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If you are a music lover and omnivorous…… kindly indulge yourself in clicking the following link. I am sure you will salute the efforts of this blogger… whosoever he is.

http://yhu.pl/muzyka-music/121350-muzyka-swiata-rough-guide-mu-sic.html#post151998

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Categories : Links, MP3, Useful Info

Why The Mad Urge To Own Patently Rigged Stocks Like Unitech, Anantraj et al…?

11 07 2009

By Rajiv Handa

Those who have been long enough in the Indian Stock markets will never forget that post the Year 2000 collapse of TMT, those very tech stocks doubled and halved four times in the succeeding year before most of them disappeared from the radar screens of investors. Ofcourse some investors still nurse fond hopes for HFCL, Silverline, Pentamedia and Crest Communications. But they remain hope.

Something similar his happening to Real Estate stocks: Anantraj goes from Rs 30 to Rs 120 and comes back to Rs 90, Unitech from Rs 20 to 90 and comes back to Rs 63, DLF goes down to Rs 125 and then to Rs 375 and back to sub-Rs 300 and so on.

Why is this happening? Most of these corporates are going for QIPs, (an estimated 3.75 bn is to be raised by Realtors), and $ 2 bn has already been raised, hence the urge by interested groups to back their horses, even when houses are not selling. I said “houses” are not selling, not “horses”…but the “horses” are doing just fine.

The fact remains beyond interest rate cuts precious little on the price and inventory front has been achieved. A Rs 7 crore apartment does not become affordable at Rs 6.70 crore even if borrowing rates go down to 8.5 per cent teaser rates. The flip side of the argument is, that a person without job is still going to renege on mortgage payment even if interest rates go down to zero.

So do you still think, there is no solution to the ‘housing affordability crisis’?

The fact is, there is. And it’s simple. Are you ready?

It goes something like this. You remove all the subsidies, taxes, and duties that distort house prices. And you leave it to a free market to decide what the price of a property should be.

It’s the simple, and it’s not hard to implement. The problem is it won’t happen because policy makers, banks and special interests are worried that it would cause a massive slump in property prices.

As for this idea of a “clear shortage of housing in India”, well, we hear that all the time. We hear that there is a shortage of 1 mn houses. But that doesn’t mean prices will always rise, or even stay the same.

As written before, supply and demand isn’t just about supply and demand, it’s about price as well. The argument over the shortage of housing seems to argue that because there is more demand than supply then prices can continue to rise without a crash.

This is blatantly incorrect. The very fact that government’s and spruikers like Rajiv Singh of DLF and Sanjay Chandra of Unitech have come up with so many hare-brained schemes is a clear admission by them that the property market is over-priced.

If further proof was needed, I’ll let you decide if this industry has any future whatsoever. First, most North Indian Realtors bought farmland at ridiculous prices, on which each and every project to be built will be unviable irrespective of where interest rates go to.

Secondly, with the GOI planning to raise massive sums of money to fund its deficit either interest rates will go up substantially from hereon, or the Rupee will be debased by monetising the deficit which in normal circumstances should imply inflation in just about every asset class.

The thing is, even before interest rates have risen significantly, more homeowners today are struggling to pay off the mortgage than were struggling when interest rates were at 12 per cent plus. They are no better at 8.5 per cent.

But don’t think that’s as bad as it will get. It will get much worse. And the mainstream media are happily cheering the property market all the way to the edge of the cliff.

Privately real estate purveyors are calling for a price fall of atleast 40 per cent from current prices and a multi-year bear market in Real Estate. To believe or not to believe…in a slightly distorted version of the famous quote from Hamlet, the choice lies with the investor.

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Categories : Discussion

Investing In Real Estate Can Possibly Destroy You

11 07 2009

Make no mistake; as bad as the housing market gets, it will eventually stabilize and resume its upward trudge.

And when that happens, probably a few years from now, we’ll see a truly once-in-a-lifetime buying opportunity. Perhaps the best housing deals this country’s seen in over a century.

But even then, buyers will be facing an inordinate amount of hidden risk, in the form of massive amounts of real estate fraud.

That’s because incredibly huge bubble-sized profits gave mortgage brokers, bankers, builders, fraudsters and homeowners the incentive to rip people off…the incentive to “game the system” at the cost of honesty and fair play.

