Tuesday, April 13, 2010

Fantastic interview with Mohanish Pabrai

Steve Forbes does a very god job in interviewing Mohnish Pabrai of Pabrai funds. Mr Pabrai's views Chinese and Indian companies with a dose of skepticism as he doesn't trust the accounting balances sheets and the audit process in these countries. Great viewing for anyone who is swayed by the morons on CNBC TV, whether in the US or India. Greed is universal. Here is the full video.

53 comments:

Anonymous said...

Good interview.

I threw some darts in the stock market in 2008 and 2009 and have got an return of @66% on an average. 2010 is going good too....... so far that is @50% returns so far, but much more difficult to throw darts this year, need to to find targets :).

Is there any good India specific mutual fund which can be invested from the US?

Anonymous said...

Anon above:
Your party is over.

Anonymous said...

My prediction of RE prices in India:

I don't think the market will crash or prices would go down suddenly. There would be a slow correction and it would take 5-6 years for this correction. Every year starting this summer the prices will correct by 10-15% and eventually by around 5-7% after 3 years or so. We may see a bottom in 2015 or so. By that time the prices would have gone down by close to 50%.

Those who are waiting to buy and thinking that prices would correct like stock prices is not going to happen. If they are waiting, they have to wait at least 5-6 years and rent for this time.

Vik said...

Anon 5:44

Look at MINDX for broad exposure to India. I want to invest in it but I will wait for a correction

Anonymous said...

Realty buyers are back in south India

http://www.moneycontrol.com/news/cnbc-tv18-comments/realty-buyersbacksouth-india_451610.html

Anonymous said...

South India is back. Seems like a bad news for people like us who are hoping that prices will go down.

shailesh said...

Mumbai’s Little-Used Sea Highway

Analysts wonder if there is a need for the new lanes when the original four are rarely jammed. Motorists who use the bridge have found it to be mostly empty, with a vast majority of drivers reluctant to pay the $1 toll — which is about the price of a meal at an average restaurant in the city.

“I think MSRDC overestimated the number of commuters who would use the sealink,” said Gaurav Dua, infrastructure analyst and head of research at Sharekhan, an online share-trading portal.

What is happening to all these Crorepatis? I believe these should be like million of them in mumbai, can't they support even one bridge??? What waste of money !!! They put 6 times the capacity in trains and don't invest in basic infrastructure, but build this world marvel for rich !!!

Anonymous said...

Not all Mumbai Crorepatis live in Malabar Hill, Worli & Bandra areas. Those who live are the educated ones. The other lot could be living anywhere in Mumbai. I personally know a crorepati worth atleast 200 crores who was and is a big landlord in Bhandup. He drives a Maruti and spends most of his time sitting hutment cafes eating paan and scratching his balls.

Most crorepatis in Mumbai are Banias, Marwaris and Marati land owners to whom wealth is just prestige. Their living standard is just like yours and mine.

Anonymous said...

Anon above:
So true. I also know of some rich people in my area in Delhi, who abuse like any street uneducated boy and would start stammering if they have to attend even a visa interview. But they have money that they use only to gain power among their near and dear ones but don't use it much to higher their standard of living.

To be truthful, they can't do much because education is also something which they don't have. They just have money but live a very normal life.

Cool Head said...

I have come to the following conclusion.
RE is India is just a "bank" for black money. So the people who have black money simply park it in RE as they cannot stuff it in mattresses. I know of one Excise officer (very junior) who just bought a 1 BHK for 25L in Ghodbunder Road Thane. All down payment no loan. If such a junior fellow has such a stash of cash imagine what his bosses must be having. In the last boom, a lot of black money was generated and found its way into RE. If the govt really tightens the screws and forces disclosure of assets, then only will RE really collapse. As lonh as the bloodsucker power class continues to use it as a parking place, nothings gonna happen.

Vik said...

couldn't agree more on the excsie officer story. I know several general managers working for BEST bus service who live in Prabhadevi. Tell me how does one working in goverment service afford to buy an apt worth several crores.

Anonymous said...

Thanks Vik on the MINDX tip. I'll look it up. Btw, don't you think we/I/you should DCA into long term investments rather than waiting for a correction?

Anon @6:24, I agree party is over :), but if you do look around, there are good deals. Again as I said in my first post, it's really difficult to find them nowadays.

Anonymous said...

Good deals are around but the associated RISK is very high now.

Kanekar said...

