to see massive volatility,” Mr. Taleb said in an interview. 

 

The fund will also bet against Treasury bonds, which tend to weaken in inflationary environments. Last week, Treasury yields shot to their highest level since November as prices fell on inflation concerns. Oil topped $66 a barrel. Gold is creeping up, nearing $1,000 an ounce.

 

The minimum investment in the firm’s other funds has been $25 million, though it rarely accepted investments less than $100 million, a person familiar with the fund says. Similar standards will likely apply to the new fund, called the Black Swan Protection Protocol-Inflation, according to the person.

 

Mr. Taleb doesn’t have an ownership interest in the Santa Monica, Calif., firm, but he has significant investments in it and helps shape its strategies.

 

The term “black swan,” which has become a market catch-phrase in the last few years, alludes to the once-widespread belief in the West that all swans are white. The notion was proven false when European explorers discovered black swans in Australia.

 

A black-swan event, according to Mr. Taleb, is something that is extreme and highly unexpected.

 

For the new inflation fund, there are risks.

 

As investors, Messrs. Spitznagel and Taleb have a mixed track record. The two managers wound down their Empirica Capital fund in 2004 after several years of lackluster returns.

 

Also, some investors are worried not about inflation but about deflation and its pernicious effects were the economy to remain stalled.

 

David Rosenberg, chief economist at Gluskin Sheff, a Toronto wealth-management firm, believes inflation won’t take hold until consumer spending rebounds, which he thinks could take years.

 

Says Mr. Rosenberg: “Not until the household sector expands its balance sheets are we likely to see the re-emergence of inflation on a sustained basis.”

 

Mr. Taleb said any deflation would be matched by an aggressive move by governments to stimulate their economies, leading inevitably to an uncontrollable surge in prices.

Small is beautiful… but can be risky too

Be it the world of cars or the stock market, “small” appears to be in vogue. In the equity rally that began early March this year, stocks in the mid- and small-cap space have delivered returns that trounce those of their large-cap competitors.

Wondering what makes these stocks so attractive? Well, it is their high-risk and high-return positioning that charms the most, though their low valuation also appeals to certain investors. Read on to understand why small- and mid-cap stocks, believed to be multi-baggers in the making, come bundled with higher risks.

Market capitalisation, an indicator of the value placed on a company by the market at that day’s price, is a product of its market price and outstanding number of shares.

While there’s no clear-cut demarcation to differentiate the stocks based on their market capitalisation, given the dynamism of the equity markets, it can be assumed that stocks with market cap less than Rs 2,000 crore fall in the small-cap category, while those above Rs 7,500 crore are of the large-cap genre. The ones that fall in the middle zone are the mid-caps.

 

Large caps – few surprises

 

 

Large-cap stocks enjoy a large scale of operations; have established business model and hence have lower uncertainty in business. Besides, analysts, fund managers and investors alike, closely monitor these stocks. So, while the risks associated with investing in large-cap stocks are known, their likely returns aren’t unknown either.

This makes large-cap investing safer and more suitable for investors who have little stomach to relish uncertainties in investing. This is also why large-cap stocks are most sought after during periods of uncertainty in the markets. But on the other hand, investing in small and mid-cap stocks comes with higher risks, given their lower scales of operation.

While some of the companies in this cadre are still far from establishing their businesses, others are relatively new in their sector — which makes predicting their future revenues tougher. But it is precisely this heightened business risk that sweetens their return potential significantly.

History has it that multi-baggers in most equity rallies are, more often than not, stocks from the mid- and small-cap category only. It is then no surprise that the current rally too saw the small- and mid-cap stocks return higher.

When benchmarked on their year-to-date returns, the mid- and small cap stocks have scored a stellar 80 per cent and 85 per cent returns, while the BSE Sensex gained by 60 per cent.

