The Second Wave

It hits those the hardest,

Who were the most afraid;

It spares all of the rest,

Who neither knew nor cared!

In a broad swathe it mows,

Where the defences were built,

Leaving places untouched,

Where people were out and about!

Danger is best encountered,

Frontally, face to face;

Those who seek to run and hide,

Often pay a heavy  price!

Some there are who believed,

In a magic potion,

Boiled up by some druid,

For indomitable strength!

As the second wave gathers,

A crazy momentum,

Everyone tries to hide - 

There are no lessons learnt!

On Debt Investments

Was just going through the category-wise performance of mutual funds over the last five years.

Across all categories of debt funds - short, medium and long durations; or  dynamic bond  \ corporate bond funds, the five year CAGR ( Compounded Annual Growth Rate) is very close to 8 percent. 

In other words, there is no additional return for additional risk.

This is a good validation of what is obvious about the debt market in india, and, to reiterate:

Choose only the lowest risk funds. Additional risk is not worth it.

Lowest risk means any of the following:

1. Short duration, ultra short duration, and liquid funds. The credit risk is lower due the lower tenor, and there is no interest rate risk either since they are such short-maturity instruments.

2. Banking and PSU funds, not because the companies are anything great, but because mai baap sarkaar will not allow them to default. But watch out, these funds also invest in scrips like Yes Bank sometimes.

3. Government Bond funds, where the credit risk is zero (by definition, and not because we trust the sarkaar - never trust the sarkaar is a good motto to follow :-) ). But these funds typically play on duration. In a scenario where interest rates are moving up, you could be exposed to interest-rate risk. 

Always hold debt funds for more than three years. That way, you get the benefit of indexation and of the special rate of 20 percent, making the effective tax rate close to five percent or thereabouts.

Fixed Deposits yield similar returns as debt funds.

Bank FD's are: 

1. Counter intuitively , inherently riskier than debt funds, due to lack of diversification.

2. Wherever you get more rate ( say Cooperative bank) is exactly where you should not invest :-)

3. Banks are the riskiest places on earth as far as parking your money is concerned, but again mai baap sarkaar to the rescue, they will not allow the big  banks (public sector banks, icici, hdfc and a handful of others only) to collapse - the illusion of stability of that piece of Maya called economy requires banks to be kept alive even if in coma.

4. FD's are tax inefficient. Hugely so. It is only fine for someone whose income from other sources is not much. FD's are ok up to an amount of  say seventy to eighty lakhs, since the interest earned annually on that amount will fall  in the zero or lowest tax slab.

PF, PPF and Voluntary PF are always good options in debt too. UHSP's (ultra high salaried people) were taking advantage of mai baap sarkaar by investing huge amounts in VPF. Even without 80C benefit, they were earning 8 plus percent, tax free, with sarkaari guarantee. It was too good to last of course - auntie FM, who cannot tolerate to see anyone happy, plugged that loophole in the last budget. A couple of my UHSP friends went on a drinking binge after the budget (in a star hotel of course), they were so depressed. I commiserated with them in return for free booze.

To summarise: 

In the Indian market, debt is priced such that taking higher risk does not yield higher return. So, stick to safe options, when it comes to Debt Mutual Funds.

When it comes to Bank FD's , stick to public sector banks, and / or the top private sector banks. Also, for tax reasons, if you have other sources of income, avoid FD's altogether.

 

And, unless you are very very sure about the company / promoter group, avoid investing directly in corporate deposits. They also have the additional disadvantage of being tax inefficient, since their tax treatment is the same as that for FD's.

I was about to end  saying  Happy Investing, but there is nothing happy about investing nowadays.

So, park your money, grit your teeth, and hang on. Acche din zaroor aayenge!

Bharatiyar Poem Nenju Porukkuthilaiye

Subramaniya Bharathi, poet laureate of Tamil, wrote this poem a hundred years back.

 

What he said then, remains true even today.

 

Given below is my attempt at translating Bharatjiyar, in verse. Tamil Pundits may please excuse any shortcomings in the translation.

 

Dinesh

 

POEM: Nenju Porukkuthilaiye

On the plight of my countrymen

By: Subramaniya Bharathi,

 

Oh! My heart cannot bear to see,

The state of these misguided people,

They are afraid of everything,

Fear is what every day kills them!