You might think this fraud is likely winding down…what with the death of the housing bubble and all. But in reality, the opposite is happening. With the housing bubble burst, go any legitimate bubble-sized profits…leaving just one alternative for fraudsters not wanting to face a rude awakening…

The New Generation of Fraudsters

Back just a few years ago, mortgage fraud felt like a black-tie affair. At least compared to what it’s become today…

Granted, the criminals have definitely changed.

It used to be a non-descript – often ex-convict – seller, and an equally non-descript straw buyer. Seller scoops up the house at an inflated price, turns around and sells it two weeks later, and he makes US$150,000 in fast, easy money. Talk about flipping a house.

Anyway, seller clears his mortgage and takes home the profits. He gives said straw buyer a cut, and the buyer disappears. At the end of the day, the bank has effectively inflated the money supply by a small degree to put money in the hands of a criminal. Just the kind of thing to make your skin crawl.

But today, it’s different.

It’s television ads, builder scams, and call rooms. It’s individuals within organizations, out for personal enrichment at the cost of an already fragile real estate market…and perhaps even your hard-earned savings.

In a sense, it’s to be expected following such a massive housing bubble. As a recent FBI report on mortgage fraud put it, “Industry employees sought to maintain the high standard of living they enjoyed during the boom years of the real estate market and overextended mortgage holders were often desperate to reduce or eliminate their bloated mortgage payments.”

So let’s look at a few of these scams, just to get a sense of what one might look like…

Scam #1 Bailout Money & Foreclosure Assistance ads

If you live in South Florida, it’s a cute young girl on television, telling you, “the Federal government has set aside special funds to help homeowners in need…” There are also mailers, cards, websites and Internet ads. Through deed transfers, payment of up-front fees, and other means, homeowners can allegedly escape foreclosure.

Naturally, it’s all forged documents and rude awakenings from there on. “In extreme instances,” says the FBI report, “perpetrators may sell the home or secure a second loan without the homeowners’ knowledge, stripping the property’s equity for personal enrichment.” Ice cold.

And it’s a shame too. Because for many of these distressed homeowners, the answer to their troubles is actually bloody simple. Let me explain…

Their gazillion-page mortgage was bundled with hundreds if not thousands of others, then sold to someone – a bank – who didn’t really care. Now I spent a little while in the consumer debt industry, and I can tell you that banks like paperwork about as much as the mafia does. They used to charge about twenty dollars just to bring you an account statement.

And with mortgages it’s an even bigger quagmire.

The Mortgage Electronic Registration System (MERS) scanned all the paperwork, so it’s all on computers somewhere. But most state laws require the original signed document as proof. And it’s your right to ask for it. Generally that can send them bumbling back to the woodshed. They’d rather stall than look through a few million stacks of original mortgage documentation.

So the ads could’ve just told the people to “ask for the original paperwork (proof),” and they wouldn’t even need to respond. But where’s the slimy profit in that?

Scam #2: The Builder Bailout Two-Step

You’re going to have a hard time disagreeing with this one, because it involves the banks getting ripped off.

And that’s not just because you probably hate the banks. But you think that by this point, they’d actually be focused on getting the job done. We’ve pumped trillions of dollars into some of these companies so they could do precisely that. But it still seems that if one really wants to rip a bank off, it’s not that hard…

Usually this one happens when developer’s having trouble unloading a property, don’t mind getting their hands dirty to do it. Using shifty tricks in the paperwork, they’ll confuse lenders on the terms of the deal. To quote the FBI, “In a common scenario, the builder has difficulty selling property and offers an incentive of a mortgage with no down payment. For example, a builder wishes to sell a property for $200,000. He inflates the value of the property to $240,000 and finds a buyer. The lender funds a mortgage loan of $200,000 believing that $40,000 was paid to the builder, thus creating home equity.”

Unfortunately, there’s no equity involved. And the bank gets caught giving a sizable loan on terms they never agreed to. Should the mortgage-holder default, the bank is stuck with all the expenses.

But one of the only ways this could affect you personally – assuming you’re not a banker – is if you find yourself in possession of mortgage-backed paper with these kinds of “equity included” deals underlying your investment.