High risk, high return

 

 

The desire to invest in smaller companies comes, from their ability to return higher. Sidelined by analysts and investors and weighed down by the higher degree of earnings risk, these stocks do not command the valuations that larger companies usually do in the stock markets.

For instance, while a large diversified company such as L&T commands a consolidated valuation of about 25 times currently, smaller ones such as McNally Bharat or Shriram EPC, which are in similar lines of business, enjoy a lower value. Why? While L&T has a wider business presence, large clientele and stable earnings outlook, the smaller ones compare less favourably with it on almost all these counts.

However, with the economy beginning to revive and credit availability easing up, investing in smaller companies may hold higher returns potential, with the advantage of a low base.

Not only do these companies hold the potential to grow at a higher pace; their earnings growth cannot also be easily replicated by their large cap peers either.

For instance, while net profits of Yes Bank have grown at a compounded rate of 53 per cent over the last three years, that of ICICI Bank has grown at about 10 per cent only.

It is this ability to scale high earnings growth that fuelled the recent rally in the mid- and small-cap space, once it became clear that the economy was beginning to get back into shape. For instance, between the cement major ACC and its smaller peers Dalmia Cements and Shree Cements, the stock performance of the latter two was way better in the run-up since January. While ACC delivered 68 per cent returns, the other two stocks registered 82 per cent and 131 per cent returns, respectively.

The trend was similar among stocks in other sectors such as FMCG and IT too. Infosys’ 38 per cent return since January appeared trifle when compared with the triple-digit gains recorded by mid-caps MindTree (117 per cent) and Hexaware (149 per cent).

Earnings trap

 

 

But if investing in small- and mid-cap stocks appears exciting, don’t turn a blind eye towards their earnings. While it is natural to get carried away by the seemingly low valuations, remember that they do so for a reason.

If the probability of these stocks to more than double their earnings is high, the probability of their non-performance is also equally high. Since their businesses are at a nascent stage, their earnings are highly vulnerable to a downturn. In 2008, a year mired with recessionary trends, the BSE Sensex declined by 53 per cent. But the mid-cap and the small-cap indices declined more, by over 67 per cent and 72 per cent, respectively.

This may explain why ACC trades at 13 times, while Dalmia Cements or Shree Cements trades lower at eight times and seven times. Here again, while the mid-caps are somewhat better off, it is their still smaller peers that become unpredictable during uncertain times.

Besides earnings risk, investing in small-cap stocks also bundles with it liquidity risk and higher impact costs. And since most small stocks sport a high promoter holding, the promoters’ credibility also becomes pivotal in determining the fate of your investments.

Will Suzlon Lose All The Gains Of The Last Three Months?

By Maverick

Do investors have any bubbles left in them? How About Wind Energy?

  

You Bet. It is Alternate Energy…take away tax benefits off Wind Farms and what you leave behind are Steel Pillars adorned with Steel Blades, rotors and turbines waiting for the next gust of wind to come..to produce unstable, non peak load and the most expensive energy on Earth. This is the Bubble that investors have to be the most cautious about, and naturally the best short is Suzlon.

In the days of free and easy money, under the leadership of Federal Reserve chief Alan Greenspan (once dubbed the ‘Maestro’, though strangely enough, not any more), investment became a big game of ‘spot the next bubble’.

With hindsight, investing was easy. You just had to ignore things like fundamentals and rationality, and buy whatever everyone else was buying. Trouble was, you also had to avoid being the ‘greatest fool’, and bail out before the bubble popped. Lots of people didn’t, hence the current pain being caused by the property slump.

Losing money in bubbles is painful and teaches a hard lesson. We’ve had two in less than a decade – the tech bubble and then the property bubble. Surely it would be difficult to take investors for a ride again?

Certainly it would be difficult. But not impossible…

 

Investors do learn from bubbles…

James Montier at Societe Generale is a specialist in ‘behavioural finance’. This basically takes psychology and applies it to the field of investment and economics.