Dollar Billionaires in India

Forbes magazine has listed few billionaires in India in its recent publication. Unknown to others, there could be many more whose assets are hidden. These are the past and present politicians and their heirs. Wiki list Rahul gandhi had $2b funds in swiss bank in 1991. At that time Bill Gates was not known to the world . Probably Sam Walton might have had assets equaling 2B.

If Rahul Gandhi or his family could hide $2B in 1991 when India was at the bottom of poor list, imagine how much money that the family could hoard since them. The fatso prince from Mysore recently sold a piece of his empire to a corp for $1.2 Billion . It is rumored that Maharashtra minister Pawar is worth 3 Billion. All these guys and their associates systematically loot the country and deposit the proceeds in offshore banks for future use. There is no accountability and prices are allowed wild run. These guys and their stooges paint rosy pictures of future India . Just like movies, people are led to believe that more they suffer, better the end results. So dear citizens, keep on starving for few years or decades, but India is going o be the super power. Already, I've seen people picturing themselves far wealthier than americans, europeans, japanese etc etc.

W dream a lot and material to dream is fed to us constantly by our leaders. Let us live few years in zopdas, stop worrying about flats etc but soon Rama Rajya will come. Then we will have the last laugh

ColabaWala said...

Exploitation is another name of the game. To give an example, until recently a contingent of Mah Police was deployed to guard Taj and surrounding areas from terrorists. These guys were living in makeshift tents, some of them cooking their own food using kerosene stoves, some practically begging from street vendors as food is expensive in Colaba. At night, these guys used to loot the street drug peddlers, terrorize prostitutes to score free screws and urinating/defecating on the road sides as there were no toilets. When asked about the possibility of Pak terrorists repeating 26/11, this is what they had to say

'Ayega tho hum log dekenge. Ek baar aya karke, dusra baar ane keliye vo log paagal tho nahi hai!!

This is our super power status.

Anonymous said...

What do you guys say:

Rupee is rising due to massive capital inflows into India and when RBI raises rates again on April 20, more capital inflows and Rupee will rise further.

What would RBI do to keep it low to prevent the death of export business/IT industry?

Vik said...

great comment by the policeman. Its hard not to have sympathy for the policemen even though we know very many are corrupt.
Yuan is revaluing and so are all Asian currencies. RBI can't do much here. they have to cut the oil bill at the expense of IT. besides I think they will increase the tax free status for one more year. IT companies are rolling with fat margins. they can take a hit of 10% without much problems. Anything more it might get tricky

Vik said...

I would DCA into vanguard funds without battling an eyelid. If mr Pabrai with all his access doesn't play with fire, how can we even think of playing with retirement money and investments. small amount of play money is ok i think. but now as they say most assets are fairly valued.

Anonymous said...

and Vik, one more thing, If you were to ask Mr. Pabrai what to do in the existing real estate market in India? Even if it was an emotional, one-time deal that you were looking at...

He would tell you that there was no value, it would erode your long-term financial security and too risky as an investment. He would suggest that you rent for now since the long term return for happiness and security would come from buying at a time when the decision is very easy to make. And also, not to leverage or undertake debt, especially the kind of massive debt people take nowadays...

Anonymous said...

One of my friends booked a flat in Kothrud couple of months ago and he said he was one of the few who bought the flat on bank finances. Most of the bookings were self financed. Moreover when buider published the list of the buyers all the self financed people were either NRI or from Mumbai. The flats were in the range of 40-50 L.
It is really scary to realize whatever you have saved for your home is nothing. And there are so many cash rich people out there.

Money may come from any source. NRIs, Businessmans, or black money it is inflating the prices so high that it has become a dream to buy a nice house in nice locality.

There is no willingness of administrators to find whether the source of money is legitimate. Otherwise how come the IPL teams are getting sold for thousands of crores. And some of the buyers were not even know earlier.

I realize now that I may end up not having my own house for years to come.

Anonymous said...

Newspapers are abuzz with headlines like IPL franchises, Shashi Taroor, Sania Mirza, SRK said this, said that, etc etc. We don't see the actual problems like housing, water scarcity, transportation, inflation addressed by any of our political leaders. May be these guys away on vacation in exotic places. How come the government is mum about the builders illegal activities and daylight robberies. How can a man afford home when the prices are 60-70 lakhs

I used to laugh at Indians trying to smuggle themselves into Europe, Oceania, Australia. After seeing the situation here I can see why they take so many risks.
Last year at this time, after reading about the recession, bubble ... I was hoping that home prices would be within my reach but now I realise that things are climbing upwards

I guess, it is too much to hope from a highly corrupt society like ours. I'm seriously thinking that corruption is ok where everyone is corrupt

Cool Head said...