Scam #3: The Outright Ponzi

It sounds brazen, yes, but for a bold few…like the guys at AFG Financial Group, it worked. For a while at least.

AFG, a ring of 25 lawyers, mortgage brokers, appraisers and bankers was recently charged with $100 million in outright mortgage fraud. Back in the heat of the bubble, these guys used inflated appraisals, forged documentation and fake deals to bilk some major players out of huge amounts of cash.

New Century Financial, Countrywide, and Washington Mutual can be counted among their victims. Add in a heap of straw buyers who often weren’t aware they were straw buyers, and you have the makings of a great crime novel. Good thing they’ll have plenty of time to write.

But as much as you may think these ponzi-style schemes of outright fraud are a thing of the past – a relic of the real estate bubble – think again. As investors start to sift through the depths of paperwork behind the U.S. mortgage market, these scams will likely keep coming to light. So keep them in mind if you ever find yourself bottom-fishing real estate debt (an extremely profitable enterprise if timed and carried out correctly).

Scam #4: Short-Sale Fraud

And with this, the last of our scams up for review, we come full circle. Or at least close to it.

This kind of scam is favorable for our “old school” fraudster, the kind who works with straw buyers. Except he can double up; by purchasing a short-sale property from another straw buyer.

Essentially, the first buyer goes into default. And because our fraudster’s in touch with him, he knows all about the timing. So before the foreclosure sale, he approaches the bank and makes an offer. If he makes the right offer, the bank accepts, and he gets a discount – without having to compete at auction – and no one even suspects fraud.

He can then turn around and flip the house – as in the example above – and make fraudulent profits two times around!

I know what you’re thinking. The banks loaning him the money…aren’t these the guys we’re currently bailing out? And weren’t these mortgages averaging over US$200,000…and much higher in some places? So it’s possible we’re bailing out over a million in toxic mortgage debt; just because of a single incident of fraud?

The answer on all accounts is – of course – yes.

Caveat Emptor

Warren Buffet is famously quoted as saying, “Only when the tide runs out do you see who’s been swimming naked.” And Bernie Madoff’s arrest and sentencing over the last few months seem to suggest Warren’s right.

But as you can see from the examples above, naked swimming is alive and well even as we approach low tide. At the turn of every corner, the fraudsters still have a leg up on bankers, homeowners and investors. By comparison, the feds and the banks look like dopey, lumbering buffoons. Sure they might “crack down” on one kind of fraud, but that just drives the criminals elsewhere.

So make no mistake; apparently the “real estate fraud” bubble is lagging housing. Because even though the real estate market has already peaked out, fraud still seems to be growing.

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Categories : Discussion

T Rowe may buy 26 pct in India’s UTI Asset

11 07 2009

U.S. firm T. Rowe Price may buy a 26 percent stake in India’s UTI Asset Management for 6.5-7 billion rupees ($134-144 million), the Economic Times newspaper said, citing two unnamed sources it said were familiar with the development.
The deal, if it were to finally go through, would value India’s oldest mutual fund house between 25 to 28 billion rupees or 4-5 percent of its assets, the paper said on Friday.
A T Rowe official told the paper she had no comment. UTI’s Chief Marketing Officer said the stake sale was on and he was hopeful it would be completed shortly, repeating a standard a line of the firm for the last 6 months.
UTI Mutual Fund officials could not be reached for immediate comments.

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Categories : Market News

“Is there a relation between Stock Market success and your Intelligence Quotient (I.Q.)?”