 

There are ghosts staying in the trees,

On top of houses, in the lakes -

These thoughts torment their waking dreams,

Feed the fears that keep them awake!

 

A thousand miseries they fear,

From wizards lurking everywhere,

The threat of witchcraft's always near,

The threat of Black Magic is real!

 

They praise all the rulers of the world,

For the gifts they receive from them,

Knowing well the politics behind,

Their self-seeking munificence!

 

They run at sight of a soldier,

Even a single man with a gun,

Cower in their houses in fear,

They let cowardice rule their lives!

 

They are always subservient,

Obsequious to every passer-by,

Stand with hands folded and backs bent,

Fear, not respect, is what makes them bow!

 

Oh! My heart cannot bear to see,

The state of these misguided people,

Are their divisions few in number?

In thousand ways they divide themselves!

 

A fiction of five-headed snake,

Invents the father to sow discord,

The son rises in righteous rage,

It's six heads, or it's off with yours!

 

Uncaring for the real Wisdom,

Or what the scriptures have to say,

They heed fake priests of a new God,

Attack those with whom they used to stay!

 

The fall prey to their false prayers,

Chanted in order to lure them –

Claim that only their God is real,

Turn upon their brethren, abuse them!

 

This, my heart cannot bear to see,

But I can't turn away in disgust,

They're struggling for their daily bread,

Unknowing, being ground into the dust!

 

Used to their endless privations,

They are starving themselves to death,

Suffering from a myriad ailments,

They refuse to support themselves!

 

Like the blind men who are helpless,

They choose to follow and be led,

Walk into the traps laid for them,

By those who lead with bad intent!

 

In this wealthy country of mine,

Rich in its arts and all its skills,

Is there no way I can help them,

Who live like homeless animals?

 

Male or Female?

I always knew I had a gender,
Which used to be assigned at birth,
Ninety nine point nine percent end up,
Being male or female, but not both!

Or either, or neither, or none,
We could have just lumped them as them,
And not, in name of inclusion,
Cast doubts into the rest of us!

The more things are certain it's good,
In a volatile uncertain world,
How can the ship stay in place,
If every breeze is a storm!

The anchors are being thrown overboard,
Like babies with the bathwater,
Time we stopped listening to the woke crowd,
They are the ones most intolerant!

Time to go back to the basics,
And call a spade a spade,
Let's just check your plumbing mate,
To decide if you're male or female!

To vaccinate or not to vaccinate

Now that the vaccine is out and being administered, people are making a beeline for it. But is it such a good thing? Is it required to take it at all?

Covid is not deadly at all. The fatality rate is as much as any ordinary flu.

The human body is a colony of germs and we coexist with them. The body has evolved its  immune system over millennia.

Exposure builds immunity. Immunology 101. By masking and distancing, we are reducing our exposure to all germs out there.

Man is a social animal. Our health and well being are dependent on meeting, gathering, touching, greeting, celebrating.

All allopathic drugs are harmful, vaccines more so.

We want to protect ourselves from covid by:

Masking: it is not very useful

Social distancing: not very effective

The whole of the country is now divided in two. Those who don't bother, like most towns in North India... it is likely that they all got the virus, were asymptomatic, and they are doing fine.

Those who are bothered, and mask, and distance. It is likely that these measures were not effective, they got the virus, are asymptomatic, and they are also doing fine.

The fatality rate of covid as a percentage of exposed population, is negligible.

Any drug is worth it, only if the benefits exceed the costs. Vaccines are harmful, and covid is not deadly.

It is more than likely that we have already been exposed to covid and we're asymptomatic.

The virus keeps mutating, all viruses do.  Will you be taking annual vaccines, for what is in essence a flu. Vaccines compromise your health.

Masking also compromise your health, due to shallow breathing.

Social distancing compromises your well being.

If you are highly comorbid , with higher probability of dying, anyway the next flu will get you.

So, cheer up, don't wear a mask, meet people, go out there, get the virus ( actually you may have got it already), develop the immunity to it naturally, keep your immunity strong, follow good lifestyle habits, and don't bother about the vaccine