As someone who’s studied psychology in the past, I’d be the first to admit that it’s a pretty ‘soft’ science compared to something like physics, for example. But compared to the pseudo-science that passes for economics, it’s positively respectable.

And given that markets are anything but rational (even the Chartered Financial Analyst Institute admits that most of its members have lost faith in the ‘efficient markets hypothesis’), it makes a lot of sense to take investors’ all-too-human characteristics into account when trying to figure out what markets might do next.

In a recent research note, Montier took a look at the psychology of bubbles. As suggested earlier, you’d think that investors would learn. If they’d seen one bubble, they’d be more careful in future.

And in fact, they do learn. An experiment conducted by joint Nobel prize winner Vernon Smith used an investment game where investors could trade a dividend-paying equity under four different random economic conditions, each of which would result in a different dividend payout.

In the first game, investors at first undervalue the equity, then massively overvalue it, creating a bubble which then deflates. Smith then got the same people back to play the game again. What happened? Well, says Montier, “far from learning from their experience in the first round, participants generally go on to create yet another bubble!” And when they were asked why, “the most common response was they thought they could get out before the top this time!”

However, when Smith asked the same players to play a third time, this time they’d learned. “You end up with a much tighter correlation between the market price and fundamental value,” says Montier.

So twice bitten, thrice shy, it seems. And you might therefore expect the current generation of investors to have learned from the two big bubbles of the past decade.

…but they can get sucked into creating them

But that’s not the end of the story. Smith found that there was a way to get experienced investors back into bubble mentality. How?

 

He cut the amount of stock available in half, and doubled the amount of cash in the game, “effectively creating what might be termed a massive liquidity surge.” This time around, even the experienced investors were sucked back into creating another bubble, although it peaked earlier than the previous ones.

“A massive liquidity surge” is exactly what the world’s central banks are trying to create just now. Montier says he has no idea if it will be large enough to “reignite a bubble (and of course another crash afterwards).” But as US fund manager Jeremy Grantham of GMO has pointed out previously, we’re currently seeing “the greatest monetary and fiscal stimulus by far in US history”. So if that doesn’t do it, arguably nothing will.

The next big investment bubble

We’re not sure that investors have another bubble in them just yet. But with all that money floating around, it’s eventually going to go somewhere.

 

And one area stands out as a prime candidate – alternative and renewable energy.

The sector has the heavy backing of the government. It has some great stories behind it – solar towers, wave farms and electric cars – all linked together by smart grids, already being hyped as “the energy internet”.

There’s also a genuine infrastructure problem to solve. The laying of internet cables and railway lines bankrupted many people and companies. But those bubbles created the infrastructure necessary to improve our lives and increase productivity and efficiency.

 

Alternative energy has a similar driving force behind it. Regardless of your take on the greenhouse effect, you can’t deny that it would be useful to reduce our dependence on oil.

So the conditions are ripe in the alternative energy sector for a bubble.

Taj Mahal… the real story.

No one has ever challenged it except Prof. P. N. Oak, who believes the whole world has been duped. In his book Taj Mahal: The True Story, Oak says The Taj Mahal is not Queen Mumtaz’s tomb but an ancient Hindu temple palace of Lord Shiva (then known as Tejo Mahalaya ) .

In the course of his research OAK discovered that the Shiva temple palace was usurped by Shah Jahan from then Maharaja of Jaipur, Jai Singh.

In his own court chronicle, Badshahnama, Shah Jahan admits that an exceptionally beautiful grand mansion in Agra was taken from Jai SIngh for Mumtaz’s burial . The ex-Maharaja of Jaipur still retains in his secret collection two orders from Shah Jahan for surrendering the Taj building. Using captured temples and mansions, as a burial place for Dead courtiers and royalty was a common practice among Muslim rulers. For example, Humayun,Akbar, Etmud-ud-Daula and Safdarjung are all buried in such mansions.