@Anon at 04:57
You have mentioned about all the headlines not mentioning the actual problems. Do you realize that these healines are the actual problem-IPL now just appears to be a money laundering operation on a massive scale. We fool Indians just watch these games and make even more money for the crooks who run the shows with their ill gotten gains. Just shows that as a population, we are really stupid.
As I said earlier RE is just a parking place for ill gotten gains. This is how the earlier poster mentioned that most of the houses are "self financed". The NRI funds are nothing but Indians own money stashed abroad being brought back and parked here.
I wonder how long this state of affairs will last-somethings gotta give-sooner rather than later

Anonymous said...

Times News Network
Suicide due to Home Loan

Pune: A 31-year-old man allegedly committed suicide by hanging himself from a ceiling fan at his residence in Indrayaninagar in Bhosari.

The incident came to light only on Wednesday morning.The Bhosari police have identified the deceased as Piyush,alias Kishore Muralidhar Mahajan,of Indrayaninagar,Bhosari.
The Bhosari police said that Mahajan had been disturbed ever since he had lost his job.

He was finding it difficult to pay the monthly instalments for the flat he had recently bought.

The police have recovered a suicide note which said he was committing suicide because no one was coming forward to help through his bad times, the police said.

Anonymous said...

Very sad news indeed. However, anyone contemplating suicide because of financial problems is just a depressed individual whose self pity makes him to take this extreme step.

Anonymous said...

Hey Guys, these are just cycles. Don't believe for a minute that these are permanent and will continue to grow forever.

Have some faith. People get excited and go for irrationally exuberant spending...See the video of Mohnish Pabrai carefully...people have been feeding off these cycles and becoming rich. When people are going mad and buying at extravagant prices...conserve cash and make sure that you have a whole bunch of cash for the period when no one will be buying.

The way the whole world is splurging liquidity and the way whole countries are struggling with debt and have at some point to stop the splurging of money, increase interest rates and reign in spending, leading to deflation is a give. Deflation occurs when countries are beset with unemployment and reduced spending leading to a fall in prices. I think even if it takes 3-5 years for the double dip to occur and massive deflation to hit us, we should wait for it. It will afford the opportunity of a lifetime. One will become rich at the same time things like homes will be lying out there at cheap prices for anyone to buy...you might see a lot of suicides and extreme violent events at this period as people who have acted irrationally are unable to cope with their past madness...

Anonymous said...

India has more cell phones than toilets: UN

India has 545 million working cell phones thanks to its booming emerging economy, a number expected to reach 1 billion by 2015, the UN University said Wednesday.

That number exceeds the number of people who have access to toilet or sanitation facilities - only about 366 million, or 31 percent of the 1-billion strong population.

Now coming to Slumbai. Out of 14 million, 10 million sure dont have access to toilets. That means, they make kakka in any available space. Let us assume, the average kakka discharged by a person is 1 kg. This gives a figure of 10,000 tons kakka deposited every day. The Mumbai people are so used to the smell, that can not live without it and therefore not willing to relocate. Therefore prices are rising and rising

Annonymous said...

check this article in today's BS

http://business.rediff.com/report/2010/apr/16/realtors-scurry-for-loans-and-theyre-having-to-pay-for-it.htm

looks like real estate companies are again struggling with debt as sales are showing slowdown

Anonymous said...

BS is a mouthpiece of realtors and corrupt businesses. I wouldn't give much value to the articles published by them

Anonymous said...

Realtors scurry for loans and they're having to pay for it
April 16, 2010 09:49 IST

With liquidity tight, firms resort to high-cost borrowing, accept tough conditions to raise funds.

* Two Mumbai-based property developers, one listed, and the other unlisted, borrowed at nearly 30 per cent a month from banks and financial institutions
* Another Mumbai [ Images ] developer has taken a three-year loan from a private bank, pledging its entire building, with the condition that it would sell the asset to the bank at half the market price if it fails to pay
* A listed real estate developer in the Malad area of Mumbai is selling apartments at half the price, with a catch that buyers have to pay up up to 90 per cent of the apartment price at one go. Normally, home buyers pay 20 per cent of an apartment price as booking amount and the rest in instalments
* Developers are signing steep cash 'waterfall' options with private equity funds, wherein the latter gets the first right on cash flows from a project. Faced with debt repayment obligations, tardy sales, uncertainty over the timing of proposed equity offers and tight liquidity, property developers are resorting to all forms of structured finance to keep cash flows going.

http://business.rediff.com/report/2010/apr/16/realtors-scurry-for-loans-and-theyre-having-to-pay-for-it.htm

Anonymous said...