10 07 2009

What are some of the character traits of people who have a high I.Q.?
1. Quick on the uptake – ability to grasp new concepts faster2. Curiosity – eager to learn and try new things3. Out-of-the-box thinking – looking for alternative and unconventional solutions – the story of how Columbus made an egg stand on a table without spilling its contents comes to mind;4. Inability to concentrate on routine or boring tasks5. Intolerant towards those who can’t or won’t follow their arguments and advice
I’m generalising here. You may not agree about some of these traits, or, may think of other characteristics that apply better.
The point is, the above traits of a high I.Q. person are not conducive to achieving fame and fortune in the stock market. The most well-known example is that of Sir Isaac Newton, discoveror of Gravity and the Laws of Motion. He lost his shirt by investing in stocks.
People with high I.Q. excel in fields like science, mathematics, economics, engineering. There are set formulae with predictable results. Stock market investments don’t work as per formulae. Even detailed analysis may lead to wrong choice of a stock. Unforeseen things happen. It is part of the game.
Intelligent people find this difficult to accept. They are accustomed to success, not failure. Their ego gets in the way – “How can I be wrong?” So, they hang on to their shares, convinced that the market is wrong and the share price will soon hit the roof.
When it dawns on them that they are still losing money, they try to think of ’smarter’ alternatives, like ‘hedges’, ‘averaging down’ and ‘puts’. A bad situation gets worse.
The attitude of a sales person works better in the stock market. Failure and success are accepted with equanimity. He may not be very bright, but has learned to be diligent in regularly updating his prospects list.
When one door gets shut on his face, he just moves on to the next prospect on the list. When he makes a sale, he is pleased but not elated. Each day is the same as the day before. Routine work. Not very creative. But a plan of action that works and meets targets.
That was the long answer. The short answer? Stock market success and high I.Q. tend to be inversely proportional.

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Categories : A passing thought

Indian Bank: The Dark Horse

4 07 2009

While many medium-sized banks are struggling, Indian Bank has robust fundamentals

Beta 1.0 Institutional Holding 15.8% Dividend Yield 3.8% CMP Rs 129 Current Mkt Cap Rs 5,542 cr Current P/E 4.8
It is also one of the best-managed staterun banks in India. Its performance in the last three years, since it absorbed all its accumulated losses in its capital, is at par with best in its industry. Investors are advised to consider it for long-term investment.
BUSINESS
Headquarted in Chennai, Indian Bank is a leading bank in South India with widespread presence in Tamil Nadu, Kerala, Andhra Pradesh and Pondicherry. It was nationalised in 1969. It is a medium-sized bank and its balance sheet size stood at Rs 84,122 crore in FY 2009. It has 1,642 branches.
    In the current decade, the bank has seen a turn-around. At the end of March 2000, bad loans, or net non-performing assets, formed 16% of Indian bank’s net advances. In FY06 it absorbed all the losses in its capital, which fell to Rs 744 crore from Rs 4,574 crore in the previous year. Since then, Indian Bank’s profit has grown at compounded annual growth rate (CAGR) of 35% every year, while its balance sheet has grown at a CAGR of 21%. This shows that it has enough reach and scale to leverage.
GROWTH DRIVERS
Indian Bank’s performance is clearly a cut above most state-run banks, notorious for inconsistent performance that puts down investors. The bank has performed well on all quality parameters while maintaining an impressive growth rate, achieving a delicate balance that has eluded several of its peers.
    For instance, its net interest margin (NIM) stood at more than 3.5% in last six financial years. The only banks, which can better Indian Bank on this count are Kotak Mahindra Bank, Federal Bank and HDFC Bank. Its return on assets (RoA), at 1.6% in FY 2009, was the highest across all banks.
    Its bad loans formed less than 0.2% of its net advances at the end of the year. Only Punjab National Bank has better record than Indian Bank on this count. The composition of its lending portfolio is very much on the lines of other state-run banks: agriculture loans constituted 15%, SME loan formed 11% and corporate sector contributed 50% to total loan book.
    That the bank’s performance is superior despite similar lending profile shows the efforts being put in to choose the customers. The bank is expanding its presence. It opened 101 new branches in FY 2009.
VALUATION
Indian Bank is trading at a price to earning (P/E) multiple of 4.8 times. This is lower than the average of smaller banks that are no match to it in performance.
    This indicates that the stock market is not giving premium to its performance. Moreover, the earnings growth is far ahead of P/E, which shows that the possibility of rise in stock price is much higher. In terms of price-to-book value P/BV), the stock is trading at close to 1, which is the average at which other banks are trading. Even based on P/BV, the bank is not getting the premium it deserves in terms of valuations.
    We think it will be re-rated some time in future and therefore advise long-term investors to buy the stock at current levels.

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Why The Mad Urge To Own Patently Rigged Stocks Like Unitech, Anantraj et al…?