Oak’s inquiries began with the name of Taj Mahal. He says the term ” Mahal ” has never been used for a building in any Muslim countries from Afghanisthan to Algeria . “The unusual explanation that the term Taj Mahal derives from Mumtaz Mahal was illogical in atleast two respects.

Firstly, her name was never Mumtaz Mahal but Mumtaz-ul-Zamani,” he writes.

Secondly, one cannot omit the first three letters ‘Mum’ from a woman’s name to derive the remainder as the name for the building. “Taj Mahal, he claims, is a corrupt version of Tejo Mahalaya, or Lord Shiva’s Palace .

Oak also says the love story of Mumtaz and Shah Jahan is a fairy tale created by Court sycophants, blundering historians and sloppy archaeologists.

Not a Single royal chronicle of Shah Jahan’s time corroborates the love story.

Furthermore, Oak cites several documents suggesting the Taj Mahal predates Shah Jahan’s era, and was a temple dedicated to Shiva, worshipped by Rajputs of Agra city.

For example, Prof. Marvin Miller of New York took a Few Samples from the riverside doorway of the Taj. Carbon dating tests revealed that the door was 300 years older than Shah Jahan.

European traveler Johan Albert Mandelslo,who visited Agra in 1638 (only seven years after Mumtaz’s Death), describes the life of the city in his memoirs. But he makes no reference to the Taj Mahal being built.

The writings of Peter Mundy, an English visitor to Agra within a year of Mumtaz’s death, also suggest the Taj was a noteworthy building well before Shah Jahan’s time.

Prof. Oak points out a number of design and architectural inconsistencies that support the belief of the Taj Mahal being a typical Hindu temple Rather Than a mausoleum.

Many rooms in the Taj  Mahal have remained sealed Since Shah Jahan’s time and are still inaccessible to the public . Oak asserts they contain a headless statue of Lord Shiva and other objects commonly used for worship rituals in Hindu temples .

Fearing political Backlash, Indira Gandhi’s government tried to have Prof. Oak’s book Withdrawn from the bookstores, and threatened the Indian publisher of the first edition dire consequences . There is only one way to discredit or validate Oak’s research. The current government should open the sealed rooms of the Taj Mahal under U.N. supervision, and let international experts investigate.

The recession has ended….

If you want a bone to pick–or an economic argument to have–it should be about when the current recession actually began. The National Bureau of Economic Research, the U.S.’s semi-official recession arbiter, says it started in December 2007. But real gross domestic product grew at a 1% annual rate from then through August 2008. That doesn’t look like a recession to us.

Nonetheless, when Lehman Brothers collapsed and the $700-billion TARP plan was proposed, a very rare “panic” ensued. Monetary velocity collapsed. From September 2008 through March 2009, the economy shrank at a rate of 5.5%. That’s why we think the recession started in September 2008, not in December 2007.

Once the “real” recession started–the one that began in September–we consistently forecast it would be over by mid-2009, earlier than many (including the Federal Reserve) predicted. Now it looks like our V-shaped recovery is underway. When the NBER eventually gets around to declaring the recession end date, we think it will be May 2009.

New claims for unemployment insurance are probably the very best single indicator of the end of a recession. The monthly average for claims normally peaks one or two months before the economy bottoms–and it appears to have peaked in March, at 658,000, versus April’s 635,000.

Also, given that the September recession was marked by consumer spending falling off a cliff, we look at this measure to signal a rebound. Consumer spending grew at a 2.2% annual rate in the first quarter, and it looks set to rise again in the second quarter. Meanwhile, both major measures of consumer confidence (from The Conference Board and University of Michigan) shot upward in April.

The housing market is also showing nascent signs of life. New home sales bottomed in January at a 331,000 annual rate, but the pace of sales in February/March averaged 357,000. After falling 80% from January 2006 to January 2009, the rate of construction of single-family homes has remained essentially unchanged for the past two months, although (thankfully) it is at a level where builders are still rapidly cutting into excess inventories. In all likelihood, a bottom has been reached for both home sales and housing starts.