@Anonymous 7.26pm

LOL. Your analysis is true. Mumbaikars like shit smell and enjoy it. The smell is free for all, be it be Anil-mukesh Ambani, Aishwarya Rai or ShaRukh Khan.

You have to just travel on a local train to watch women men alike sitting on railway tracks and shitting. Some face forward exibiting their reproductive wares and those kinky once exibit their butts

Jai Maharashtra , Jai Shivaji Maharaj. Amchi mathi ani Amchi Manoos.

Anonymous said...

Goldman Sachs has been charged of fraud. Dow is down 125 and futures are down by similar number. I think a correction is coming soon.

US is going to get strict on all the unethical and illegal behaviour. This will scare all the wall street investment companies doing fraud all over the world.

This will definitely affect Indian Markets both RE and Sensex this week. I wouldn't be surprised if Sensex goes down by 600-800 points Monday and Tuesday. All the RE investments would be uncovered in weeks to come from all these big theives who hire MBAs to make these schemes/scams.

Job market is fucked again. Double dip is coming.

Anonymous said...

NEW YORK — Regulators shut down five banks Friday — three in Florida, and one each in Massachusetts and Michigan — putting the number of U.S. bank failures this year at 47.

The Federal Deposit Insurance Corp. said it took over Riverside National Bank of Florida in Fort Pierce, Fla. The bank has 58 branches and assets of $3.4 billion.

The government also took over First Federal Bank of North Florida in Palatka, Fla. It has eight branches and assets of $393.3 million.

The third bank the FDIC closed in the state was AmericanFirst Bank in Clermont, Fla. Its assets total $90.5 million. It has three branches.

The FDIC said TD Bank Financial Group’s TD Bank division acquired the operations, deposits and nearly all the assets of the three Florida banks.

Meanwhile, regulators also took over Butler Bank in Lowell, Mass. That bank has assets of $268 million. People’s United Bank in Bridgeport, Conn., agreed to assume all the deposits of Butler Bank.

The government also took over Lakeside Community Bank in Sterling Heights, Mich. It had assets of $53 million.

Anonymous said...

So what all this to do with Indian Reality? The black money flowing is very much by Indians. The NRIs investing(?) are still going to buy the flats at these steep rates.

I think reality will only crash when people will realize that they are not going to get returns for their investment. And that might take 2-4 years more.

Anonymous said...

Anonymous 3:18

you have nailed the point. I agree with you.

The bullshit about america and europe doesn't maake sense here. The guys blogging such think are delusional and far fro the reality. Probably they aren't living in India. They pick up scraps from newspapers and concot their own stories

Anonymous said...

Dear Anon above:
You'll find out on Monday how BS about America and Europe is related to India now when Sensex falls by 3-4%. You should also realise that a major chunk of financial engineering/scams being created in India are the expertise of big US firms operating in India.
All this Black and White thing is also a part of creation of these MBAs creating ponzi schemes in these firms.

Anonymous said...

house prices are NEVER going to fall in metros like mumbai city. They may correct 5-10% but will not fall more then that. I am talking about Jan 2010 prices and not April 2010 where they have already raised by 5-10% this year.

I agree, there will not be any major increase in reality prices for long time (may 5 years!) hence doing investment in real state now is foolish.

Buy house, if you really need it and do not finance more then 40% of total house value.

Jay

Anonymous said...

Jay,
You are a moron. Why don't you keep buying and don't preach here.
I'm not buying and will wait for the prices to fall by 50%. I'm happy renting till that time and I'm saving a lot of money by renting.

Anonymous said...

A possible bubble is developing in India and China, believed Arun Mohianey of Roubini Global Economics. “I'm not optimistic that this bubble will not grow bigger and then eventually burst in both China as well as India.”

He further said, a double dip was likely if Greek sovereign debt crisis spread to the US. However, he was quick to add that it was premature to call for a global double dip. “There is a need to watch European crisis carefully,” he added.

According to him, some Europe economies had the highest fiscal deficits—Spain’s debt to gross domestic product (GDP), though deteriorating rapidly, was better than India.

Anonymous said...

Beginning as Soon as April 30th!

Technical indicators suggest market collapse could begin by April 30th


The Fed has propped up the equity markets for months...
but that could soom come to a disastrous end!

Anonymous said...