On the trade front, companies are increasingly willing to do business across borders. Inbound and outbound container traffic is up, at both the port of Los Angeles and the port of Long Beach. This is also a signal that credit conditions are easing, as international trade tends to be more credit-sensitive than domestic commerce.

Other signs of a rebound in monetary velocity can be found in prices. Consumer prices fell at a 12.4% annual rate in the last three months of 2008, the fastest decline since the Great Depression. In the first three months of 2009, however, prices are up at a 2.2% annual rate.

Meanwhile, commodity prices bottomed in February, signaling that the economy has turned a corner. In addition, Treasury bond yields are on the rise despite direct purchases by the Federal Reserve–an indicator that real interest rates have bottomed.

Add to all these signs April’s month-to-month jump in the ISM Manufacturing Index–the second largest in the last decade–and recent sharp increases in the Chicago PMI, the Philadelphia Fed Index and the Richmond Fed Index. All show the manufacturing recession is rapidly losing steam.

The end of the recession does not mean we won’t lose more jobs; employment is always a lagging indicator. And there will be more defaults, foreclosures and financial market problems too. But none of these are leading indicators.

In our view, there are no more shoes to drop.

What only a CEO can do

by A.G. Lafley CEO Proctor & Gamble

I became Procter & Gamble’s CEO in June 2000, in the midst of a crisis. On March 7 of that year the company had announced that it would not meet its projected third-quarter earnings, and the stock price plummeted from $86 to $60 in one day, leading the Dow Jones Industrial Average to a 374-point decline.
The price dropped another 11% during the week my appointment was announced. A number of factors had contributed to the mess we were in, chief among them an overly ambitious organizational transformation in which we tried to change too much too fast and which distracted us from running the everyday business with excellence. But our biggest problem in the summer of 2000 was not the loss of $85 billion in market capitalization. It was a crisis of confidence. Many of P&G’s leaders had retreated to their bunkers. Business units were blaming headquarters for poor results, and headquarters was blaming the units. Investors and financial analysts were surprised and angry. Employees were calling for heads to roll. Retirees, whose profit-sharing nest eggs had been cut in half, were even angrier.
The news media chronicled the drama with headlines ranging from “P&G Investor Confidence Shot” to “Trouble in Brand City: We love their products. But in a tech-crazed market, we hate their stocks.” The most painful one was in a major industry publication: “Does P&G Still Matter?”
At 6:00 PM on my first day as CEO, I stood in a TV studio, a deer in the headlights, being grilled about what had gone wrong and how we were going to fix it. Everyone was looking to me for answers, but the truth was that I did not yet know what it would take to get P&G back on track. Welcome to the job of CEO—a job I’d never done before.

The Work of the CEO
In October 2004 I looked back on that first day and the even more difficult weeks that followed as I sat with Peter Drucker and several other CEOs and management scholars who had come together to ask, “What is the work of the CEO?” (Most of the quotations in this article come from Drucker’s notes for the remarks he made on that occasion.)
It seemed an odd question, because enormous attention has been paid to CEOs, who are alternately revered as corporate saviors and reviled as corporate scoundrels. Yet the question remained: Do we really understand the role and the unique work of the chief executive? Drucker believed the answer was no. He argued that people wrongly view CEOs as coaches and utility infielders who jump in to solve problems as needed, and that CEOs indeed have work that is their own. On his death, in November 2005, Drucker left behind an outline of his emerging thoughts on the role. (The Wall Street Journal had published a portion of it as “The American CEO” in January 2005.) In 2004 Drucker said, “The CEO is the link between the Inside that is ‘the organization,’ and the Outside of society, economy, technology, markets, and customers. Inside there are only costs. Results are only on the outside.”
My experience validates Drucker’s observations, and my actions since those early days and weeks have been consistent with them. I’ve gone back to his unfinished draft time and again, reflecting on his central question: What is the unique work of CEOs—work that only they can do and that they must do? Over time I’ve come to see the power in Drucker’s words about linking the outside to the inside. The CEO alone experiences the meaningful outside at an enterprise level and is responsible for understanding it, interpreting it, advocating for it, and presenting it so that the company can respond in a way that enables sustainable sales, profit, and total shareholder return (TSR) growth.
It’s a job that only CEOs can do because everybody else in the organization is focused much more narrowly and, for the most part, in one direction: Salespeople are externally focused; just about everyone else is inwardly focused. Integrating the outside and the inside is hard; it’s far easier to pick one. The CEO can see opportunities that others don’t see and, as the one person whose boss isn’t another company employee, make the judgments and the tough calls others are unable to make. The CEO is the only one held accountable for the performance and results of the company—according not just to its own goals but also to the measures and standards of diverse and often competing external stakeholders.

The CEO wears many hats: communicator, coach, problem solver. While others in your organization can also fill those roles, there’s one critical job only a CEO can do: link the outside world (society, economy, technology, customers) with the inside world (your organization).
To link outside to inside, says Procter & Gamble CEO Lafley, chief executives must focus on these four tasks:
• Define the meaningful outside: Determine which external constituency matters most. Not surprisingly, at P&G, the consumer is king.
• Decide what business you’re in: For example, what are your core businesses, and which of them will you grow? In 2000, P&G decided to target low-income consumers and developing markets.
• Balance present and future: Ensure that stakeholders’ near-term interests don’t overshadow your company’s long-term future. To fund long-term bets such as compact detergent packaging, P&G lowered its short-term revenue goals.
• Shape values and standards: For instance, P&G defined trust as consumers’ trust in its brands.
The Idea in Practice
A closer look at the four tasks enabling CEOs to link outside to inside:
Define the Meaningful Outside
Your company has many stakeholders, each with important demands. Once you’ve defined your most important external constituency, ensure that everyone acts on that understanding.
Example: P&G is obsessive about understanding its customers. Almost every trip Lafley takes includes in-home or in-store consumer visits. Offices and innovation centers have consumers inside working with P&G employees, who also spend days living with lower-income consumers and working in neighborhood stores. These activities keep P&G’s two external moments of truth—consumers’ choosing a P&G product and then using the product—top of mind for employees.
Decide What Business You’re In
Analyze the attractiveness of the businesses you’re already in, your company’s position in existing industries relative to competitors’, and industries’ strategic fit with your core competencies.
Example: P&G decided to grow from its core businesses—laundry, diapers, feminine care, and hair care—where it was already a global sales and market-share leader. Though mature, these businesses had significant opportunities for growth, evidenced by demographic trends. For instance, people are living longer and experimenting with beauty and personal-care products at earlier ages. So P&G invested more in these businesses as well as in low-income consumers and developing markets, which show the most population and income growth.
Balance Present and Future
Balance short-term investments with investments in resources needed for your company’s longer-term future.
Example: P&G allocates human resources with an eye toward the skills and experiences leaders will need to run businesses that don’t yet exist. Lafley personally grooms people for the future. He knows the top 500 people in the company and involves himself in career planning for the 150 potential presidents or function heads. He reviews their assignment plans, assesses their strengths and weaknesses, and puts them in front of the board at company events.
Shape Values and Standards
Define your company’s values (its identity) and standards (expectations) in ways that encourage the right behaviors.
Example: Over time, P&G’s company values became interpreted in a way that implicitly placed employees’ needs ahead of consumers’. For example, its value of trust had come to mean employees could count on lifetime employment at P&G. Lafley encouraged the company to embrace outwardly focused interpretations of its values. Trust now means consumers’ trust in P&G brands and investors’ trust in P&G as a long-term investment.

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