Is India a US colony ? Stop blabbering about US Fed and come to reality. The problem in India is the moneyed Indians who used to bury gold for future use, are investing in real estate.

Comparing US to India is like comparing Ambani brothers to Sharavi slum dwellers

Anonymous said...

Anon@3:18

What a funny comment. Obviously, you would not have anything to back this comment and nobody can dispute you since this is unaccounted money you are talking about.

However, I have a question to ask - How come this unaccounted money started flowing in big numbers only from 2005? and then in 2008 the market was going to crash, the prices dipped. Again from 2009 the prices have gone up so I presume people are pumping in more unaccounted money from 2009?

Are you seriously saying all of the above?

Anonymous said...

There is a thriving Havala trade based in Brusells that channels billions of rupees to India. The indian government is not only fully aware of this but is an active participant in this. From 2003 onwards the inflow to india is much higher than outflow which indicates some businesses have confidence in the indian market. Real eastate in one of the lucrative sector that this money is invested in.

Turmoil in financial markets has little effect of this sort of transactions. Therefore, I too endorse Anonymous 3.18's view . IPL may be one of the avenue these guys are looking into to make the transactions more legitimate.

Anonymous said...

For the people who think that India is getting rich, please read the following.
The divide is getting bigger. And that is why we don't need these many high cost houses.

http://www.moneycontrol.com/news/economy/100-million-more-indians-now-livingpoverty_452245.html

Anonymous said...

@Anon above

India isn't getting richer but some Indians are. What can we expect when some section of our sociery breeds like rats

Anonymous said...

LOL, to the poster above who is expecting 50% price fall.

Do you have any idea, how much is the pay scale in India now days?. If prices go down even by 20% there will be huge huge demand which will suck up all the supply.

Read AGAIN, Prices will NOT go up for next 5 years BUT THEY WILL NOT GO DOWN in metro's like bombay city.

People who are waiting for correction are foolish. Buy property for your own use, do not buy for investment.

Anonymous said...

@Anonymous 8:28

Whilst agreeing with the rich/poor divide, it is wrong to suggest that the deserving should not avail luxuries like homes, vehicles and other good that are the fruits of their labor. If some one marries 4 wives and produces 4 dozen children when he not able to provide for them, crying foul of exploitation is nothing but exploiting the tax payers. These 4 dozen extra persons contribution to the society is most probably would be criminality.

We are experiencing the phenomenon what western nations went through 100 years ago. Our country will also reach the developed status like them in the future that we may live to see.

All the talk about rapid development and poverty eradication is for public consumption by the government.

Life is short. So, enjoy while you can. If you can not afford a home in a city, try to find some alternatives. As for the bubble theory, it may look absolutely convincing but things that happen in other countries may not necessarily happen here as conditions here are totally different.

shailesh said...

Jay 12:42 PM

How old are you? Go back and study bubble and bust from 92 to 96. Mumbai homes sold at 50% compared to the peak.

Granted there are differences this time. There are more home loans available then in past, also many buyers are end users esp. with high income ones in IT etc... But the bubble is much bigger compared to 94. At least 3 times bigger. Also, IT is pretty much now limited to new and developing areas like Baner in Pune etc... These are outskirt areas not in the city center. Why should any IT person buy in Mumbai or its old suburbs is beyond me. Most jobs are in IT parks surrounding it like Navi Mumbai etc... There is no shortage of land there.

Anonymous said...

LOL!. You are fool to believe property prices are not going down, tomorrow reverse bank is going to increase interests rates again which will put more burden on people who want to buy home.

Lets see whos laughs in next few days. LOL

Keval.

Anonymous said...

LOL!. You are fool to believe property prices are not going down, tomorrow reserve bank of India is going to increase interests rates again which will put more burden on people who want to buy home.

Lets see whos laughs in next few days. LOL

Keval.

Anonymous said...

Reserve Bank of India is a corrupt org. Couple of crores to right people dictate how the policy are made. Every senior manager in this org. is a millionaire. Reserve Bank is there for the rich. In this case, the builders.

Don't bank on reserve bank policy to bring the price down. The only way the price can be stabilised is by curbing Black Money. This was done before and successful. The government needs the will to do it, but unfortunately they lack it

Jai Shivaji Maharaj

Team Building Melbourne said...

Really appreciative article. The information is better and people can learn lot of things from this. Thanks for posting it

course in real estate said...

Valuable information for all the people. I am sure readers will love it and probably share it with their loved ones and friends.

rajni sharma said...

Hey this is really very nice post...
Nd one of your best post...Thanks
Flats in kolkata